The possibilities of crisis mean possible interruptions in the cycle of expanded reproduction. With the cycle or circuit as a whole made up of several different processes, often separate in time and place, there is the possibility of failure in each process, which must be successfully realized and in proper relation to the others, for the whole circuit to be completed. This contingency reveals that just as there are possibilities of crisis within capitalist efforts at expanded reproduction, so too is the expanded reproduction of capital itself merely a possibility, by no means guaranteed! Indeed, as they proceed, trying to complete each stage of their circuits – while trying to manage all the other institutions of society that they have reshaped for their own purposes – they are repeatedly confronted with the very real possibility of failure at each point. So, what some see as an almost unstoppable juggernaut turns out to be a rather fragile affair, tenuously held together and needing to be repeatedly patched up. Capitalists, of course, have always known this, which is one reason why they have frequently argued that they deserve profits for having hazarded their money in risky investments!
Returning to the metaphor of the circulation of blood, which – through Quesnay – inspired Marx’s theory of circuits, the counterpart to a crisis in capitalist reproduction would be some rupture in the flow of blood, e.g., a blood clot that blocks the flow, or a wound out of which the blood flows instead of through the body. Failures in the various moments of capitalist reproduction, like blood clots or wounds, can be small or large, cause temporary problems or threaten the life of the system. This suggests that examination of the possibilities of crises must involve not only their identification but also some evaluation as to the degree of risk that they pose to accumulation as a whole. Traditionally, focused as they have been on their hopes for the death of capitalism, many Marxists have looked only at those possibilities they have felt might result in the collapse of the system. However, as I show below, such major crises do not arise out of the blue but tend to be the product of an accumulation of smaller, less noticeable crises. Therefore, in what follows I pay attention to all the possibilities that Marx & Engels identified, both large and small.
In his exposition of his theory of crisis, before turning to the possibilities of crisis in the circuits of capital, Marx first points out the potential for crisis in the character of markets. It exists because in commodity exchange, C – M – C, the two acts of sale, C – M, and purchase, M – C, are separate. Here, as in his analysis of accumulation, he measures these variables by labor value and to simplify things he assumes equality in exchange. He writes of this in the Grundrisse, then in his Contribution to the Critique of Political Economy (1859), again in the section of the “Manuscript of 1861–63” that became Theories of Surplus Value (TSV) and finally in Capital, Vol. 1 (1867).
In the Grundrisse, he points out how crisis lurks in the very nature of commodities and the contingency of C – M.
The simple fact that the commodity exists doubly, in one aspect as a specific product … and in the other aspect as manifest exchange value (money) … this double, differentiated existence must develop into a difference, and the difference into antithesis and contradiction … this contradiction … contains the possibility that these two separated forms in which the commodity exists are not convertible into one another … the exchangeability of the commodity for money … may or may not be present.1
Just as the exchange value of a commodity leads a double existence … so does the act of exchange split into two mutually independent acts … purchase and sale. Since these have now achieved spatially and temporally separate and mutually indifferent forms of existence, their immediate identity ceases. They may correspond or not … consonance may be reached only by passing through the most extreme dissonance.2
There are contradictions which are unpleasant for the apologists of bourgeois common sense, and must hence be covered up. In so far as purchase and sale … are indifferent to each other and separated in time and space,
they by no means need to coincide … But in so far as they are both essential moments of the whole, there must come a moment when the independent form is violently broken and when the inner unity is established externally through a violent explosion … in the splitting of exchange into two acts, there lies the germ of crises, or at least their possibility”3
The division of exchange into purchase and sale … contains the general possibility of commercial crises, because the contradiction of commodity and money is the abstract and general form of all contradictions inherent in the bourgeois mode of labour.4
This is true regarding both cash money, which may or may not be used to purchase directly, and with credit money. Whether credit money serving as a means of payment will be forthcoming after commodities have already been delivered is always an open question.
The difference between means of purchase and means of payment becomes very conspicuous and unpleasantly so, at times of commercial crises.5
Where chains of payments … have been developed, any upheaval that forcibly interrupts the flow of payments and upsets the mechanism for balancing them against one another suddenly turns money from the nebulous chimerical form it assumed as measure of value into hard cash or means of payment … The summum bonum, the sole form of wealth for which people clamour at such times, is money, hard cash …6
The general, abstract possibility of crisis denotes no more than the most abstract form of crisis, without content, without a compelling motivating factor [predisposition] … The most abstract form of crisis (and therefore
the formal possibility of crisis) is thus the metamorphosis of the commodity itself.”8
In Capital, Chapter 3, he once again examines how, despite their independence, the “unity” of purchase and sale, “violently makes itself felt by producing – a crisis.” However: “These forms [of motion of this immanent contradiction] therefore imply the possibility of crisis, though no more than the possibility.”9
This contradiction bursts forth in that aspect of an industrial and commercial crisis which is known as a monetary crisis. Such a crisis occurs only where the ongoing chain of payments has been fully developed, along with an artificial system for settling them. Whenever there is a general disturbance of the mechanism, no matter what its cause, money suddenly and immediately changes over from its merely nominal shape, money of account, into hard cash.11
Assuming money, once obtained, could be easily spent (M – C), the main problem, he argues, lies in C – M. “Crisis results from the impossibility to sell.”12 Why might that occur? He mentions two reasons. First, a commodity may no longer find buyers, “Today, the product satisfies a social need. Tomorrow it may perhaps be expelled partly or completely from its place by a similar product.”13 Second, the person who has effected a sale and acquired money is not
2 And in Capitalism Per Se
Marx then goes on to point out how capitalists face exactly the same problems as merchants because those two aspects of commodity exchange, buying, in their case M – C (LP + MP), and selling, C’ – M’, both required for capitalists to successfully gain the surplus value necessary to reproduce their operations on an expanded level, are separate in time and in space. Returning to Marx’s diagrammatic representation of the circuit of capital, we can identify three distinct stages:
Other temporal separations have also been identified in the “life of the commodity,” or product life cycles, i.e., successful new products are first conceived (born in the mind), then produced (born concretely), then sold for a profit. But if demand dwindles – say because of changing fashion or new competing products – capitalists will cut back their production. When their profitability declines enough, capitalists cease producing them at all and consign their corpses to the graveyards of the commodity world (neglected in attics, garages and closets, an exemplar or two in museums, or rusting or rotting, neglected in abandoned warehouses or landfills).17
There are also often geographical separations whose overcoming creates further possibilities of rupture. When M – LP took the form of buying the source of LP, i.e., slaves, they had to be successfully captured or bought and transported to wherever their LP could be exploited. The indenture of workers in Britain for employment in colonies generally included their passage abroad. Today’s labor market continues to include the hiring of workers in one location and their transportation to another. Raw materials produced in one location must often be successfully transported to another for processing. Finally, more generally, many commodities produced in one location are commonly sold in many other locations – which again necessitates various kinds of transportation and all the possibilities of interruption to which they are susceptible, from
Two of these processes are in the sphere of circulation and exchange: M – C, C’ – M’, and one in the sphere of production, … P … C’. Marx examined each of these different moments of the circuit of capital to determine possibilities of failure. Because capitalism came to maturity within a world of increasing foreign trade, these problems regularly had an international as well as local, regional and national dimensions.
Given how I have argued in Chapter 3 on accumulation that the social relationships in each of these stages are those of class conflict and have insisted on the centrality of our struggles in those conflicts, in my further explorations of the possibilities of crisis in each of these three stages of the capitalist circuit, and in each element of those stages, I foreground the role of our struggles in potentially creating crisis. Certainly, Marx makes clear that workers’ struggles are not the only source of potential rupture, but from my point of view (and I believe of his too) they are ultimately the most important because they alone have the possibility not only of creating crisis but also of overthrowing the system as a whole.
Please note: Marx’s theory reveals possibilities of rupture, of failure, of crisis. In what follows, I point to many of those possibilities, some of which Marx analyzed at length, some of which he ignored. Which deserve notice and how much treatment is appropriate? While his theory tells us where to look, my choices about which to include here are based on historical experiences that have revealed these possibilities to be not merely theoretical but to exist in
3 Possibilities of Crisis in the First Stage of the Circuit: Investment
As I spelled out in Chapter 3, capitalists begin their investments by gathering enough money to buy what their plans require. If successful, they must then find and enslave or hire the labor-power they need and purchase the means of production upon which their workers will be set to work. Let’s examine possible crises in each of these necessary steps.
3.1 Possible Crises in Gathering Enough Money, M
With respect to the first stage of the circuit of money capital, M – C(LP, MP), the very first possibility of crisis lies in difficulties of amassing the money, M, necessary to begin the process. Marx usually assumes the availability of enough money to finance intended investment, i.e., to purchase both LP and MP. However, every capitalist faces the possibility of not being able to obtain a sufficient quantity of money and thus, a crisis avant la lettre, so to speak. In Capital, Marx gives an illustration of such a possibility from far-off Russia, where landowners, no longer able to command serfs, complain that “before the harvest is sold, the wage-labourers have to be paid a considerable amount, and the basic condition for this, a supply of ready cash, is lacking.”20 Although most workers are usually not paid until after they have worked for a week or a month, the same problem can exist for any capitalist. Without enough anticipated cash coming in to pay their workers, there is no point in hiring them.21 The same problem
In his analysis of primitive accumulation in Volume 1 of Capital, Marx points out how this possibility, which had long plagued merchants, also faces would-be industrial capitalists. Both kinds of investors face the same problem of putting together enough money to buy in order to sell – for merchants to buy goods, for industrial capitalists to buy labor-power and means of production.
Within on-going accumulation the availability of money for investment generally depends upon 1) retaining past surplus value in the form of money reserves, i.e., suspended coin, hoard or highly liquid assets, and 2) the ability to borrow if such savings are insufficient for the intended investment.22 Therefore, the possibility of investing and exploiting workers tomorrow is dependent on the success of investing and exploiting workers today and on access to commercial or industrial credit, i.e., the ability to convince other capitalists, banks, buyers of stocks and bonds or the government to loan money to help
Having argued the importance of foregrounding workers’ struggles in each of these stages and in each element of each stage, my first question is “how might workers’ struggles impede the ability of capitalists to muster sufficient funds for desired investment?” The most obvious response derives from how successful worker struggles can reduce work, raise wages and salaries or force their employers to spend money on other expenditures of interest to workers, such as safety equipment (e.g., guard rails around dangerous machinery or ventilation fans in textile factories and mines).24 Less work and all such expenditures raise costs and, ceteris paribus, reduce profits and thus the availability of retained earnings for investment. The second response is that such successful struggles by workers inevitably affect expectations about the future rate of profit from planned investment. Anything that lowers expected rates of profit undermines investment, both out of whatever retained earnings are available and the possibilities of borrowing money.25
Banks are notoriously averse to loaning money in risky circumstances. With rates of interest charged on loans contingent on estimations of risk, the higher those estimates, the more expensive potential credit, and the less profitable prospective investment. Indeed, opportunities can be rendered moot by rates of interest exceeding expected rates of return. The same effects can be seen in the ability of capitalists to raise money by issuing stocks or bonds: buyer perceptions of increased risk will reduce their purchases of securities and raise less money for investment. Reporting on crises of their time, Marx and Engels repeatedly pointed to the negative effects of increases in interest rates
Similar considerations are taken into account by government policy makers, be they kings or legislators, in deciding whether to subsidize investment, either by the state itself or through loans or subsidies to private investors. Here again the reaction to upsurges in worker struggles, especially if on a large scale and affecting expectations across industries, may be to spend money on police and military repression while putting off expenditures on investment.26
Workers’ struggles, however, are by no means the only determinant of interest rates and thus the availability of credit for investment, be it from private money markets or government. Despite holding a theory that the supply of money is ultimately determined endogenously by the value of commodities in circulation, Marx nevertheless recognized how central banks repeatedly changed the interest rates they charged to influence the amount of money in circulation. For example, central banks would raise interest rates to maintain ties between their issuance of notes and their bullion reserves. With gold and silver the basis of money throughout Europe and Asia, the transference of bullion and thus the flow of investable money capital were sensitive to differences in interest rates – flowing away from lower rates and towards higher rates. Recognition of this sensitivity repeatedly led central banks to raise their rates in competition with one another to stem capital export and had the result of circulating crisis.27 In 1856, Marx analyzed such competition between the Bank of England, the Bank of France, German banks and those elsewhere on the continent. Complicating those relationships were the increasing drains
Whatever may be the temporary cause of the monetary panic, and the drain of bullion which appears as its immediate occasion, all the elements of commercial and industrial revulsion were ripe in Europe …29
One locus of such “ripeness” upon which Marx dwelt at length was France, where huge speculations in railroads were complemented by disasters in, and new taxes on, agriculture, “the dearth of lodgings and provisions in Paris, the pressure on the retail trade of the capital, [and] the strikes in different branches of Parisian industry …”30
In the case of both private banks and public lenders the cost of borrowing may entail not only interest but also all sorts of conditions that the borrowers much meet. In the case of private banks, the most obvious conditions are those for collateral, specified patterns of repayment and fines for failure to meet those obligations. In the case of public lenders, you have conditions placed on central banks by governments, e.g., Peel’s Bank Act of 1844, and by central banks on other banks, e.g., reserve requirements, and on foreign central banks and governments.31 Whatever the source, the terms of borrowing must
The possibility of being unable either to earn or to borrow sufficient funds to finance a desired investment increases dramatically amid an economic crisis. Potential investors’ possibilities of earning the money they need to invest may be reduced by their own inability to sell. More generally, commercial crises (involving generalized ruptures in C’ – M’) bring on monetary crises in which the rate of interest charged by lenders rises rapidly as all kinds of firms – industrial, commercial, and financial – become desperate for cash and loath to loan in anticipation of their own needs, thus aggravating industrial crises.
Moreover, there are a number of possibilities of crisis for would-be investors associated with changes in the value of their money holdings. First, money in the hands of investors may become debased to the point of being unacceptable to those from whom they desire to buy, e.g., raw materials. Besides inevitable wear and abrasion of coin in circulation, the debasement of metal money generally had three sources: (1) governments reducing the percentage of gold or silver in coins to stretch the “value” of precious metal on hand, (2) the private clipping of coins that reduced the amount of metal (and thus their value) and (3) out and out counterfeiting. In the Contribution to the Critique, Marx points to the “little shilling men,” who advocated repayment of government debt in debased shillings as a solution to currency problems.32 John Locke, while serving in the Mint, took the threat to British trade of debasement of the pound sterling so seriously that he called for recoinage – despite fears that it might result in deflation at a time when the country could ill afford it.33
Two, somewhat similar, problems may arise with metal-based monies from reductions in the value of the metal serving as money or from bimetallism in those periods in which gold and silver both serve as money. In the first case, the resulting price increases would reduce the buying power of whatever money is available for investment. In the second case, if the value of one metal falls in
A final problem, one of increasing importance in the nineteenth century with the rise of joint-stock companies, was the diversion of money from real investment, i.e., spending money on LP and MP to increase production, to speculation. i.e., money spent by individuals or firms that does nothing to increase production. Unfortunately, the word “investment” is commonly used to refer both to real investment and to speculative expenditures of money on existing assets whose prices are expected (or hoped) to rise, assets such as already issued stocks and bonds or existing supplies of housing or raw materials.34 We must differentiate speculative spending on existing stocks and bonds from purchases of new offerings of stocks and bonds being issued to raise money for actual real investment. Investing in new production involves speculation but only in the limited sense that future outcomes cannot be known with certainty.
Let us now turn from the problem of having enough money to those potential crises that can emerge as capitalists try to obtain the LP and MP required in their investments. Assuming enough money has been found to fund the intended investment, there can still be crises associated with the availability of LP in labor markets and the availability of MP from other capitalists. In their economic models, economists treat scarcity as easily resolvable through changes in prices with changes determined by supply and demand. In the case of LP, they assume excess demand will raise the price of slaves or the wages of hired workers with the result that slavers will capture more workers or waged workers will have a greater willingness to sacrifice leisure and work more, or more workers will be drawn into the labor market from the “reserve army.”35 If more MP is needed than is currently available, i.e., the amount
Marx and Engels, on the other hand, saw lots of cases where no such smooth, marginal adjustments took place, but instead corrections came in the form of serious disruptions and crises. After all, from the point of view of investors, when scarcity results in higher prices, their money buys less LP and/or MP. Given existing financing, in the short-term rising costs of LP and MP will immediately reduce the amount of investment and accumulation. If the prices of either labor-power or the means of production, or both, rise so high as to make earning an acceptable rate of profit unfeasible, capitalists will not invest at all. The result is, effectively, the same as a total unavailability of the required resources and the resulting impossibility of either beginning or renewing circuits. If this unfolds on a large scale the results can be dramatic.
3.2 Possible Crises in Obtaining Labor-Power
Because within capitalism, labor is imposed, whether by slavery or through the not so “free” labor market, people resist and often revolt causing crises in the supply of labor-power. As a result, its availability is never guaranteed. Both slaves and waged workers, whom Marx often referred to as “wage-slaves”, drawing a parallel with their enslaved counterparts, have struggled against that imposition and the resulting alienation. The mechanisms of coercion differed but the objective was the same – control and exploitation – and both kinds of workers have fought back.
3.2.1 Possible Crises in Obtaining Slaves
Since the rise of capitalism, capitalists have deployed several methods to obtain slaves, either as chattel property or as forced labor. Thanks to the resistance of those enslaved, each method has been subject to crises.
The first, historically dominant method, when chattel property in people was legal, was capture and sale – “the slave trade.” This included the Atlantic
Slave resistance has also been supported by many abolitionists who have opposed slavery on various ethical or moral grounds. The revolt of the former directly deprived their owners of their LP; opposition of the latter demanded an end to both the slave trade, which would reduce the number of slaves, and to chattel slavery tout court, which would eliminate the ability of capitalists to employ slaves legally.
The second method has been the imposition of forced labor on workers found guilty of crimes and either put to work by the managers of governments’ prison systems or farmed out to private capitalists. In Marx and Engels’ time, Britain was notorious for “transporting” prisoners – especially condemned militants – to places like Australia and New Zealand for forced labor. Within the US, penal forced labor persisted thanks to the Thirteenth Amendment to the US Constitution that made chattel slavery illegal but legalized forced labor in prisons “as a punishment for crime whereof the party shall have been
The third method of obtaining slaves has been to breed them, i.e., enslave the children of existing slaves. This became the sole remaining method after the slave trade was made illegal, ending only with the outlawing of chattel slavery. Here too, there was resistance, especially by enslaved women who secretly used home remedies to avoid pregnancy or to abort, denying new slaves to their owners. (See, Chapter 5, Section 1.2.3.3.)
3.2.2 Possible Crises of Hiring in the Labor Market, M – LP
Of these two markets, M – LP and M – MP, I begin with M – LP, rather than M – MP, because the labor market is the first of the two moments of the capitalist circuit where capitalists and waged workers come face to face and where the intrinsic antagonism of the class relationship is clearly manifested. (The second moment of confrontation, of course, is production, …P….) In Volume 2 of Capital, Marx was quite explicit about the centrality of M – LP.
M – L is the characteristic moment of the transformation of money capital into productive capital, for it is the essential condition without which the value advanced in the money form cannot readily be transformed into capital, into value-producing surplus value. M - mp is necessary only in order to realize the mass of labour bought by way of M – L.38
The class relation between capitalist and wage-labourer is thus already present, already presupposed, the moment that the two confront each other in the act M – L (L – M from the side of the worker).39
In the case of M – LP, the possible sources of crisis faced by capitalists are first, not being able to buy enough LP and second, not being able to buy it at a price that will make putting it to work profitable. This holds whether the LP being purchased is “free” (waged) or slave.40 In other words, there are too few workers to hire or slaves to be bought or the wages of the one or the cost of the other might be too high. This possibility has existed in every labor market where capitalists buy LP.
In Marx’s theory we speak of the labor market, but there have always been many segmented labor markets, differentiated by industry and skill, but also by gender, ethnicity and race and corresponding pay scales. Women have been treated differently than men, relegated to particular jobs and generally paid less. There have been Men’s jobs and Women’s jobs. The same has been true with ethnic and racial minorities. Not only were the Irish pitted against the English (and vice versa) in nineteenth century Britain but the Irish were admitted only to labor markets for the worst, lowest paying jobs.41 The “payment” of slaves, of course, generally in kind, room and board, has generally been much less than waged and salaried workers.42 Once chattel slavery was abolished in the United States, Jim Crow laws created segregated labor markets in which Blacks could only apply (with any reasonable expectation of being seriously considered) for some jobs, generally low paid, but not others. There have been White jobs and Black jobs.43 This segmentation was recreated throughout
Within all of these carefully constructed, segmented markets for waged and salaried workers, employers have been able to fire their employees “at will” – just as slave owners can sell their slaves whenever they have needed to do so. Firing has often been done unceremoniously, by company goons forcibly escorting workers off the grounds of their job.44 This has been the fate of individuals or, sometimes, of all workers when companies have shut down operations for whatever reason – from cutbacks in production or bankruptcies during crises to lockouts during contract negotiations (once workers achieved the power to impose collective bargaining).45
The problem of finding enough workers in any of these differentiated labor markets and at profitable cost has been endemic to capitalism for a variety of reasons. In the case of potentially waged workers, their availability depends on a number of factors: their willingness to enter the labor market at all, flight from labor markets, disease and starvation, military drains and reduced or slowed population growth.
3.2.2.1 Avoidance of the Labor Market
Because waged and salaried jobs are shaped by capitalism’s efforts control life, making them exploitative and alienating, folks of all ages often try to avoid them. And avoiding jobs means avoiding the labor market – that portal to the heart of capitalism’s hell-on-earth. When young, still curious about the world, well-fed, and left on their own, kids are often more into exploring the world than accepting the difficulties and discipline with which they see their parents and older people struggling. When older, a surprisingly large number of adults still opt out of the labor market and choose some alternative way to survive. Eventually, for those who have chosen to work for wages or salaries,
Avoidance among not-yet-disciplined youth seems endemic and can be found in every segment of the income hierarchy, from its upper echelons down to its most poverty-stricken segments. In the nineteenth century, well-to-do families in capital’s new income hierarchy often emulated earlier practices of the landed gentry by allowing their children to put off entering the job market, first by “schooling”, usually by tutors for boys and governesses for girls, then by taking parent-financed tours abroad (mostly boys), for fun, to widen their horizons, to improve their language skills and to prepare them for future leadership roles in capitalist society. Among the emerging middle-class, where family income has allowed, their youth often followed the same path, partly emulating their upper-class counterparts, partly just avoiding the job market and work.46 In both cases, young adults have indulged their natural propensity to avoid knuckling down to the discipline of doing what someone else tells them to do.
The situation for the children of working-class families, in both countryside and cities, and those born into circumstances that Marx and Engels would classify as lumpenproletariat, faced more dire futures and much greater pressure to set aside their natural propensity to explore life and instead find some kind of work to supplement family income. Thus, that “selling into slavery” of children by some working-class families struggling to survive. Where even that proved impossible, children and young adults have often organized themselves into collectives (gangs) – operating within the “informal economy”, frequently in ways disruptive of the usual operations of businesses. A few, among children of all sorts, have formed politically active, militant groups, some to challenge
But for adults, avoiding the labor market, refusing to hire out to some employer, has never been easy because of the way capitalists have monopolized the means of livelihood, land, tools, etc. Nevertheless, many have avoided and have found alternative ways to survive. Here, I’ll highlight two common alternatives. First, among the expropriated, those with either no interest in regaining access to land or judging it impossible, have often chosen to move outside both traditional norms and capitalist laws doing whatever they could to live. Second, where enclosure has not been complete, both during the rise of capitalism or later, on its not-yet-enclosed margins, many have fought to either retain their access to land for subsistence agriculture or, having lost it in one place sought it elsewhere. Thus, the resistance to enclosure and later efforts to reverse it. (See below, Chapter 4, Section 5.2.2.1.)
Among those who, once deprived of land, abandoned any effort to regain it, were the beggars, vagabonds and robbers cited by Marx on the first page of Chapter 28 of Capital. With his emphasis on the cruelty of expropriation, his account emphasizes how they were forced out of their traditional roles and livelihoods. Studies by bottom-up historians provide examples of adaptation, such as Edward Thompson’s Whigs and Hunters: the Origin of the Black Act (1975) that sketches the complex modes of survival via squatting, farming and poaching of displaced yet creative people in and around the forests of England, and Peter Linebaugh’s London Hanged that shows how, as capitalism took over the slaughter of animals, many displaced butchers who lost their livelihood turned to robbery.48 Many other accounts have studied how some chose to continue living outside the labor markets capital sought to impose. The book London Labor and the London Poor (1851) by Henry Mayhew (1812–1887), based on interviews with vagrants, contains lots of stories of how and why they chose uncertain lives on the streets, highways, and byways of England rather than submit to the discipline of the job, any job. For those unacquainted with life on
Success at staying free from the labor market and from being exploited by some capitalist, despite being criminalized and harshly punished, has long had an appeal to those less successful at avoidance. John Garraty has reported on how French workers harassed cops arresting beggars; Eric Hobsbawm has suggested how exploits of unwaged “social bandits” appeal to the exploited and explain the persistent popularity of the frequently sympathetic portrayals not only of beggars and vagabonds but also of robbers.50 Think, for example, of the many tales of the English outlaw Robin Hood, or the orphan Oliver Twist in Charles Dicken’s novel of that title (1837–1839), or the hero of Victor Hugo’s Les Miserables (1862), who wends his way through much of the story as a vagabond. Or, the 1901 novel If I Were King, its 1925 adaption as an operetta The Vagabond King, and subsequent film versions, all based on the romanticized adventures of the fifteenth century outlaw and poet Francois Villon.51
The “dangerous class” [lumpen proletariat], the social scum, that passively rotting mass thrown off by the lowest layers of old society may, here and there, be swept into the movement by a proletarian revolution;
its conditions of life, however, prepare it far more for the part of a bribed tool of reactionary intrigue.52
This view was reinforced by observing how some of the lumpen were mobilized to help put down workers’ revolts in 1848. Still seeing the lumpen as disorganized “social scum”, in the Eighteenth Brumaire (1851–2), Marx and Engels failed to study any of those they lumped into the lumpen other than those at the highest levels of capitalist power and corruption, e.g., Napoleon III, who Marx deemed the “Chief of the Paris Lumpenproletariat”, or those organized by them, e.g., the Society of December 10.53
Yet, the “lumpen” were not always a chaotic assembly of isolated, self-serving individuals, easily manipulated by the powers that be. Beggars, vagabonds and robbers often grouped and struggled collectively. Robin Hood, after all, had his band of “merry men” operating out of Sherwood Forest. The later deer-stealing “Blacks” (Thompson’s “hunters”) of Windsor Forest were also often well organized, albeit with guns rather than bows and arrows. Oliver Twist hooked up with a gang of pickpockets working the streets of London and the “vagabond king” was king of a well-organized underground of all sorts of “lumpen.” Exceptions to this neglect among historians who have studied the period leading up to and including Marx and Engel’s nineteenth century are Eric Hobsbawm in his Primitive Rebels (1959), the authors of Albion’s Fatal Tree: Crime and Society in Eighteenth-Century England (1975), including E. P. Thompson and Peter Linebaugh, also author of The London Hanged: Crime and Civil Society in the Eighteenth Century (1991), based on biographies of workers executed at the Tyburn gallows, Marcus Rediker, who has analyzed pirate communities on ships and on shore in Villains of All Nations: Atlantic Pirates in the Golden Age (2004) and Linebaugh and Rediker, who collaborated to write The Many-Headed Hydra: Sailors, Slaves, Commoners, and the Hidden History of the Revolutionary Atlantic (2000).54
the Russian agricultural worker, owing to the common ownership of the soil by the village community, is not yet fully separated from his means of production and is thus still not a ‘free wage-labourer’ in the full sense of the term.57
They have ceased to be slaves, but not in order to become wage labourers, but instead, self-sustaining peasants working for their own consumption.58
It is worth remembering that in the nineteenth century, many peasants, even when forced off the land carried living memories of different and often preferred lives in agricultural communities (such as the Russian mir, or peasant commune) and yearned after restitution or some new access to land, somewhere else.59
After the American Civil War, the situation of ex-slaves paralleled that of the Jamaican and Russian cases. Mostly agriculturists by skill, however forced it had been, many wanted “forty acres and a mule” to continue working the
The ability to avoid the labor market in old age depends on sources of income. Those higher up the waged/salaried hierarchy could save, either in banks or by buying bonds that generate income, independent of current salaries. The further down that hierarchy, the lower the income, the harder to save – to the point of impossibility. For the low-paid workers whose struggles were the focus of Marx and Engels’ studies and political organizing, almost the only source of support in old age was the extended family – where the no-longer employed old lived with and helped their children and grandchildren – and community networks of mutual aid. But both the extended family and community networks have been repeatedly torn apart by the exodus of those following, rather than avoiding the job market. The closing of a mill or mine could mean not only the loss of jobs, but the need of the newly jobless to move elsewhere to find new ones. While such movement was sometimes from one local job to another, it also, all too often involved major geographic displacement, including immigration to other countries, e.g., those repeated waves of European immigration that populated the Western Hemisphere, while displacing the indigenous. That malleability of labor supply so vital to capitalist repeated self-reorganization has always undermined the ability of
3.2.2.2 Flight from the Labor Market
Many are the ways waged workers have fled the labor market and working for some employer. For example, many landless laborers, fed up with low and irregular seasonal wages, have tried to flee the labor market by seizing and occupying land, to obtain independent means of obtaining subsistence. (See, Chapter 4, Section 5.2.2.1 below on efforts to reverse enclosure.) Other waged workers, no longer willing to put up with their conditions of work and wages, have fled both labor market and waged labor in what have often appeared as sudden exoduses, short or long term. Short term flight has included: walking off the job, absenteeism, play, or sabotage. Marx and Engels’ familiarity with such actions began with the Chartists’ short-term strikes and protests, witnessed by Engels in 1842 upon his arrival in England. It continued through their observation of European workers’ long-term flight to the New World, often in the wake of armed uprisings, such as those of 1848. For example, many of the German immigrants who came to Texas after the failure of the Revolution of 1848 proceeded to set up utopian communities intended to be free not only of labor markets but of all capitalist exploitation and alienation.62 By reducing the size of the working labor force, or markedly slowing its growth below capitalist needs, all such actions can cause crises for investors.63
As in 1842, strikes and protests have generally been intended to be short, with workers soon returning to work, win or lose. They cause immediate crises for the struck employers, who can no longer produce, much less invest in expansion.64 The longer such actions last, the greater the disruption to both production and planned investment.
Exodus from labor markets through flight to distant shores, such as emigration from British and European labor markets to the fabled free lands of the Western Hemisphere can also be short or long-term, depending on whether those fleeing are actually able to obtain land. When successful, their attachment to the land can be as fierce as that of peasants who have resisted enclosure.67 If such immigrants fail to obtain land, however, their flight may be
The Europeans who fled to the Americas and moved west to the frontier seeking land included peasants and farmers who had lost their land, those who had worked for wages and those who gained passage across the Atlantic by accepting indenture for several years.68 Eric Williams argues that the ease of escape for white workers, whether waged or indentured, was a prime motivation behind the recourse to black slavery by capitalists in North America and the Caribbean.69 Those who fled exploitation in cities and towns, pushing the “frontier’ westward – destroying native American communities in the process – included frontiersmen, pioneers, miners and homesteaders in North America and similar groups in South America.
North American frontiersmen who went west generally hunted for hides or trapped for furs – intruding into the lands previously occupied by Native Americans. (See, Section 3.3.1.) Gauchos went west from the cities on the east coast of South America into the Pampas, the great plains of Argentina, Uruguay and Southern Brazil. Like their counterparts up north, gauchos subordinated their work to their needs. Like many subsistence peasants, they refused to enter the labor market, killed wild cattle for food and hides, which they then sold, but only to obtain what little money they needed to buy what they could not make or trade for.70 As I once argued to historian George Rawick, for the most part such persons escaped working-class status by subordinating their
The frequent comparison of South American gauchos with North American cowboys – because of their independence, equestrian skills and relationship to cattle – rarely differentiates between those successful at avoiding the labor market and those caught up and corralled by settlers, especially ranchers, into hiring out their labor-power.72
Humans, it turns out, were not the only species to flee exploitation. In their own ways, many horses and cattle, imported by the Spanish conquistadors, also fled their enslavers. Almost as soon as horses and cattle reached the mainland in the sixteenth century, they began to escape and multiply, especially in the open grasslands and plains of both North and South America.73 The rapid multiplication of wild horses provided some Europeans the possibility of living free of the exploitation organized by the colonizers. They also provided Native Americans both a physical and a spiritual resource for resistance to European invasion. Both horses and cattle provided meat and hides, while horses also provided mounts. The result was a proliferation of mounted Native Americans and unwaged Europeans roaming free, hunting wild animals, horses and cattle as a way of life.
The flip side of flight has been the refusal of waged workers to move away from their communities, to labor markets where they are needed by capitalist employers. While some workers move, many others have resisted migrating to jobs. Indeed, whole communities have responded collectively by sending the few willing to go to distant labor markets while everyone else remains behind and the wages of the former help sustain the latter. So, for instance, in Marx’s time male Irish workers went to England for jobs, but their wages – to the extent possible at their low level – would often be used to support their
3.2.2.3 Other Sources of a Shortage of Labor-Power
Beyond these refusals on the part of potential workers, other factors with the possibility of disrupting M – LP by reducing the availability of workers and increasing the cost of labor, have included famine, disease and starvation, wartime conscription, and any slow-down in population growth due to women’s struggles.78 The first three possibilities were realized frequently enough in the nineteenth century to seriously reduce the availability of labor. The fourth, although not yet having observable effects on population as a whole, was
3.2.2.3.1 Disease and Starvation
Besides flight, by far the most obvious dramatic reductions in the labor force, in Marx and Engels’ time, were those caused by famine, disease, and starvation. In the British Isles, the most serious famine of the nineteenth century was undoubtedly the Gorta Mór or Great Irish Famine of 1845 to 1859 that killed a million people.79 In that case, although the root cause of the deaths was a disease that hit potatoes, it resulted in famine because the English colonization of Ireland had forced the conversion of most food cultivation to that of commercial crops, especially flax to pay taxes and feed the British textile industry. As a result of this manner of exploitation, potatoes had become the staple food of peasants in Ireland and when the potato blight hit, the drop in food supplies soon produced malnutrition, disease, and starvation on a massive scale. The deaths, coupled with the flight of over two million emigrants, caused a huge drop in the supply of Irish laborers. This drop and the subsequent series of revolts by Irish workers against their exploitation by the British caused recurring crises for employers.
The potato blight and the crop failures of 1845 and 1846 increased the general ferment among the people. The dearth of 1847 called forth bloody conflicts in France as well as on the rest of the continent… the struggles of the people for the prime necessities of life.81
The great famine in Ireland was both preceded and followed by many others, especially in British-colonized South Asia where the yields of most crops depended on adequate but not excessive monsoon rains. In 1837–1838 drought and famine struck Agra in the East India Company-ruled North-Western Provinces and killed roughly 800,000 people. In 1866 drought, famine and then a cholera epidemic killed a third of the population in Orissa (Odisha). The Great
The colonial replacement of food production for local consumption by the cultivation of commercial crops for export, imposed on Ireland and other colonies, not only makes workers’ health more susceptible to crop failures but has often involved gathering workers into shanty housing, where the presence of disease and sickness spread quickly. Where sick workers are easily replaceable, the cost is relatively low. Where not, money has to be spent on housing and feeding those who, for the time being, can’t work and the costs to employers are higher.83
Because capital organizes workers in an unwaged/wage/salary hierarchy, disease always hits the poorest the hardest. Given their highly contagious nature, some diseases, such as influenza, can spread throughout the income hierarchy. But those with higher incomes are better able to avoid the disease, say by moving away, or to cope with disease, once acquired, by having access to the best available health care.84 Poor workers have no such options. Engels’
For the most part, the negative impact of disease and starvation is localized. Hurricanes which churn up in the Atlantic and the Gulf of Mexico and cyclones and typhoons in the Pacific and Indian oceans hit low-lying coastal areas hardest. Flooding occurs mostly on coasts and in river valleys and deltas. Fires rage mainly in drought-struck brush and forested areas or among poorly constructed houses in working-class neighborhoods. When the winds die down, the flood waters recede and the fires burn out, the locals left most devastated are usually workers and their families – those living in shanty towns or poor neighborhoods – because they don’t have the resources to escape, cope or rebuild.86 Their suffering costs money to those who employ them, either in caring for them or replacing them.
The obvious exceptions to such localization have been pandemics in which disease has spread across much of the world, carried from country to country by some vector. In the case of the Black Death (bubonic plague) of the fourteenth century, the vectors were rats and rat fleas, carried from Asia to Europe on ships engaged in international trade and imperialism. In the case
As capitalist circuits have become ever more entwined on a global scale, creating far-flung networks of production and sales, local disruptions can quickly circulate to cripple reproduction. Where the production in one place provides inputs into production in another place, the reduction in production due to disease ripples along the supply chain. Where disease disrupts the transportation of commodities, shutting down ports or dramatically raising the costs of transport, costs rise and profits fall.89 (More on this in Chapter 5, Section 4.) The connections between class struggle and these pandemics that disrupt capitalist reproduction deserve far more attention than they have received. While the differential negative impact on workers has derived from exploitation and workers’ failure to successfully win higher wages, better housing and access to medical care, their reaction has sometimes been outrage and uprising against the neglect of measures to protect them – actions which can further disrupt production.90
3.2.2.3.2 Military Poaching of Workers
Even without the contribution of imperialist armies to the spread of disease and its negative effect on the supply of labor, the simple drain of workers from the labor force into the military reduces labor supply at home and can cause
Military forces were recruited among both waged and unwaged workers. Among the waged workers impressed into military service were sailors from commercial vessels, either in port or at sea. This immediately reduced the number of workers available to those merchant capitalist ships, and their captains had to find replacements on their own. Among the unwaged taken into the military were conscripts from peasant villages, which immediately reduced the size of the agricultural labor force. Others were taken from taverns or prisons reducing the size of the latent reserve army of labor and its availability to employers, either as a threat to the currently employed or as replacements.93 Both at home and abroad Black slaves and indentured “coolie” laborers from India and China were diverted from more productive labor to the work of building fortifications, etc.94 Although local recruiting of the colonized, e.g., Sepoys in India, helped limit the drain at home, it reproduced it in the colonies.
Whatever the source, the scale of extraction of workers from the labor force available to capitalists is determined by the scale of military mobilizations and by the degree of resistance to recruitment and conscription. Conscription, after all, involves forced participation in the military and that in turn produces widespread avoidance and desertion from the ranks. The drain and associated conflict swelled in periods of war, either of conquest or between imperialist powers. The greater the resistance to colonialization or the bigger the war, the more workers are conscripted and the greater the problem for capitalists trying
3.2.2.3.3 Reductions in Family Size
Here, I feel obliged to point to an important phenomenon that Marx and Engels should have taken into account in their analysis of crisis but did not – as far as I have been able to find. When they analyzed internal family dynamics, they focused on power relationships, but failed to study how those relationships affected birth rates, population growth and the availability of workers for hiring. I find this surprising considering their familiarity with what the English political economist Thomas Malthus had to say on the subject in his book An Essay on the Principle of Population (1793) – a man whom Marx and Engels criticized again and again on other topics related to crisis.
Malthus argued theoretically that population, and hence the supply of labor, tends to grow exponentially because workers tend to breed like rabbits, unlike the bourgeois who sometimes exercise “moral restraint” and limit the size of their families. At the same time, he saw agriculture and the supply of food tending to expand more slowly than population. As a result, population growth and the supply of labor, he argued, is mostly only checked by external factors, such as famine or war. Among the lessons he drew from this analysis were that 1) the poor had only themselves to blame for their situation and 2) feeding the poor, i.e., those with no wages, should be abandoned because with more food they would just breed faster and create more poverty. This argument appealed to capitalists and was wielded by them against the Poor Laws or any other form of relief. Eventually, in the second edition of his book (1803), after studying actual population dynamics in Europe, he admitted workers did appear to be able to
Instead of addressing these issues, Marx and Engels’ emphasis on the internal power structures within the family focuses on the inequities of men dominating both women and children. As early as the Manuscripts of 1844, the German Ideology (1846), and the Communist Manifesto (1848), they argue that property relationships shape family relationships.98 They juxtapose the bourgeois family, in which, they argue, the possession of property results in relationships being reduced “to a mere money relation”, to the proletarian family, which lacks property and therefore the relation of husband “to his wife and children has no longer anything in common with bourgeois family relations.”99 They condemn the former, “the bourgeois sees in his wife a mere instrument of production [of progeny]” to maintain the continuity of family property, and mock the bourgeois pretense of a “hallowed c0-relation of parent and child.”100 They call, therefore, for the liberation of women from the servitude of the bourgeois family and stopping “the exploitation of children by their parents.”101
Yet, by the time Marx writes Capital, he also recognizes how – under the pressure of poverty – desperate proletarians are willing to allow their children to be exploited by capitalists.
We find in the most recent years of the Children’s Employment Commission [1850s-60s] that in relation to this traffic in children, working-class parents have assumed characteristics that are truly revolting and thoroughly like slave-dealing.102
Decades later, Marx and Engels’ discovery of the writings of the anthropologist Lewis Morgan (1818–1881) spurred both to new thinking about the origin, nature and destiny of families. Although Marx died before he could do more
The modern individual family is based on the overt or covert domestic slavery of the woman … the man has to be the earner, the bread-winner of the family, at least among the propertied classes, and this gives him a dominating position … In the family, he is the bourgeois; the wife represents the proletarian.105
And, as in the case of those two classes, there is a struggle in which the wife/proletarian often rebels against her servitude.
As in the Manifesto, Engels juxtaposes this situation to that of working-class families where, because industrialization “has moved the woman from the house to the labor market and the factory, and made her often enough the bread-winner of the family, the last remnants of male domination … have lost all foundation … the woman has regained, in fact, the right of dissolution of marriage …”106 So, if wives’ traditional servitude to their husbands includes their role as brood-mares, one might expect women to use the power conveyed by the wage, in ways that would result in a decrease in birth rates. Yet, Engels says nothing about this. His only solution to women’s struggles is their complete integration into the waged labor force. “… the first precondition for the emancipation of women is the reintroduction of the entire female sex into public industry.”107
In short, neither Marx nor Engels provide any analysis of intra-family struggles around procreation and child rearing that could provide an alternative to Malthus’ simple-minded vision of working-class homes as “bunny hutches” where only the food supply determines birth rates. Despite recognizing that
This absence is all the more striking because not long after Marx and Engels passed from the scene demographers came to recognize how rising income produces a “demographic transition”, with eventual falling birth rates and slower population growth.110 Rising incomes free parents from the need to peddle their children to capitalists for a wage that supplements their own. Rising income also reduces the need for children’s labor at home, e.g., on farms. Moreover, for both waged and unwaged families, it reduces the need for children as ultimate care providers for their parents – for many the only form of social security for old age. All these factors help explain fewer births and slower growth of the labor force. Finally, we also now know that the speed of this demographic transition has been determined by that to which Marx and Engels paid little attention: the degree to which women’s struggles have given them control over their bodies, including their ability to control the number of their children. Everywhere women have gained more control, birth rates have fallen, often dramatically, causing a reduction in the growth of the population and hence of the labor force – sometimes reducing it well below the needs of capital and therefore causing a crisis in M – LP.111
3.2.3 Overzealous Investment
The most obvious possible problem on the demand side of the labor market I have already discussed in the first section of this chapter, i.e., possible problems in raising sufficient money to hire enough workers for planned investment. All the possible impediments discussed there could be repeated here, including: (1) workers past struggles causing a shortage of retained earnings and (2) problems in access to credit due to perceived risks, or to central bank
If the quantity of unpaid labour supplied by the working class and accumulated by the capitalist class increases so rapidly that its transformation into capital requires an extraordinary addition of paid labour, then wages rise and, all other circumstances remaining equal, the unpaid labour diminishes in proportion. But as soon as this diminution touches the point at which the surplus labour that nourishes capital is no longer supplied in the normal quantity, a reaction sets in: a smaller part of revenue is capitalized, accumulation slows down … 112
Against Malthus’ reasoning that fluctuations in wages are caused by fluctuations in labor supply, Marx argued the contrary, that fluctuations in capitalists’ demand for labor – over the course of booms and busts – was the primary explanation for increases or decreases in wages and the effects on profits, the willingness to invest and to hire. How capitalist reductions in investment during downturns can help overcome the power of workers to raise wages, I take up in Chapter 7.
Also, on the “demand side,” it is worth noting how more often than not when capitalists hire workers it has been common to put them to work and then pay them – a situation in which it is the workers who are effectively extending
3.3 Possible Crises for Buyers of the Means of Production, M – MP
This section deals with crises faced by capitalists who need to buy means of production. The flip side: crises facing capitalists selling means of production are dealt with in Section 5.2.2. Because capitalist purchases of MP are acts of investment, willingness to buy depends upon everything I discussed in Chapter 3 above, including both investor estimations of the potential profitability of the investment, and their ability to mobilize the resources necessary, not only to purchase MP but also to hire LP. That ability depends on their accumulated surplus value and, if necessary, their access to loanable funds, i.e., their ability to borrow from the monetary commons pooled and managed by various financial intermediaries. Given these conditions, the most obvious source of crisis
In his theory, because it is a theory of a fully developed capitalism, Marx generally assumes capitalists buy MP from other capitalists with money. However, as his analysis of primitive accumulation, colonialism and the gradual transition from traditional agriculture and artisanal handicraft to capitalist industry shows, he was fully aware that capitalism first emerged and developed within a non-capitalist world. As capitalists have expanded their operations across the face of the earth, they have repeatedly faced peoples who have not yet had any use for money but have had things to trade usable as means of production for various industries. In such situations, capitalists have often resorted to one of the oldest methods of merchants: barter.
3.3.1 Barter and Crisis
As an early example of the acquisition of MP via barter was the fur trade with Native Americans, beginning in the 1600s. This barter was soon undercut by the acquisition of furs from European trappers, who would sometimes barter furs for things they needed but often wanted to be paid in cash. Both the barter trade in furs and that for cash were integral to the rise of capitalism, both local and international. European merchants were bent on acquiring furs to resell and created elaborate networks to cultivate fur trapping and trade with both Native American and European trappers. Industrial capitalists sought furs, instead, as means of production. These Europeans learned that they could trade use-values for furs. In so doing, they were both acquiring what they wanted and, effectively, annexing and exploiting the labor and skills of trappers for their own purposes.115
This pattern of trading industrial goods for Native American use-values was repeated as the European invasion moved West, with what they offered in trade varying according to the practices of the people encountered. More notorious than the trading of industrially produced use-values such as wampum, steel knives or cloth was the trading of alcohol or guns in exchange for whatever the merchants or capitalists sought to obtain.
Although an anomaly in capitalism, barter trade, like trade using money, was also susceptible to crises. The sources of such crises could be found both in the supply of use-values and in the demand for them.
Supply was subject to short-run disruptions among trappers due to conflicts over who could trap what and where. Conflicts raged not only between European and Native American trappers but also between tribes of Native Americans. Such conflicts were aggravated by those among competing European colonialists, e.g., the French-Indian War (1754–1763), in which both the French and the British allied with different tribes and pitted them against each other for their own competing imperialist interests. As the variety of manufactured trade goods and Native American desires for them grew, so did conflicts among suppliers, both Native American and European.
Supply was also subject to the long-run problem of the depletion of animal populations being trapped or hunted. As trade expanded, the earlier limited indigenous trapping for furs or hides, which involved a sustainable relationship between people and their environment, fell victim to their subordination to the much greater demand driven by the capitalists selling to European producer and consumer markets. With activities such as fur-trapping and trade the only way for indigenous peoples to obtain the goods churned out by capitalist industry, trapping for trade eventually depleted the trapped populations,
The demand for indigenous use-values as MP, was, in turn, dependent on the demand for the goods being manufactured with them. In the North American fur trade, the demand for furs was dependent on the demand for various kinds of clothing made from furs, e.g., fur coats, or hats made from the felt extracted from beaver hides. So, when such hats fell out of fashion, or felt was made from cheaper rabbit fur, the result was a crisis in the trade for beaver hides.116
Although important in processes of primitive accumulation, as capitalist trade expanded in the nineteenth century, barter tended to be progressively replaced by the trading of goods and services for money (or the precious metals from which many monies were made).117 On the basis of their usual assumptions of both monetary exchange and the availability of sufficient money to purchase required MP, Marx and Engels pointed to a number of possible sources of crisis in M – MP, including those resulting from the struggles of workers, time lags, natural disturbances and political blockades of trade.
3.3.2 Possible Crises for Buyers Caused by Workers’ Struggles
The same hold up [in investment] could occur for the opposite reasons, if the real prerequisites of reproduction were missing (for instance, if grain became more expensive or because not enough constant capital had been accumulated in kind). There occurs a stoppage in reproduction and thus in the flow of circulation.119
Violent fluctuations in price [of raw materials] thus lead to interruptions, major upsets and even catastrophes in the reproduction process.120
Clearly, grain (and other MP) can “become more expensive” due to workers’ struggles in their production and transportation (more in Section 4.2 on crises in …P…) that reduce quality and cause shortages. When workers go on strike and shut down production, crops rot in the fields, nothing is added to inventory, ships are neither loaded nor unloaded and undelivered C(MP)’ deteriorates. With their production shut down, enough raw materials, intermediary goods, tools, or machinery might not be accumulated. The more complex the “supply chains” of production and exchange, the more points of class struggle and the more numerous the possibilities of breakdown in both the production and shipping of MP.
Similarly, even in the absence of shortages, when such actions by workers producing MP are successful in raising wages and the increased cost of production is passed on through higher prices of C(MP)’, this increases costs, c, for buyers of MP and reduces the rate of profit, s/(c + v) undermining investment and planned expanded reproduction.121
3.3.3 Crises for Buyers Caused by the Appropriation of MP
Another source of problems in the availability of MP, has been their direct appropriation by workers or their theft by other capitalists. In this essay, and more generally, I differentiate between “direct appropriation”, i.e., the taking of either MS or MP by workers and “theft”, i.e., the theft of MP by capitalists. The former term amounts to a refusal of the legitimacy of laws, generally written by
3.3.3.1 Direct Appropriation of MP by Workers
Just as workers have tended to directly appropriate MS for their own consumption or for resale to augment their income, discussed in Section 5.2.2.2 below, so too have they appropriated some means of production, e.g., food, raw materials, fuel, or tools, for the same purposes. The peasant direct appropriation of wood in forests, which caught Marx’s attention in the 1840s, was an appropriation of means of production only to the degree they cut trees that were to be harvested as lumber; fallen wood was of use only to their personal consumption, e.g., firewood for heating or cooking. An example from the eighteenth century, analyzed in fascinating detail by Peter Linebaugh in The London Hanged, was the repeated appropriation of tobacco throughout its transportation from drying barns in America to British wharfs, warehouses and retail outlets by slaves, waggoneers, lightermen and porters, sailors on ships, warehouse carters and even government inspectors.123 Although some of the tobacco was clearly a consumption good, some was raw material destined to be transformed into cigars, snuff, etc. Obviously, the more tobacco that disappeared into worker pockets along the way, the less was available as MP and the higher the price for industrial buyers. The London Hanged also details such appropriation by shipyard, silk and leather workers, who would take “scraps” from their workplaces for their own use, or to work up and sell.124 Their appropriation increased the cost of MP by forcing their employers to spend more on raw materials.
In agricultural zones, where foodstuffs are grown commercially as C(MP), workers, both small holding peasants and landless laborers, sometimes directly appropriate food from the fields of agrarian capitalists, effectively converting MP into MS and increasing their income.125 This is especially common
Because many raw materials – tobacco, cotton and other fibers, ores – were produced in colonies far from the handicraft and factory workers who processed them, their transportation to distant factories was subject to all kinds of disruption by all the workers involved, on both land and sea, including mutiny and piracy.127 In the case of mutineers turned pirates, of course, not only the cargo being carried was appropriated but often the ship itself – the most important means of production in the long-distance transportation of both MS and MP.128
3.3.3.2 Theft of MP by Capitalists
In the case of capitalists stealing from other capitalists, when the means of production, MP, are stolen merely to resell them, via hijacking or piracy, the thieves are effectively acting as agents of rogue merchant capitalists engaged in illegal activity. When the MP are stolen to be covertly integrated into another
One important kind of intra-capitalist theft is industrial espionage to obtain secret information about production methods or products.131 Marx’s analysis of the diffusion of technological change – often implemented, as we have seen, in response to workers’ struggles – focuses on how any development by one capitalist firm, which gives it a competitive advantage and a larger share of surplus value, is desired by others.132 Where the new technology is easily available, diffusion takes place simply through adapting old plant and equipment or setting up new ones. But the international diffusion of new technology has often come through the migration of skilled workers and entrepreneurs who simply import or build new production facilities. In such a manner, for example, did the silk industry become established in the United States where sericulture had never been successful. Originally protected by tariffs on finished silk goods, the development of the industry was based on imported European technology and Far Eastern raw silk.133 But where the technology has not been freely available, nor skilled workers willing to move, copying was sometimes done by reverse-engineering means of production but often by stealing
Such espionage has always been an essential part of “competition” among capitalists. Writing about such methods in the eighteenth century, with a major focus on French spying on British industry, John Harris writes, “Espionage was a major means by which important new technology was actually transferred or attempted to be transferred … It was practiced on a very wide scale by all western countries of any industrial significance.”134 Methods included observation as “tourists” and stealing actual tools, machines, models, plans or formulae. Often essential, however, was enticing those with knowledge to “defect” to another company, either at home or abroad. Industrialists, it seems, either recognized or discovered that without the knowledge of skilled operatives about how to make a new technology work efficiently, stolen tech could be much less productive or even useless.135 This inseparability of technology from labor points to the inherent relationship between the two. It is creative labor, after all, that first invents new technology and then brings it alive in action. So, the separation of MP and LP, e.g., of machines from humans, of “dead” labor from “living” labor is much less clear in actual production processes than it appears in the abstraction of theory.
At an international level all these methods, including espionage, have been natural complements to protectionist laws designed to keep foreign competitors out of a country while local late-comer capitalists are investing and trying to “catch up” to the methods and standards of their more able foreign competitors. The degree to which the success of these methods causes a crisis for the company or industry from which the technology is stolen depends upon how much of a market share the newly more competitive production is able to carve out. The logic of the “infant industry” argument for protection explicitly assumes that success in augmenting industrial efficiency will enhance competitiveness and the ability to steal market share and cause a crisis for competitors.
As Marx’s two-department model of expanded reproduction makes clear, the appropriate amounts of MP (and MS for that matter) need to be produced – and available at profitable cost – for both departments. Marx and Engels argued, as early as the 1840s, that such availability is never guaranteed – despite economists’ quasi-religious belief that market dynamics would almost always bring this about. The absence of intersectoral planning and time lags in flows of information sometimes meant overproduction and sometimes underproduction, which produced either excessive or inadequate inventories of available C(MP)’, thus price swings and possible interruptions in expanded reproduction.136 As capitalists extended their operations across oceans, increases in distance lengthened the time lag between production and sale and multiplied the possibilities of interruptions.
Further: since the circulation process of capital is not completed in one day but extends over a fairly long period until capital returns to its original form … great upheavals and changes take place in the market … it is quite clear, that between the starting point, the prerequisite capital, and the time of its return at the end of one of these periods, great catastrophes must occur and elements of crises must have gathered and developed.137
the commercial cycle has again reached the point where overproduction and over speculation turn into a crisis … glutting of the world market has been achieved in spite of … the electric telegraph which has transformed the whole of Europe into one big commodity exchange, in spite of railways and steamships which have improved communication and therefore commerce to an incredible degree.138
The same problem of time lags could produce underproduction, the collapse of speculation and a crisis in supply from raw material importers.
3.3.5 Crises Caused by Nature
Crises caused by Nature in the ability of investors to obtain the MP they require result from shortages that either drive up the prices of MP to levels that undermine their profitable use or cause such absolute scarcity as to bring those production processes that require them to a halt. Such shortages occur because of catastrophes in either their original production or in their transportation. Dramatic changes in Nature such as drought, tornadoes, hurricanes, cyclones, flood, tsunamis, earthquakes, volcanic eruptions, wildfires, and disease can all have the effect of dramatically reducing either the quality or the quantity of MP, or both. On such crises in the production of MP, see Section 4.2.2.2 below.
3.3.6 Crises Caused by Blockades of Trade
Unlike natural disasters, the imposition of blockades on flows of MP have been entirely the result of capitalist and government decisions. Using government-sanctioned patents and copyrights, capitalists have prevented or slowed the flow of new technologies. Governments, using laws, protective tariffs, and force have slowed or prevented flows of actual goods. Yet, these are parallel to natural disasters in their effects: reducing availability and raising prices – increasing costs to firms requiring blockaded MP for their operations.
One well-known nineteenth century example of governments intentionally intervening to cut off imports of raw materials were the blockades of imports from the continent to England during the Napoleonic Wars, caused by both
That historical experience reveals a further problem: reduced quality of MP caused by being forced to switch from preferred sources to secondary ones. The cotton obtained from India turned out to be of a much lower quality than that from the United States – which raised the costs of production and undermined both the quality of the product and profitability.144
4 Possibilities of Crisis in the Second Stage of the Circuit: Production
In the second, production stage of the circuit (… P … C′), the possibility exists that despite having acquired and purchased the two elements of production,
4.1 Possible Crises with Labor-Power, LP in … P …
For reasons, which I analyze in Chapter 5 on predispositions to crisis, the labor processes of capitalist production are rife with conflicts between workers and capital – conflicts that can evolve from sporadic individual resistance to collective organization and action – and have the potential to disrupt and precipitate crisis.
4.1.1 Enslaved or Hired, But Will They Work? Resistance to Work
In both cases, of slavery and waged labor, obtaining workers is only the first step in obtaining the labor necessary for the production of commodities. In the case of slaves, force or the eminent threat of force is usually required in an ongoing manner to get slaves to do the work desired. From reports from America, Marx and Engels were aware of the resistance of slaves that made that force necessary. In the case of waged or salaried labor, in principle, the only force required is the threat of everything that can be lost through the loss of a job.
However, every capitalist discovers it is one thing to hire workers’ capacity to work, LP, but it is quite another to extract sufficient living labor, … P …, not only to preserve the original value invested, v + c, but also to extract surplus labor and generate surplus value, s.145 For the capitalist, success in production appears “totally identical with the production of surplus labor …”146 Therefore,
In other words, will capitalists succeed in exploiting their workers? And, will they succeed in exploiting them enough to be competitive with other capitalists trying to do the same? Will their s/v and s/(v + c) reach at least average levels (and preferably exceed them)? It all depends on just how much work they can get their workers to do.
Although capitalists do their best to hire workers who seem both able and willing to do the work they need done, the degree of both are only truly revealed on the job and may disappoint capitalists’ hopes and expectations.147 No matter prior conditioning and training, there is much truth in the well-known maxim that “most of what you need to know, you learn on the job.” (This is true about both how to do the job, and how to resist it!) Much the same is true with respect to willingness.
Not only do workers often hide their resistance to work while seeking jobs and agreeing to terms of employment, but because conditions on the job vary, both by task and over time, so may willingness. Regardless of agreements concluded in M – LP, more often than not in …P… capitalists try to squeeze out a bit more labor, even at the cost of the workers’ safety and health, while workers try to limit their work, to make it safer and to conserve energy for their own personal lives off the job.148 This will be especially true if, once on the job, they find their work unsafe. Such discovery can undermine initial willingness and provoke varying degrees of resistance.
In value terms, all worker resistance that takes the form of less work undermines the total amount of value added, v + s, to the means of production, c. In what follows, I examine some of the ways workers work less, reducing v + s. Here I look only at possible ways of working less – albeit demonstrated in history – reserving analysis of why they resist for Chapter 5, Section 2 on predispositions to crisis within the sphere of production.
Given that the amount of work is determined primarily by the time of labor (how long workers work) and by the intensity of that labor (how hard they
Although at any point in those battles, the length of a working day was often formally determined – by verbal agreement or by law – the actual number of hours, minutes and seconds of work could vary enormously. When and where craftworkers controlled their tools, e.g., where the subordination of labor was only formal, they could start and stop work at will, opening what Marx sometimes called “pores” of non-work in the working day and thus reducing its actual length. Early examples were spinners and weavers who controlled the speed of their spinning wheels and hand looms. Later examples were skilled machine tool operators, those who used machines to make machines or machine parts, and steel workers who long acted as both as engineers, designing tools and processes, and as manual workers, putting them to use.
A parallel dynamic existed with respect to intensity. Just as workers who controlled their tools could take breaks, stop and start as they pleased, so too could they control the intensity of their work; they could modulate the rhythm of work, sometimes working hard and fast, sometimes taking it easy, depending on circumstances (such as how much they could earn for a given amount of labor or how much they needed to earn).149 But even where workers were assigned to merely tend machines that capitalists tried to run continuously to minimize down time and costs while maximizing output, workers were not without recourse.
One obvious way of achieving down time for workers tending machines whose speed is controlled by their bosses is sabotage. Sabotage sometimes has taken the form of machine breaking, overt in cases such as the Luddites, covert in many others. Those who work with machines, hour after hour, day after day, often come to know them even better than their designers. That knowledge
Other possibilities of rupture in work time include various forms of intentionally working less, e.g., workers sleeping, playing or organizing on the job instead of working, absenteeism (coming in late and/or leaving early), slow-downs, strikes, protests and uprisings. Sleeping or playing on the job has sometimes involved sabotage, sometimes merely carefully planned diversions of energy.150
Examples of collective slow-downs are often found in cases of piecework, where wages depend on how many “pieces” are produced, be they pounds of yarn spun by spinners, yards of cloth woven by weavers, crates of fruit picked by farm workers, or tons of ore extracted by miners. In such cases, workers sometimes collaborate to limit the number of “pieces” each produce – effectively slowing down production. One of my favorite short stories by Jack London is “South of the Slot” (1909) which recounts how a new employee is called out by a veteran for working too hard and messing up the piece rate. By producing more than the others, he risks giving the boss an excuse to lower their piece rates, forcing everyone to work harder.151 In such a manner do workers often refuse competition among themselves and collectively set upper limits to how many pieces each will produce and thus just how much work they will do.
Shopfloor organizing – organizers talking with other workers about problems and possible actions – clearly takes time away from work and often involve preparation for taking more time, e.g., strikes.152 Strikes may be officially sanctioned by law, e.g., pre-contract contestation between unions and employers, or unsanctioned wildcat actions by rank & file workers. They may involve walking off the job, occupying plants and preventing the replacement
The same is true with widespread protests and uprisings, e.g., Chartist protests against Parliament inaction on their petitions or the Revolutions of 1848. Workers walking off the job and into the streets in large scale actions – especially general strikes and revolutions – may rupture not only production but other moments of the circuit as well – such as M – C(MP, LP), discussed in Section 1 above, or C′ – M,” discussed in Section 3 below.
Whatever the cause, workers do get fed up with the work and even with the struggle over work, declare “Take This Job and Shove It!”!” and quit. Walking away obviously means less work by those who walk and the diversion of managerial time into replacing workers who quit.
4.1.2 “Nature” Can Kill
In Section 3.3.5 on possible problems in buying the means of production, I discussed how drought or flood could decimate crops used as MP, reducing supply, driving up prices, reducing capitalist profits and causing a crisis. Obviously, drought or flood can also reduce food crops (MS), also driving up retail prices and undermining the value of workers’ wages. Where wages are already low, reductions in what they can buy brings deeper malnutrition, greater susceptibility to disease, loss of housing, even starvation – all reducing the ability of workers to work and, in the worst cases, killing them outright. The disease that blighted potatoes in Ireland, also resulted in some workers starving and others fleeing the workforce through emigration to escape the same fate. Any natural disruption – whether by flood, drought, or disease – of any crop that feeds local workers can have much the same effect of reducing available labor-power – as demonstrated dramatically in the multiple nineteenth century famines of South Asia.153
Severe storms, tornadoes, fires, and flooding can also damage or destroy manufacturing factories and in the process harm the workers who work in them, regardless of the nature of their final product. Earthquakes that crumble factories or whole towns crush workers as well as machinery and other means of production.
Clearly, the recurrent epidemics and pandemics of the nineteenth century sickened and often killed workers removing them either temporarily or permanently from working and by so doing disrupted production. With working-class wages so often at or near bare subsistence, the ravages of disease simply worsened the health of workers already weakened by chronic malnutrition, killing more quickly than slower deaths by starvation. Not only were such sufferers removed from labor markets as I discussed in Section 4.1.2.3.1., but their deaths removed them from the labor force entirely.
4.2 Possible Crises with Means of Production, MP in … P …
Keeping in mind that the means of production are determined by the technology of production, embodied in tools, machinery and raw materials, there are several possibilities of crises in production associated with some breakdown in these. They include workers’ actions, e.g., sabotage and direct appropriation, natural disasters and, for individual capitalists, the inability to cope with inevitable depreciation or keep up with technological changes introduced by competitors.
4.2.1 Crises in MP Caused by Workers’ Actions
In working niggers, we must always calculate that they will not labour at all except to avoid punishment, and they will never do more than just enough to save themselves from being punished, and no amount of punishment will prevent their working carelessly and indifferently. It always seems on the plantation as if they took pains to break all the tools and spoil all the cattle that they possibly can, even when they know they’ll be punished for it.157
Turning to industrializing Britain, where slave-produced cotton was being processed into cloth with ever-more sophisticated machinery, Marx observed the same conflict between workers’ desire to work less and capitalists’ desire to extract the most work possible. As early as 1846, while critiquing Proudhon, he wrote, “Since 1825, the invention and use of machinery resulted solely from the war between masters and workmen.”159 On the basis of his worked out theory of relative surplus value, he reiterated this theme in Capital, explaining how the introduction of machines, which held the technical possibility of reducing work was used by capitalists to increase work and undermine workers’ power to resist.
Hence too the economic paradox that the most powerful instrument for reducing labor-time [machines] suffers a dialectical inversion and becomes the most unfailing means for turning the whole lifetime of the worker and his family into labor-time at capital’s disposal for its own valorization.160
The most powerful weapon for suppressing strikes, those periodic revolts of the working class against the autocracy of capital … It would be possible to write a whole history of the inventions made since 1830 for the sole purpose of providing capital with weapons against working class revolt.161
Not surprisingly, workers resented these capitalist uses of machinery. Although the best known acts of sabotage were those of the Luddites (1811–1816), English
Similar actions against machines have been undertaken by agricultural workers. These included the widespread “Swing Riots” in 1830 against mechanization in agriculture and involved the destruction of labor-displacing threshing machines.164 Machines were not the only objects of anger and attack but unfolded alongside “the underground of the poaching war, the anonymous letter and the flaming corn rick.”165 By fits and starts such rebellion would become gradually better organized, leading eventually from the struggles and subsequent repression of the Tolpuddle Martyrs in 1834 to the “formation since the end of 1865 of a trade union among the agricultural labourers … in March 1867, the labourers carried through a general strike …”166
Another terrain of the production of MP that proved highly susceptible to worker sabotage was mining. As coal-fed steam engines replaced water-powered machinery in factories and transportation, the power of coal miners to disrupt accumulation, not only in the mines but also downstream in the industries dependent on their product, grew steadily. Given the dangerous character of the work, mine owner reluctance to invest in safety measures, and the support of isolated mining communities, the struggles of coal miners, all over the world, are legendary, from the Molly Maguires in Britain and the United States to miners in France, Silesia and India.168 Miners, with easy access to mining equipment, including explosives, have the means not only to shut down mines but also to interrupt the transportation of ore from pit to where it would be employed. Such power forced mine owners to draw upon both private police, e.g., the Coal and Iron Police, and government military force to repress miner struggles. Those same conditions obtained in many other kinds of mines.169
4.2.2 Crises in the Production of MP Caused by Nature
I have already noted how interruptions due to exogenous changes in Nature may hurt workers and reduce the availability and efficacy of their labor-power. Such changes can also undermine the production and quality of the means of production. This is probably most obvious in extractive industries such as agriculture and mining. In Marx and Engels’ accounts, the example of crises in the production of MP that shows up most often is that of agricultural raw material production – especially crops – being disrupted by bad weather. Drought can reduce yields, even completely wipe out harvests. When prolonged, drought can undermine irrigation systems by drying up their sources of water, be it from reservoirs or aquifers. Its counterpart, storms, heavy rains and flooding, can disrupt the growth of crops (via “lodging” or drowning), their harvesting,
The replacement of a sudden or chronic shortage of (grain, tea, cotton, flax, etc.) in the case of a domestic crop failure deprives the nation doubly. A part of its invested capital or labour is not reproduced – real loss of production. A part of that capital which has been reproduced has to be shifted to fill this gap … A crisis caused by a failure in the grain crop is therefore not at all created by the drain of bullion … Exports of gold are not the cause of the grain crisis, but the grain crisis is the cause of gold exports.177
In the case of mining, veins of ore can dwindle, or the percentage of useable metal in ore drop below levels worth extracting and processing, given the
Finally, severe storms and flooding can also wreak havoc on factory production as well as on agriculture, thus disrupting the production of both intermediary, manufactured means of production and final products. Storms can also disrupt shipping, especially transoceanic shipping where bad weather and other natural hazards, e.g., dangerous coasts or rogue waves can sink ships, pandemic human disease can shut down ports, and disrupt supplies of MP.180
4.2.3 Depreciation and Competition
While raw materials must be replaced regularly so too, eventually, must machinery and other elements of “fixed capital,” e.g., factories, barns, grain silos, irrigation systems, oil and gas drilling and refinery equipment, trucks, trains and ships. They all wear out or “depreciate” over longer periods of time and must be replaced (in part or in whole) in a timely manner to avoid ruptures in the production process. Marx discusses depreciation, both physical and in terms of value in his analysis of machines and industry in Volume 1 of Capital.181 In Volume 2, Section 3, his reproduction schemes explicitly include the replacement of MP due to depreciation (and any other losses).
Leaving aside unforeseeable accidents, in which mine tunnels, bridges or roads collapse, refinery equipment or storage facilities explode, trucks and
But beyond the failure to replace existing fixed capital, can be an inability to match technological innovations introduced by competitors who are able to raise productivity, reduce costs and gain a larger share of total surplus value. What may be true of an individual capitalist enterprise may also be true of large numbers, indeed, of whole industries. Marx and Engels watched this unfold as English industrialization surged ahead of that on the European mainland and further afield. They wrote of it lyrically in the Communist Manifesto, calling the “cheap prices” of commodities (because produced with more productive technology) “the heavy artillery” which “batters down all Chinese walls.”183 It is true that such metaphorical artillery was often accompanied by quite material artillery and other machinery of war carried by armies and gunboats, but the failure of some producers to match the innovations of others, for whatever reason, meant crisis for them. Marx set out essentially the same argument in his opening chapter (12) on relative surplus value and how innovation by one capitalist “forces his competitors to adopt the new methods.”184 Unfortunately for many competitors, anywhere in the world, they may find that adoption impossible – creating such a crisis for them that their businesses go bankrupt and fail completely.
4.3 Possible Crises Caused by a Rising Organic Composition of Capital
In previous writings, but especially in Capital, Volume I, Part 4 on the “Production of Relative Surplus Value”, Marx lays out both the history and the logic of the tendency for capitalists to raise both the technical (MP/LP)
This emphasis is clear in the number of words Marx devotes in Capital to the historical success of workers (and their reformist supporters) in obtaining reductions in work time. After sketching capitalist efforts to impose ever longer hours of labor, he describes how workers and their reformist supporters fought back, stemmed that capitalist offensive, and eventually succeeded in getting laws passed reducing the number of hours in a working day. In retrospect, his emphasis seems well placed because after his time workers have gone on to win further reductions in the number of working days in a week, the number of working weeks in a year and the number of working years in a workers’ lifetime. All such reductions undermine absolute surplus value, both as a phenomenon (successful extraction of surplus labor) and as a strategy (increasing work time). Although these successes have never been complete, not then, not now, in the sense of covering all workers in all jobs, the overall effect of each such victory has been a reduction in the ability of capital as a whole to extract surplus value and profits. As a result, more and more capitalists have been forced to change their strategy of exploitation.
As soon as the gradual upsurge of working-class revolt had compelled Parliament compulsorily to shorten the hours of labor, and to begin by imposing a normal working day on factories properly so called, i.e., from the moment that it was made impossible once and for all to increase the production of surplus value by prolonging the working day, capital threw itself with all its might, and in full awareness of the situation, into the production of relative surplus value, by speeding up the development of the machine system.187
Whether the motivation is to offset wage and benefit concessions or shorter hours, successfully “speeding up the development of the machine system” to raise productivity requires control over workers – getting them to cooperate with the change or repressing their resistance.
As the Luddites and many subsequent struggles have demonstrated, this is not always easy because such changes often cause crises for workers, e.g., layoffs, loss of wages and all the stark consequences. So, the first, most immediate possibility of crisis is the reaction of workers who may strike, destroy machines, or even burn down factories. Successfully increasing MP/LP requires successfully managing one’s labor force. Those who are better at it have a shot at winning the competitive battle. As this dynamic has played out, the result has been a secular rise in average MP/LP and co/vo, albeit a rise marked by repeated crises in capital’s ability to manage the class struggle.
Beyond such immediate problems, by far the most profound possibility of crisis in response to increases in the technical and organic compositions of capital lies in the unintended “tendential fall in the rate of profit”, which Marx analyzes at length in Part Three of Volume 3. Because he calls this tendency “the most important in the capitalist process of accumulation”, I treat it separately in the next section.
4.4 Possible Crises Due to a Tendency for the Rate of Profit to Fall
Marx first worked out how this tendency of capitalists to raise the organic composition could have contradictory effects on profits and predispose to crisis in the Grundrisse, then in the Manuscript of 1864–1865, distilled by Engels into Capital, Volume 3, Part Three. How it can raise profits, he showed in Volume I. How it can lower them is less immediately obvious, but simple and with the most profound consequences. Let me outline it briefly in mathematical terms:
Second, increases of productivity can lower v. Because there is no limit to this reduction, in theory complete robotization (complete elimination of human labor) could reduce v to zero. As v is reduced towards zero, s/v would seem to rise toward infinity and s/(v + c) to s/c. However, there is an upper limit on the possible value of s given by the number of workers, the length of the working day (which cannot even approach 24 hours), and the upper limit on intensity of physical and mental endurance. Therefore, with a rise in s/v brought on by an extension of the working day, rising intensity, and mainly by rising productivity, profits, s/(c + v), will tend, not to infinity, but to s*/c where s* is the upper limit on the possible value of s, and v has gone to zero.
Third, the relative surplus value strategy that raises productivity and lowers v is based on a rise in the organic composition of capital, co/vo, which, being based on MP/LP, knows no theoretical limits. Therefore, the c in s*/c can rise continuously or repeatedly, without limit. Since s* is limited, s*/c will tend to fall. (Note: the distinction between the organic and value compositions of capital is critical here. Rising productivity in production of MP could lower the value composition, but not the organic composition that is tied to MP/LP. Indeed, lowering the value of MP encourages its substitution for LP and thus a rise in the technical and organic compositions.) In short, the outcome of the tendency of the organic composition of capital to rise is an increasing difficulty in extracting surplus value. It takes a larger and larger investment in c to impose/extract a given amount of surplus labor.
The progressive tendency of the general rate of profit to fall is, thus simply the expression, peculiar to the capitalist mode of production, of the progressive development of the social productivity of labor.188
This progressive decline in the variable capital in relation to the constant capital, … is just another expression of the progressive development of the social productivity of labor, which is shown by the way that the growing use of machinery and fixed capital generally enables more raw and ancillary materials to be transformed into products in the same time by the same number of workers, i.e., with less labor.189
Behind the movement of the value relations is the movement of the material relations of production. This is why the organic composition must never be confused with the value composition because it alone reflects the real moment represented by the technical composition.
The most detailed and profound discussion of the real processes involved in the tendency of the organic composition to rise is contained in the Grundrisse. There we find two points that are very relevant here.
The first, which he makes just about everywhere, is capital’s “general tendency to drive beyond every barrier to production”190; its “tendency to expand them [labor and value creation] boundlessly”191; “the necessary tendency to raise it [the productive force] to the utmost.”192 This emphasis on the endless expansion of capital, its quest for infinitude, is inherent in the class relations. It is neither an a priori assumption nor a crude observation. It is the product of capital’s need to raise productivity and expand production in the face of workers’ struggles.
… the quantitative extent and the effectiveness (intensity) to which capital is developed as fixed capital indicate the general degree to which capital is developed as capital, as power over living labor …193
Labor no longer appears so much to be included with the production process; rather, the human being comes to relate more as watchman and regulator to the production process itself … No longer does the worker insert a modified natural thing as middle link between the object and himself; rather he inserts the process of nature, transformed into an industrial process, as a means between himself and inorganic nature, mastering it. He steps to the side of the production process instead of being its chief actor.194
But to the degree that large industry develops, the creation of real wealth comes to depend less on labor time and on the amount of labor employed than on the power of the agencies set in motion during labor time, whose ‘powerful effectiveness’ is itself in turn out of all proportion to the direct labor time spent on their production, but depends rather on the general
state of science and on the progress of technology, or the application of this science to production.195
In this discussion in the Grundrisse, in this famous “Fragment on Machines,” Marx is clearly talking about the reduction in manual labor – by far the primary sort of labor toiling for capital in his time. But it is also clear in his analysis of the labor process, in Chapter 7 of Volume 1 of Capital, that “the general state of science” and its application to industry – the usual definition of technology – are also the products of living labor, of mental labor.
What distinguishes the worst architect from the best of bees is that the architect builds the cell in his mind before he constructs it in wax. At the end of every labour process, a result emerges which had already been conceived by the worker at the beginning, hence already existed ideally.196
Among those things “conceived by the worker” are scientific theories. But as with every other labor process, they are only the beginning; they must be tested and their consequences discovered. Both scientific and technological research involve a mixture of mental and skilled manual labor.197 The performance of basic scientific research has always involved myriad steps requiring careful manual manipulation of equipment by scientists and their technical assistants. The application of science to industry has also always involved scientists, engineers, and their technicians in a complex array of manual tasks in crafting new machines and production processes as well as the mental labor involved in their conceptualization, evaluation of progress, etc. While this increasing importance of mental labor certainly increases the demand for such labor – offsetting to some degree the decline in the demand for manual labor – it is also subject to the same dynamic as manual labor, namely the tendency of capital, over time, to substitute the use of machines for the mental labor of individuals, thus reproducing in these fields of endeavor the same dynamic of a rising organic composition of capital as experienced elsewhere.198
In this transformation, it is neither the direct human labor he himself performs, nor the time during which he works, but rather the appropriation of his own general productive power, his understanding of nature and his mastery over it by virtue of his presence as a social body – it is, in a word, the development of the social individual which appears as the great foundation-stone of production and of wealth. The theft of alien labor time on which the present wealth is based appears as a miserable foundation in face of this new one, created by large-scale industry itself. As soon as labor in the direct form has ceased to be the great wellspring of wealth, labor time ceases and must cease to be its measure and hence exchange value (must cease to be the measure) of use value … With that, production based on exchange value breaks down.199
This is a vivid exposition of the concrete processes expressed by and producing the rise in the organic composition of capital and the tendency for the rate of profit to fall, and also a vision of how this tendency works to undermine the fundamental basis of capitalism, as a system based on the imposition of work through the commodity form.
5 Possibilities of Crisis in the Third Stage of the Circuit: Sales
The third moment of the circuit, C′ – M′, like the first, is in the sphere of exchange or circulation. Its completion depends upon the successful production of the commodity C′ being followed by the discovery of those both able and willing to buy it with an equivalent M′. In usual Marxist parlance, this is the realization problem. Only if buyers can be found do capitalists stand a chance of earning at least the average rate of profit, s/(c + v). This is the flip side of two processes whose susceptibility to crisis I have already discussed in 4.1 the purchase of labor power, M – LP, and commodities C(MS) and C(MP).
However, although Marx considered slavery an anomaly within capitalism, people are still enslaved, sold and bought, by among others, traffickers of sex workers and domestic servants. Therefore, just as I included possible crises in
5.1 Possible Crises in Selling Slaves, C(LP) – M′
The most obvious sources of crisis for both capitalists trying obtain slaves – as a substitute or complement to waged workers – and those selling slaves have been the revolts of the slaves themselves and interventions by others helping them break free. The successful flight of slaves to maroon colonies or to areas where slavery is outlawed obviously deprives slavers of their “property”/commodities. So too, does the escape of modern slaves from sweat shops, fishing boats or illegal brothels. Slaves rising up in violent rebellion do the same, temporarily if revolt is put down, permanently when successful, as in the rising on Santa Domingue that overthrew slavery on the island. Beyond the slaves themselves, anti-slavery reformers (including ex-slaves) have joined the fight, ranging from sporadic individual action through the collective organization of flight to the ultimately successful public battle for the criminalization of chattel slavery.
As with all laws, however, success in outlawing both chattel slavery and human trafficking has only been effective to the degree that the laws have been enforced. It took the deployment of naval military forces to enforce the criminalization of the transoceanic slave trade and it took a civil war in the United States to enforce Lincoln’s Emancipation Proclamation of 1862.200
5.2 Possible Crises in Selling C(MS)’ or C(MP)’
As capitalism developed, the search for and creation of markets expanded steadily – both domestically and internationally. Capitalists trying to sell both C(MS)’ and C(MP)’ share the problem of properly gauging the amount of their production to the size of the market and thus avoiding either underproduction
5.2.1 Possible Crises of Overproduction/Underconsumption
For capitalists to be able to sell the goods and services produced by their workers, they require customers with both money and readiness to spend it on what they need or desire. Any limit to the availability of money, or to a willingness to spend it, limits demand and the ability of capitalists to sell and make profits. “New value and as value as such,” Marx writes, must have the proper “magnitude of available equivalents, primarily money … the surplus value … requires a surplus equivalent.”201 In order to realize surplus value in the accumulation process there must be expansion at several points. “The surplus value created at one point requires other points: creation of surplus value at another point, for which it may be exchanged; if only, initially the production of more gold and silver, more money …”202
Will all those other points be realized – that is, come into existence? Although there are some reasons to think they will, there is also the possibility that there will not be enough of them and aggregate demand will be less than aggregate supply.
The creation by capital of absolute surplus value – more objectified labor – is conditional upon an expansion, specifically a constant expansion of the sphere of circulation … A precondition of production based on capital is therefore the production of a constantly widening sphere of circulation, whether the sphere itself is directly expanded or whether more points within it are created as points of production … to create more points of exchange; i.e., here seen from the stand point of absolute surplus value or surplus labor, to summon up more surplus labor … The tendency to create the world market is directly given in the concept of capital itself … to subjugate every movement of production itself to exchange.203
He made the same kind of observation concerning the need for an expansion in the case of relative surplus value. “The production of relative surplus value … requires the production of new consumption; requires that the consuming circle within circulation expands as did the productive circle previously.”205
However, just because the expansion of capital based on absolute and relative surplus value strategies results in the multiplication of points of exchange, and in an expansion of the money available to buy the output, it remains possible that the amount buyers want to buy will be less than the commodities to be sold. This possibility, Marx and Engels recognized because they saw it repeatedly.
Therefore, in the absence of a plan to coordinate the amount produced with the amount demanded, the possibilities of differences in the two amounts were inherent in the system. Capitalists can control the amount their own workers produce (based on their expectations) but they cannot control either the amount produced by their competitors or the demand for their product. For the most part, both are in the hands of others. How they cope with these problems, I discuss in Chapter 6.
In the world around them, Marx and Engels saw how production sometimes continues even though previously produced commodities have not yet been sold, either by the producing firm or by wholesalers who bought them to sell or by retailers who bought them from wholesalers.
The production of surplus value … and the whole reproduction process finds itself in the most flourishing condition, while in fact a great part of the commodities have only apparently gone into consumption, and are actually lying unsold in the hands of retail traders, thus being still on the market. One stream of commodities now follows another, and it finally emerges that the earlier stream had only seemed to be swallowed up by consumption. Commodity capitals now vie with each other for space on the market. The late-comers sell below the price in order to sell at all. The earlier streams have not yet been converted into ready money, while payment for them is falling due … At this point the crisis breaks out.206
Storch, for example, remarked quite correctly against Say that a great part of consumption is not consumption for immediate use, but consumption in the production process, e.g., consumption of machines, coal, oil. required building etc.209
It is quite the same [to be points of centers of circulation] with the demand created by production itself for raw material, semi-finished goods, machinery, means of communication, and for auxiliary materials … In so far as one capitalist buys from others, buys commodities, or sells, they are within the simple exchange relation; they do not relate to one another as capital. The correct (imaginary) proportion in which they
must exchange with one another in order to realize themselves at the end as capital lies outside their relation to one another.210
This means, as with the production of consumption goods, that capitalists cannot, as individual buyers and sellers, see the overall picture, cannot know in advance exactly how much buyers will want or be able to buy. Therefore, the proportions can be wrong.
As I pointed out in Chapter 2, Marx first encountered capitalists beset with these problems in the 1840s while studying the problems of the Moselle vintners (1843) who were producing wine (a consumer good) and Silesian weavers (1844) who were producing cloth (a means of production for the clothing industry). Both found themselves overproducing because of the influx of (cheaper) goods from elsewhere in Germany because of the Zollverein. Eventually, in 1848, after much study, Marx took on the issue of trade policy and the debates over it directly in a “Speech on the Question of Free Trade.”211 He laid out and examined both the arguments for “free trade” and those for “protection,” coming down on the side of “free trade” – but only because he believed it increased the frequency of crisis and “hastens the Social Revolution.”212
In Volume 1 of Capital, the theoretical possibility of overproduction is first analyzed by Marx in the case of individual producers, e.g., farmers or crafts persons, selling some use-values to obtain the money they require to obtain other use-values, i.e., C – M – C, often for their personal consumption. In Chapter 3 “Money, or the Circulation of Commodities,” he points out one source of overproduction, namely that even in a world with many buyers “no one directly needs to purchase because he has just sold.”213 Just because the sellers of C find buyers willing to part with their M, those sellers can then hold onto the money they receive instead of spending it. They may, for example, save to accumulate enough money for future, larger purchases. The possibility of C – M with no follow up M – C implies, he argues “the possibility of crises, though no more than the possibility.”214 All this is framed in terms of the selling and purchasing behavior of individuals in particular markets.
Marx and Engels’ primary interest, however, in both their journalism and their theoretical work, were the possibilities of widespread failure in which
Dept I MP* = MP1 + MP2 + new MP1 + new MP2
Dept II MS* = LP1 + LP2 + new LP1 + new LP2
In the absence of planning, imperfect market mechanisms, i.e., producer/seller and buyer behavior based on often flawed perceptions, erratic expectations and unexpected disruptions, provides only crisis-ridden paths to achieving these required proportions.216
Among the possible causes of “flawed perceptions” are the often-serious lags in information flows sketched in Section 3.3.4. There I was concerned with the problem posed by time lags in information about the availability of means of production to buyers, those who need them in order to begin, continue, or expand production. But the same problem confronts sellers of both MP and MS. Each capitalist wonders whether there will be enough buyers to purchase everything their firm is sending to this or that market. If not, they will have “overproduced” C(MP)’ and C(MS)’ and suffer the consequence of “underconsumption” in the case of C(MS)’.
The opposite case – when producers crank out less than buyers want, signaled by an unexpected drawdown of inventories – Marx and Engels seem to have seen as simply an inducement to firms to increase production, sales, and total profits but not as any kind of crisis.
Nevertheless, despite these common problems, there are distinct differences in the problems facing those trying to sell means of subsistence and those trying to sell means of production.
5.2.2 Possible Crises in Selling the Means of Subsistence, C(MS)’ – M’
For capitalists to sell consumer goods, workers must be both willing and able to buy.217 Anything which substantially undermines either of those two conditions reduces demand and can cause a crisis for sellers of C(MS)’. Historically, capitalists have done their best to force people to buy consumer commodities by stealing and then monopolizing the means by which they might produce for themselves. The result: the only legal way to obtain the means of consumption has been by selling one’s labor-power in exchange for the money required to buy what is needed.218 As Marx points out in Capital, Vol. 1, Chapter 30, capitalist success in imposing these conditions created the “home market” for C(MS)’. The same methods were deployed in colonies abroad to create “foreign markets.” Although mistakenly thought by some to be a thing of the past, such theft has been ongoing, along with all the struggle it has provoked.
5.2.2.1 Possible Crises due to Reversing Enclosure
Both enclosures and efforts to reverse them predated capitalism but were renewed by the emerging capitalist class grabbing land and destroying homes and handicraft tools during that “primitive accumulation” of capital which Marx analyzed in Part Eight of Volume 1 of Capital. Clearly, every peasant success at seizing and then cultivating land, has made it possible for them to withdraw, to some degree, from capitalist markets for MS.
In his book on The Peasant War in Germany (1850), Engels looked back at the history of such struggles, focusing on peasant revolts in the 1500s. German peasants and their supporters demanded, among other things, the abolition of serfdom and guaranteed rights to land. They tried negotiations, appeals to courts and finally armed struggle. His analysis repeatedly compares and contrasts the struggles of German peasants with others in Britain and elsewhere.219
One well-known effort by the landless to seize land took place during the English Revolution of the mid-1600s. One part of the many diverse efforts by the dispossessed in that period to “turn the world upside down” was occupying, cultivating and building houses on previously stolen commons, often uncultivated “wasteland.”220 Such were the struggles of the “True Levellers,” or “Diggers”, one of whose leaders was Gerard Winstanley (1609–76) – who wrote both a manifesto explaining their demands and objectives and a song for them.221
Struggles for land continued in the 1700s and 1800s, taking place piece-meal, locally or through immigration, or as one motivation of those involved in various revolutions, e.g., the American (1775–1783), French (1789–1799), Haitian (1791–1804), French and the Dutch in 1830, the Revolutions of 1848 and the Paris Commune of 1870. To such momentary upheavals we must add the long history of resistance to colonial dispossession that involved both settler efforts
5.2.2.2 Possible Crises due to the Direct Appropriation of MS
Inevitably, because capitalists maintain a “reserve army” of unwaged workers to pit against the employed, many of those dispossessed from the land, and unable to regain access, do not find jobs, cannot earn a wage and therefore are unable to buy, regardless of their willingness or need to do so. They either depend on those who can find jobs and wages to support them, e.g., waged spouses or other extended family members, or they find some other way to obtain what they need, or they die. In this predicament, they find themselves in the same plight as other workers who participated in the labor market but subsequently lost their jobs and been dumped into the reserve army. In both cases, one obvious alternative to dying has been to bypass markets for MS and directly appropriate what is needed.
The direct appropriation of C(MS) by workers, before they can be sold, has disrupted capitalist management of markets throughout its history. I have already pointed to such appropriation in the sphere of production – including in the transportation of C(MS) to markets. The direct appropriation of finished goods for purposes of consumption is very much like that of raw materials or intermediary goods in production discussed previously. In both cases, workers reject capitalist claims to the ownership of products they themselves, or other workers, have produced, ignore sellers’ prices and, when successful, reduce C(MS)’ to MS, destroying their exchange value to capitalists.223
Here, we must distinguish robbery-for-resale from robbery-for-consumption. Those who rob a business then re-sell their stolen goods, e.g., individuals, criminal gangs, pirates or privateers, also cause losses to their original owners – be they industrial or merchant capitalists – but the value of the goods is merely redistributed from the original owners to their thieves, rather than destroyed. The thieves effectively assume the role of rogue merchant capitalists, inserting themselves illegally into the circuit. In selling the stolen C’, they re-establish C’ – M’, although the M’ they gain is often less than the original value of the goods stolen and resold.224 NB: I am concerned here only with the direct appropriation of commodities from businesses, which would otherwise sell them. I am not concerned with the robbery of individuals’ property. Such theft either transfers property from one person to another, or, if the stolen property is sold, re-establishes C’ – M’, albeit only to the benefit of the thief and buyer.
Methods of direct appropriation vary, from covert acts such as individual shoplifting and burglary to overt ones such as armed robbery in stores, the hijacking of trucks or ships or massive protests. The costs of small-scale robbery to capitalists may be marginal and factored into their “costs of production.” Large-scale, direct appropriations, on the contrary, carried out by those with either little or no money or facing prices which have been raised beyond their ability to pay, can and have caused crises – both for those trying to sell, through the immediate rupture of C(MS)’ – M and through the longer-term delegitimization of prices and capitalist control over them.225 The most frequent of such uprisings, and the best documented, have been those in which
5.2.3 Possible Crises in Selling the Means of Production, C(MP)’ – M’
Here we have the flip side of M – MP discussed in 1. There I discussed potential crises for those trying to buy MP, here I am concerned with potential crises for those trying to sell MP. However, many of the possible crises that I noted facing buyers of MP simultaneously face sellers, e.g., any reduction in the quantity produced. For buyers of MP that means a likely increase in price, higher costs of production, and less profit. For sellers that means less to sell and the danger of any increase in price being offset by reduced sales, revenue and profit – depending on the behavior of buyers.228
5.2.3.1 Possible Crises with Barter
In the example of the fur trade in Chapter 4, Section 3.3.1, the emphasis was on crises for buyers focused on reductions in supply, either short-term (local conflict) or long-term (exhaustion of species). For sellers, assuming constant demand, any substantial reduction in the supply of furs means less to sell. The long-term depletion of species whose fur can be sold, however, means the eventual reduction in the quantity available to sell, less revenue and profit, even with higher prices. It also meant a reduction in the number of trappers as trapping was largely replaced by industrialized fur farming – the breeding and murder
Serious drops in demand, however, could end the trade much sooner, as in the case of the demand for beaver fur to be processed into felt to make hats. The reduction in the demand for hats made of such fur meant a drop in the market for beaver pelts. So even if there were still plenty of beavers to be trapped, with less demand, beaver trapping became a less viable way to make a living.230
Other examples of dramatic drops in the demand for sellers’ goods have originated in the reduction of protection for their markets, reductions which cause producers and sellers to find themselves unable to compete with competitors who can produce more cheaply and sell at lower prices. The abandonment of protectionist measures have sometimes been forced, e.g., by colonialism or war, and have sometimes been the result of economic pressures or negotiation.231
5.2.3.2 Possible Crises due to Workers’ Struggles
Clearly, all struggles by workers which reduce the amount of MP produced and transported undermine sales and profits for those selling MP. This includes struggles during initial production and during transportation and sales. (See, Section 4.2.1) So, the same struggles against work, sabotage, strikes, protests, and upheavals that result in shortages and higher prices for buyers of MP, also undermine production, increase costs and prices, reduce sales, and potentially undermine profits for producers and sellers of MP.
5.2.3.3 Possible Crises due to Deterioration of Quality
Among the problems facing sellers of both MS and MP are those of convincing potential buyers of their useful qualities. Because both MS and many MP are sometimes produced far from where workers or capitalists will either consume
The more perishable a commodity, the more directly after its production it must be consumed and therefore sold, the smaller the distance it can move from its place of production, the narrower therefore its sphere of spatial circulation, the more local the character of its market.232
Good examples of such limits were means of production subject to water damage during transportation in wooden ships, such as colonial exports like tobacco and rice. In the TV film series Hornblower (1998–2003) based on C. S. Forester’s novels about the fictional career of Horatio Hornblower during the Napoleonic Wars, the episode “An Even Chance” includes a vivid illustration of the dangers of both war and deterioration. A ship smuggling bags of rice through the English blockade of French ports is attacked and taken by an English ship of war. In the taking, the smuggler’s ship is holed below the water line. Before the hole can be plugged, water leaks in, the rice begins to swell and widens cracks in the ship’s frame, which lets in more water. Unable to unload the rice fast enough, the swelling eventually breaks the ship apart and both cargo and ship are lost. Given how all wooden sailing ships were so vulnerable to sea water leaking in through their caulked joints, the war damage portrayed in this TV episode merely accelerated an ongoing danger to vulnerable cargos.
Much less dramatic but having a greater impact on the international trade in rice was the tendency of soft-grained rice, e.g., from Siam (Thailand) or
The same could be true for other consumer goods subject to deterioration, such as tobacco or cotton, where sales prices are partly determined by their innate qualities and partly by their condition, a function of both their production and whatever deterioration they suffer during their long transportation from country of origin to country of utilization.
5.2.3.4 Possible Crises due to the Direct Appropriation of C(MP)’
Just as problems of direct appropriation face buyers of MP, as sketched in Section 3.4, so too do they also face sellers, albeit somewhat differently. Clearly, every direct appropriation by workers or theft of produced MP by capitalists reduces sales, revenue and profits for sellers. If the losses are marginal and foreseeable, sellers often try to compensate by passing the cost of lost MP on to buyers by raising their price, but possibly lowering sales. The net impact on profits of higher prices and lower sales will depend on the behavior of buyers.234 If the losses are unforeseeable and massive – as with a sudden invasion by groups engaged in “self-reduction” (of prices) struggles, e.g., “food riots”, or by bad weather, mutineers or pirates sinking or seizing ships at sea, the costs will be much greater, and the likelihood of crisis increased.
5.3 Credit, Debt, and Commercial Crisis
Temporal and geographic distances between the production of C’ and its realization as M’ has long made the availability of credit a major issue for capitalists engaged in commerce. This is true whether the possessor of C’ is an industrial capitalist who has overseen production and now undertakes to sell, or a commercial intermediary who has bought C’ to resell it. Indeed, historically, the extension of credit and the debt to which it gives rise were developed long before capitalism as a social system and played a major role in commerce.235
While obtaining credit in the form of loans solves the immediate need for cash to finance the transportation, storage and selling of C’, holding such
In the 1840s, as Engels and Marx began to study these relationships, both old financial institutions such as banks and newer “financial intermediaries,” such as stock and bond markets, were progressively channeling money to capitalist industry. Where Italian banking had dominated commercial trade in the Renaissance, British banking grew to dominance with industrial development in the eighteenth and nineteenth centuries. Other countries, including major ones on the continent, lagged behind Britain in the degree to which banks were making their monies available to capitalists and not just to governments and the simply wealthy.239 So, for example, in a series of articles in 1846 and 1847, Engels describes the various means – some illegal – by which Frederick William IV of Prussia was borrowing money, at home and abroad, eventually trying to trick the United Diet into approving a new loan – despite the backdrop of crisis in which “there is comparatively little capital in Prussia,” i.e., little money available for industrial investment and what was available was being
Everywhere capitalism has developed, sooner or later, in response to difficulties and possible crises, new credit relationships have been developed among industrialists, merchants and specialized financial institutions such as banks at every point of the reproduction of capital where exchange occurs.241 By the mid-1850s, Marx’s studies of finance included following efforts in France – one of those countries where capitalist finance lagged – to reorient banking toward industry. He tracked the doings of the Société Générale du Crédit Mobilier, a joint stock company backed by Napoleon III that raised money by issuing stock to the wealthy and the emerging middle class.242 While loaning money to the government – to finance, among other things the Crimean War – and to merchant capitalists engaged in commerce, the Crédit Mobilier’s claim to fame was its financing of large-scale industry, such as railroads, both in France and abroad. Marx reported that the actual business practices of the company involved as much speculation with other people’s money as they did investment in industry.243
Commercial credit can be extended either to the producing capitalist or to a commercial intermediary. A producer may borrow to cover the costs of
All these relations of credit, like the other aspects of accumulation, are elements of, and shaped by, class relations and their antagonisms. In Capital, Marx was quick to point this out by drawing attention to the class conflicts around credit and debt in earlier societies.
The class struggles in the ancient world took the form mainly of a contest between debtors and creditors, and ended in Rome with the ruin of the plebian debtors. In the Middle Ages the contest ended with the ruin of the feudal debtors, who lost their political power together with its economic basis … Here indeed, the money-form – and the relation between creditor and debtor does have the form of a money-relation – was only the reflection of an antagonism which lay deeper, at the level of the economic conditions of existence.245
Within capitalism, that deeper antagonism “at the level of the economic conditions of existence” is between capitalists and workers. With the availability of industrial credit dependent on capitalist control over workers, the effect on profits and the ability to repay, this is obvious. In the case of commercial credit, class struggle is integral in two ways. First, the capital-labor antagonism exists
In general, credit is a vehicle for overcoming barriers (potential ruptures) by buying time, but the allocation of credit depends on relative “credit worthiness” among capitalists, industrial or commercial. The most important measure of “credit worthiness” is the ability of capitalists to control their workers so that they can make the profits required for repayment. The so-called “prime (interest) rate” to large corporate borrowers is accorded to those firms that earn the highest rate of profit, often produced by a high rate of exploitation, s/v. The greater the perceived risk that capitalist borrowers may lose control over their labor force, the higher the “risk premium” and the higher the interest rate charged by creditors. In this way, from the viewpoint of the capitalist class as a whole, loanable funds are allocated efficiently, by providing the most support to those who appear most capable of controlling their workers.
In all these cases, where commodities are transferred from seller to buyer first and payment is only made later, credit allows the exchange to occur where it otherwise might not. But there is a sharp separation and opposition between the exchange of goods and the exchange of money, between the creditor and the debtor. In each case, because the debtor may fail to secure the necessary means of payment, that is, fail to sell C’ at high enough prices to be able to repay loans, the possibility of crisis persists. When such a breakdown in sales occurs, Marx calls it a commercial crisis. When the major aspect is the collapse of a set of monetary (credit) relations, he speaks of a monetary crisis. These two often go together, but are differentiated from industrial crisis, in which the breakdown occurs in the sphere of production. I discuss the interrelation of these crises below when I examine Marx’s analysis of how crisis can circulate from one aspect of accumulation to another.
5.4 Summarizing
Early in this chapter on the possibilities of crisis, I emphasized how the possibilities that interest me the most are the direct and indirect results of workers’ struggles, of how they can impose an interruption at any of the many points in the circuits of capital, whether in M – LP, M – MP, LP – M – C(MS), … P … C’, C(MS)’ or C(MP)’ – M’. Here’s a brief summary of the possibilities of crisis in each of these moments caused by workers’ struggles.
Workers’ struggles can, in the past, in the present and we can anticipate in the future, reduce the availability of M – without which there is no
investment at all. Those in the past may have reduced the available surplus value below what is necessary for investment. All of them, past, present and anticipated, can undermine the willingness of creditors to loan money for investment and raise interest rates to unacceptable levels, given that interest must be paid out of surplus value. Both borrowers and lenders will estimate the consequences of any rise in interest rates resulting from the risks they anticipate.246 Workers may cause a crisis in the labor market, M – LP/LP – M, by refusing to enter it or by withdrawing from it. Without LP no production can take place, no matter how much MP may be on hand. Factories that can’t attract workers stand empty. During strikes, the inevitable cry of capitalists is “Our machinery lies idle! Our raw materials are rotting (or rusting) in warehouses!” If workers have won higher wages, raising v, either through the initial deal or in added expenditures necessary to make LP function, with a given total added value of v + s, surplus value will be reduced.247 Any rise in v means a fall in the rate of exploitation, s/v, and a fall in the rate of profit, s/(c + v). If the fall is great enough, it’s a crisis for the investor.
Because the value expended on the means of production, M – MP, the investment in constant capital (c), is counted in the value of the final product, workers’ struggles that force an increased expenditure on c, lower the rate of profit, s/(v + c), (ceteris paribus). If workers’ struggles in the production or transport of MP raise its costs or render it unavailable, profit will be reduced or eliminated.
While capitalists generally seek a low v, by holding down M in M – LP – C(MS), because it means a higher rate of profit s/(c + v), workers resist the resultant low level of C(MS) available to them. Because of the low wages of his time, Marx emphasized how reduced v often undermined the reproduction of labor-power by decreasing the size of the labor force through starvation or reducing the productivity of labor due to illness, but he and Engels also pointed out how workers revolted against such reductions in their well-being, rising up violently, directly appropriating
commodities or fleeing when that seems fruitless. All of which can cause a crisis in simple reproduction.248 At the point of production, … P … C’, all forms of worker struggle can interrupt the circuit by effecting the value components c, v, and s. Inefficient production (including sabotage) can greatly increase the cost of c through waste, etc., reducing the rate of profit. Absenteeism, loafing, and so on, can increase the costs of labor (v) by increasing the costs of labor turnover, supervision, etc. All reductions of work time or intensity can cut into surplus value, as can reductions of productivity by raising costs per unit, and even globally raising v. All lengthening of production time can raise finance costs of borrowing, etc., increase interest payments and reduce industrial net profit, and thus the rate of profit. When successful, strikes over wages, salaries or benefits have similar effects by raising v directly, thus cutting s, either immediately, or through a rise of v during the next contract of M – LP.
Any worker unwillingness or refusal to spend money on consumer goods reduces C(MS)’ – M’, whether the cause be attachment to subsistence farming, reduced income, uncertainty, solidarity with the workers producing them, a conscious minimization of dependence on store-bought goods or a revulsion against the endless advertising of supposedly desirable but actually completely dispensable “goods”, reduces C(MS)’ and thus M’. All direct appropriation by workers ruptures C’ — M’, whether of C(MS)’ or of C(MP)’, undermines the sale of the final product, reduces total value, c + v + s, and thus surplus value, s, the rate of surplus value, s/v, and the rate of profit, s/(c + v). This will be true, whether the appropriation takes place at the point of production, during transportation or at retail outlets. Capitalist willingness to purchase C(MP)’, as with every other aspect of investment, may be undermined by worker struggles, either in-house or during the production or transportation of MP, that raises their price enough to undermine prospective profitability.
Not only do workers’ struggles increase the possibilities of crisis along the circuit but they also undermine the availability of credit and loans by risk-conscious creditors to capitalists they see threatened by disruption. This is true for both industrial capitalists and merchant capital
when their managers are forced to turn to financial intermediaries for the wherewithal necessary to keep their businesses running.249 As the cost of credit rises, net industrial and commercial profit falls and with them future investment and future profit.
We now turn to an analysis of the forces that predispose all of these theoretical possibilities to become actualized causing actual crises for capitalists and their system.
Grundrisse, p. 147, or MECW, Vol. 28, pp. 84–85.
Ibid., p. 148, or MECW, Vol. 28, pp. 85–86.
Ibid., p. 198, or MECW, Vol. 28, p. 133.
MECW, Vol. 29, p. 332.
IBID., p. 374.
Ibid., p. 378.
MECW, Vol. 32, p. 138.
Ibid., p. 140.
Capital, Vol. 1, p. 209, or MECW, Vol. 35, p. 124.
Capital, Vol. 1, p. 235, or MECW, Vol. 35, p. 148.
Ibid., p. 236, or MECW, Vol. 35, pp. 148–149. Although focused, at this point in the text, on commercial crises, which can predate capitalism, he throws in “industrial crises,” which for him are only characteristic of capitalism. He’s getting a little ahead of the logical order of his exposition.
MECW, Vol. 32, p. 139.
Capital, Vol. 1, p. 201, or MECW, Vol. 35, p. 116. This is the death knell of what economists and business later called the “life cycle” of a commodity. See, Anne Sraders, “What is the Product Life Cycle? Stages and Examples,” The Street, March 4, 2019.
MECW, Vol. 29, p. 328.
Marx is writing about holding money in the form of cash, “larger or smaller amounts in reserve funds of coin,” or “suspended coin.” If unspent money is placed in interest earning assets, he assumes that that money will be loaned out and spent by someone else. “M – C, the second member of the circuit C – M – C, splits up into a series of purchases, which are not effected all at once but successively over a period of time, so that one part of M circulates as coin, while the other part remains at rest as money” or “hoard.” MECW, Vol. 29, pp. 360–1. And in the case of credit money: “Money has to be gradually accumulated so as to be available at definite dates in the future when payments become due.” Ibid., 379. With the development of world trade, the possibility of trade deficits, in which exports (which bring in money) are less than imports (for which money must be paid), requires the holding of money in the form of some accepted world money, e.g., the pound sterling or US dollar, or in the form of bullion or in the form of other reserves of foreign exchange.
In Keynes’ analysis of the “demand for [cash] money,” he calls such holdings “transactions demand,” or the holding of money for near-term spending. He also identifies a precautionary demand (holding against risk) and a speculative demand (holding against improvements in future rates of return on available financial assets). These motives hold for both businesses and individuals – at least for those with enough income to be able to hold on to some of it, a rarity among workers in the nineteenth century. See, John Maynard Keynes, The General Theory of Employment, Interest and Money (New York: Harbinger, 1965), Chapter 15 “The Psychological and Business Incentives to Liquidity.”
The case of “futures” markets, where payment may be made before production to guarantee availability, merely reverses the temporal separation.
This life cycle parallels that of both machines and employees, both of which eventually wear out and are discarded by capitalists. In Eastern Europe, after the “fall of the wall” and the opening of ex-Soviet economies to Western competition, much manufacturing machinery was left to rust in largely abandoned, uncompetitive factories. I visited one such factory in Poland, one that had built engines for big ships. Two-thirds of the place, including the machinery, stood unused and unlikely to be used in the future. Almost visible in their absence were the ghosts of all those workers hitherto employed on those machines, workers now discarded and gone from that factory. In recent years, the persistence of such attitudes helps account for employer prejudice against older workers and the latter’s charges of “agism” when 1) they are fired upon reaching a certain age and 2) when their job applications are perceived to be rejected because of their age.
Shipwreck and the loss of C’, and thus M’, plays a central role in Shakespeare’s play The Merchant of Venice (1590s). In Act Three, Scene One, one of Antonio’s ships “of rich lading” is reported wrecked on the Goodwin Sands off the coast of England. Strikes by Thames lightermen in London, workers “employed in the transit of goods between wharfs and ships in the river,” caught Marx’s attention during the summer of 1853. So too did “the most important incident in this history of strikes” the declaration of the ‘Seamen’s United Friendly Association’ of the ‘Anglo-Saxon Sailor’s Bill of Rights’ against the repeal in the Navigation Acts of the requirement that at least three quarters of the seamen hired by British shippers be British. In other words, protest against the use of cheap foreign labor on British ships. See, “Rise in the Price of Corn – Cholera – Strikes – Sailors’ Movement,” August 30, 1853, MECW, Vol. 12, pp. 287–289.
Capital, Vol. 2, Part I, Chapter 1, Section 1, or MECW, Vol. 36, Book II, Part I, Chapter I, Section I.
Capital, Vol. 2, p. 117, or MECW, Vol. 36, p. 39.
Unless, of course, the capitalist can get away with not paying them. In the nineteenth century that often happened during downturns when workers were laid off and factories closed. Today, unfortunately, within the multinational network of ever-changing patterns of capitalist investment, it still happens that plants are closed without workers being paid their most recent wages – often in response to workers organizing to form unions, but also because of the unprofitability of a particular operation due to all sorts of problems in the circuit of capital. See, Kate Bronfenbrenner, Final Report: The Effects of Plant Closing or Threat of Plant Closing on the Right of Workers to Organize, International Publications, 1, Cornell University, 1996. http://digitalcommons.ilr.cornell.edu/intl/1 Where workers are organized and have achieved laws covering this bit of capitalist cheating, they take legal action to obtain their unpaid wages. See, https://www.workplacefairness.org/
Borrowing here should be understood broadly, not only loans from individuals or banks, but also new stock and bond offerings and loans from governments. Government financing of industrial production has sometimes taken the form of state-owned enterprises, which operate like private enterprise – seeking to maximize profits – but subject to government regulation and manipulation, e.g., having their profits drawn off through taxes to finance other state expenditures. Although rare in the US, the Tennessee Valley Authority (TVA) that produces and sells electricity is one well-known example, state enterprises have been much more common elsewhere. The most obvious cases were in Soviet-style “socialist,” or more properly “state-capitalist” countries. But they have also been created in Western Europe, e.g. Renault, the automobile company nationalized by the French government in 1945 and owned by it until privatized in 1996, in the Middle East where the governments of most OPEC countries own and manage their oil production and marketing, and elsewhere. Many such enterprises were created in ex-colonial countries where managerial talent was thought to be concentrated in the state. (Many have been privatized under neoliberal policies adopted by governments since the 1980s.) Governments have also provided outright subsidies to private industry that do not need to be repaid, either direct monetary payments or through the financing (via taxation) of infrastructure (roads, ports, dams, etc.) that reduce costs to industry and by so doing raise profits. Although relatively uncommon in the mid-nineteenth century, the more active intervention of governments in fostering investment in the twentieth century has led to the creation of all sorts of governmental agencies charged with promulgating either a particular industry or regional development. (The TVA was designed to provide such regional support as well as to produce electricity.)
See, Capital, Vol. 1, Chapter 31, or MECW, Vol. 35, Chapter XXXI.
Since workers have become aware of how capitalist industries have poisoned both their workplaces and the communities in which they live, and since they have forced up wages and reduced working time to the point where they look beyond mere survival, they have also demanded expenditures on equipment to stem environmental pollution. Consistent with its past behavior, business has systematically resisted all such expenditures, complaining of reduced profits and demanding government subsidies – at taxpayer/worker expense.
Years after Marx, Keynes formalized this relationship in his analysis of the effects of prospective rates of return on investment. Any decline in expected rates of return would reduce the “marginal efficiency of capital,” with the effect of reducing investment at each rate of interest; conversely, any rise in expected rates of return would likely increase investment. See, The General Theory, Chapter 11.
In extreme situations, however, we see both, designed to complement each other. Such was the US reaction to the upsurge in workers struggles during and after WWII in Europe where communists and their political parties played a major role in resistance to fascism. That gave them credibility and electoral strength in the post-war period. So, the Marshall Plan subsidized reinvestment in Europe, supporting capitalists, while more covert methods were used to counter communist party efforts to strengthen their influence in unions and to gain political power in France and Italy. Such complementary methods became frequent during various post-war counterinsurgency campaigns in Southeast Asia and elsewhere in the Global South where “civic action,” including investment, was designed to complement the military repression of insurgents. It continues to this day in places such as Chiapas, Mexico where government military and paramilitary methods of repressing indigenous autonomy have been complemented by various “mega [investment] projects” such as government subsidized rail lines and tourist development.
Marx, K., “The Vienna Note – The US and Europe – Letters from Shumla – Peel’s Bank Act,” (Sept. 9, 1953) MECW, Vol. 12, pp. 292–300. Marx to Engels, 3 Feb. 1851, MECW, Vol. 38, pp. 273–278,
See “The Causes of the Monetary Crisis in Europe,” (circa October 14, 1856) MECW, Vol. 15, pp. 117–122, “The Monetary Crisis in Europe -- From the History of Money Circulation,” (circa October 17, 1856) MECW, Vol. 15, pp. 123–129, and “The Economic Crisis in France,” (circa November 7, 1856) MECW, Vol. 15, pp. 130–135. Today, “hot money” investors in liquid financial assets are known to flee open capital markets in response to perceptions of increased risk. One of many modern examples was the 1994 currency crisis in Mexico when increasing political instability in the wake of the Zapatista uprising in January of that year let to flight from the peso and its dramatic devaluation. (More on this in Chapter 5, footnote 5.) Not only did that flight reduce the available funds for investment, but the subsequent imposition of high interest rates to stem the outflow undermined availability even more, bringing on a broader crisis – and more political turmoil.
MECW, Vol. 15, p. 122.
“The Economic Crisis in France,” MECW, Vol. 15, pp. 134–5.
Over time Marxist studies of relationships between banks and non-financial industry have evolved considerably. I have already mentioned Hilferding’s Finance Capital and Sweezy’ counter argument. In more recent years, the spread of financialization has renewed interest in the relative power of financial institutions versus industrial, agricultural or service industries – including the intellectual followers of Sweezy who make up the “Monthly Review” school of neo-Marxism. See, “Decoding Financialization” in Cleaver, Rupturing the Dialectic, for a sketch of this evolution. In the case of modern, supranational lenders to governments, e.g., the World Bank or International Monetary Fund, conditions for their loans and for signing off on the roll-over of private international debt, have included devaluations of local currencies, reductions in subsidies for basic consumption, privatization of state enterprises, etc. See Cleaver, “Close the IMF, Abolish Debt and End Development,” op. cit.
MECW, Vol. 29, p. 319. The British pound sterling coin was divided into 20 shillings (smaller coins) – a monetary unit which was abandoned in 1991 in the UK but continues to be used in several countries in East Africa.
See, George Caffentzis, Clipped Coins, Abused Words and Civil Government: John Locke’s Philosophy of Money (New York: Autonomedia, 1989).
The likelihood of money being diverted into speculation depends on a host of factors, although in recent decades the primary one has been financial deregulation which has made it easier to divert all sorts of money into speculation, most notably in housing and in financial assets.
Thus, contemporary microeconomists’ general assumption of upward sloping supply curves of labor derived from personal preferences about mixes of income (and what it buys) and work (a loss of leisure). Not being completely oblivious to the implications of recognizing leisure as desirable and work as undesirable, economists sometimes remember that if wages rise high enough the supply curve of labor curves back to the left reflecting the choice (when available) to work less to take advantage of the opportunities provided by higher income! In typical introductory microeconomic textbooks, however, such “backward bending” labor supply curves are ignored, despite the way they provide one explanation for why capitalists try to keep wages below the point at which less work will be desired and chosen (when possible) to maintain adequate supplies of labor. The backward bend (becoming downward sloped) was first recognized by economists studying colonial labor markets where the colonized did NOT want to work for their colonizers and did so only to pay required taxes in colonial monies that could only be earned by working for the invading foreign capitalists. THEIR labor supply curves were thus downward sloped from the get-go. The lower the wages the more they had to work to pay taxes.
The capture and trade in slaves in the nineteenth century was by no means limited to the Atlantic. Non-Muslim Europeans captured by pirates were enslaved, sold and bought along the North African “Barbary Coast.” The slave trade was also rampant within Africa and in many parts of Asia.
Escaped slaves formed Maroon colonies throughout the Americas, from those in the swamps of Florida to the forests and plains of South America. These colonies often interacted with and sometimes merged with indigenous communities. Underground railroads, on the other hand, usually led to the relative freedom of waged labor markets. See, Richard Price, Maroon Societies: Rebel Slave Communities in the Americas, 3rd edn. (Baltimore, MD: Johns Hopkins University Press, 1996), Robert Schwaller, African Maroons in the Sixteenth Century Panama: A History in Documents (Norman: University of Oklahoma Press, 2021) and Maroon Comix: Origins and Destinies (Oakland: PM Press, 2018). On the underground railroad, see, Eric Foner, Gateway to Freedom: The Hidden History of the Underground Railroad (New York: W.W. Norton & Company, 2015) and the film Harriet (2019) about the struggles of escaped slave and abolitionist Harriet Tubman (1822–1913). In today’s world, “underground railroads” consist mostly of organizations that help escaping slaves by providing temporary refuge and then legal support.
Capital, Vol. 2, p. 113, or MECW, Vol. 36, p. 35.
Ibid., p. 115, or MECW, Vol. 36, p. 37.
In the case of chattel slavery, capitalists buy humans for their LP, extracted by force or manipulation. In the case of human trafficking, some capitalists pretend to hire workers but then force them to work as slaves, e.g., in the case of immigrants, withholding passports, whether in homes and brothels, agricultural fields, sweat shops, fishing boats or prisons. I take up the problems of capitalists trying to sell LP in the form of slaves in Section 5.1.
The same, of course, was true when millions of them emigrated to the United States.
The same was true in those cases where slave owners put their slaves out to work in waged jobs. Not only were they paid less but most of their pay went to their owners. On waged slaves in pre-Civil War southern industrialization, see: Robert Starobin, Industrial Slavery in the Old South (Oxford: Oxford University Press, 1970) and Klas Rönnbäck, “Were slaves cheap laborers? A Comparative study of labor costs in the antebellum U.S. South”, Labor History 62 (2021): 721–741.
For a vivid contemporary example, see Charlie LeDuff, “At a Slaughterhouse, Some Things Never Die: Who Kills, Who Cuts, Who Bosses Can Depend on Race”, The New York Times, (June 16, 2000): A1-A24.
The word “goon” comes from South Asia and the Hindu word guṇḍā or goonda – defined in both the vernacular and law (Goonda Acts) as a hired criminal, or a hired hand who engages in criminal behavior. They can be found in the hire of large landlords, merchants and industrial capitalists and the term with its derogatory connotations has been widely applied by workers to company thugs.
Today, in the United States, the “pink slip,” the surprise order to leave everything behind except personal items, followed by the escort to the front door (or gate) have been so common as to constitute despised ceremonies of termination. In some European countries, better organized workers have won protection from such arbitrary termination with employers obligated to notify their workers ahead of time and, in a few cases, provide assistance in finding new jobs.
The poets and writers of the Beat Generation in the 1950s inspired many to follow Jack Kerouac On the Road (1957) but only as a temporary escape from the labor market. I became personally familiar with many such students in the early 1960s because while an undergraduate studying in France, I spent some time sleeping under the bridges of Paris, eating at soup kitchens, and hanging out with other students taking time away from both studies and the job market. A decade later, the 1960s saw an explosion of youthful resistance to the job market by a generation of “hippies” and “radicals”, critical of capital’s subordination of life to work with the accumulation of stuff as the only consolation.
The decision by some middleclass students to avoid entering the labor market by spending some time on the streets or traveling has been common enough but hardly a cause of crisis. In the 1960s, in the context of the Civil Rights Movement at home and of the Vietnam war, we saw the emergence of radical militants among both students and non-students. These included anti-war groups such as Students for a Democratic Society and militant groups such as the Black Panthers and the Brown Berets. In all these cases, participation in the labor force was minimal and designed to support struggles outside it.
Edward Thompson, Whigs and Hunters: the Origin of the Black Act (, 1975), Peter Linebaugh, The London Hanged, Chapter Six: ‘Going upon the Accompt: Highway Robbery under the Reigns of the Georges.”
Capital, Vol. 1, p. 899, or MECW, Vol. 35, p. 726.
John Garraty, Unemployment in History (New York: Harper Colophon, 1978) 25. Eric Hobsbawm, Primitive Rebels: Studies in Archaic Forms of Social Movements in the 19th and 20th Century (New York: W. W. Norton, 1959) Chapter II.
Films based on adaptations of the original novel were made in 1920 (silent), 1930 (musical), 1938 (historical), and 1956 (1930 remake), this recurrence a testimony to the appeal of the story.
“MECW, Vol. 6, p. 494. Marx and Engels’ dismissal differed radically from the view of contemporary anarchists, such as Max Stirner or Mikhail Bakunin whose embrace of lumpen rebellion earned him Engels’ nickname “the lumpen prince.”
MECW, Vol. 11, pp. 148–149, 155.
In the post-WWII period, some Marxists turned their backs on what they took to be a sold-out, consumerist, industrial proletariat, modern versions of what Engels had called the “labor aristocracy” of better paid, unionized workers. They turned their attention at home to re-evaluating the revolutionary potential of the lumpen and abroad to struggles on what they often called the Third World “periphery” of global capitalism. The result was both a failure to thoroughly analyze the hierarchy within the former countries – as Marx had done in Capital – and a tendency to glorify workers struggles in the latter – a tendency sometimes called “Third Worldism.” Among those fascinated with the former were Herbert Marcuse and among those who revived the concept in Global South was Franz Fanon. The formation of groups such as the Black Panthers and the Young Lords whose militance included organizing in their communities gave some credence to such preoccupations in the US. The widespread rebellions in Asia, Latin America and Africa, against which the US and European powers mustered counterinsurgency wars, gave hope and prompted solidarity among those dismissing the “labor aristocracy” of the North.
Eventually, barter trade with European colonizers would create enough of a demand for industrialized goods to induce some indigenous to enter the labor market to obtain money to buy them. See Section 3.4.1 below.
The degree of unavailability has varied according to circumstances. Under normal growing conditions, sufficient subsistence renders recourse to the labor market for income unnecessary. Although, in peasant communities, some may temporarily hire out to neighbors during harvests. Drought, flood, and famine, however, often drive reluctant but desperate peasants to seek employment and wages.
Capital, Vol. 2, p. 117, or MECW, Vol. 36, p. 40. This failure to totally separate workers from the means of subsistence persists in the recourse of even regularly employed waged or salaried workers to gardening or some subsistence farming. This is common in the Global South where even those driven from their rural lands make use of any unbuilt ground in cities to grow food, e.g., the common milpa or corn patch in Mexico. The practice has been spreading in cities in the Global North, often in immigrant communities and with the blessings of ecologists. See, Chris Carlsson, Nowtopia: How Pirate Programmers, Outlaw Bicyclists, and Vacant-Lot Gardeners are Inventing the Future Today! (Oakland: AK Press, 2008) and Gabriel Valle, “Food Values: Urban Kitchen Gardens and Working-Class Subjectivity,” in Mexican-Origin Foods, Foodways and Social Movements: Decolonial Perspectives, Devon Peña et al., eds., (Fayetteville: University of Arkansas Press, 2017), 41–61.
Where collectivization has been imposed, as in the USSR, to maximize grain production for export to finance rapid industrialization, the intentional allocation of small subsistence plots of ground to workers on collective and state farms proved a serious mistake. With production on state-organized farms of no use to them, workers tended to plow much of their effort into their private plots. This not only provided subsistence but often produced a surplus which was traded in the countryside or sold in cities. The higher productivity of labor on these private plots was well-known and was the direct result of the withdrawal of efficiency from state exploitation and its application to self-valorization.
Grundrisse, p. 326, or MECW, Vol 28, p. 251.
Teodor Shanin argues that first generation rural-urban migrants in Russia were responsible for setting up the soviets during the Russian revolution. They were, he argues, replicating in their factories and cities organizations akin to the communes they had known in the countryside.
Over time, emigrants’ children constitute a “second generation” with no memories of the land and with an entirely different set of desires and, often, with much less willingness to put up with low wages and lousy jobs. Such children, of whatever age, have often spearheaded uprisings in immigrant communities. See, Yann Moulier-Boutang, La Révolte des Banlieues ou Les Habits Nus de la République (Paris: Éditions Amsterdam, 2005).
C. Vann Woodward, Origins of the New South, 1817–1913 (Baton Rouge: Louisiana State University Press, 1951). The “Freedmen’s Towns” were not the hidden maroon colonies founded by escaped slaves, but simply communities of African-Americans with similar background. Often originally on the edge of cities, which have eventually expanded around them, many of those living in such Black communities sought, to the degree that persistent racism allowed, integration into the waged labor force. Over time, such communities have often been at least partially destroyed by the land being usurped through “eminent domain” for such “public improvements” as highways or eroded through gentrification.
Because these disruptive displacements have been recurrent and on a mass scale, not surprisingly, both families and communities have often tried to reconstitute themselves in new lands, whether in cities or countryside. Individuals would move, then bring other family members. In many cases, friends and neighbors would move together trying to hold together remnants of their community of origin. Thus, the establishment by immigrants of a “Little Italy” in New York City, a “Chinatown” in San Francisco, a Greektown in Chicago, a Turkish neighborhood in Berlin or an Algerian banlieue in Paris. As I mentioned in Chapter 2, Marx and his family tended to find lodging in just such communities of exiles and immigrants as they moved or were driven from one country to the next.
See, Ernest Fischer, Marxists and Utopias in Texas (Burnet, TX: Eakin Press, 1980).
On all kinds of flight, by all kinds of workers, see Marcus Rediker, Titas Chakraborty and Matthias Van Rossum, A Global History of Runaways: Workers, Mobility, and Capitalism, 1600–1850 (Oakland: University of California Press, 2019).
I first saw this in action in a Paris post office chatting with a North African worker, while waiting in line. I asked him about his job and it turned out he was considering getting a new one. He proceeded to list a whole series of alternatives across Europe, complete with wage scales, benefits, and the degree of unionization. I was impressed!
On capitalist responses to such flight see Chapter 6 below. Since the spread of schooling in the twentieth century, such flight undertaken by more educated workers has been labeled a “brain drain” from the countries of origin – an obvious ideological slur on the so-called “uneducated.”
Such flight has been portrayed in many films about the American West. Examples: Jan Troell’s The Emigrants (1971) and The New Land (1972) about Swedish immigrants who settle in the forests of Minnesota in the mid-nineteenth century and Ron Howard’s Far and Away (1992) about immigrants fleeing burning crofts in Ireland and seeking free land in Oklahoma during the Land Run of 1893. In both areas “free” land was being taken from Native Americans, in the first case from the Očhéthi Šakówiŋ or Dekota Sioux and in the second from the repeatedly-betrayed Tsalagi or Cherokee (ᏣᎳᎩ), a people already dispossessed in Georgia, Tennessee, Alabama and North Carolina and forced into the 1838 Trail of Tears trek to Oklahoma.
Although such flight to land for farming has largely disappeared, along with the dwindling of available land (e.g., the “closure” of the North American frontier), difficulties for small farmers, such as foreclosure and enclosure, have continued and the increasing urbanization of society generates ever fewer interested in moving to rural areas. There are still examples of such flight, such as that which has devastated the Amazon cutting down and burning its ecologically complex jungles for conversion to farmland. Unsuited for crop cultivation, most such land has wound up as ecologically impoverished grasslands used for grazing cattle – much of whose meat is exported to wealthy consumers in the Global North. Although some countries, such as Canada and Australia continued to offer free land to settlers well into the twentieth century, fewer and fewer have taken advantage of the offer. Today, some small towns offer small plots of free land for house building in the hopes of bolstering their population, but takers are quite different from workers seeking the independence of farmland.
Indenture was a legal contract binding a person to work for another for some period of time, during which the person holding the contract tried to extract as much labor as possible. This kind of arrangement has since been banned as a form of slavery.
See, Eric Williams, Capitalism and Slavery (Richmond, VA: University of North Carolina Press, 1944). There was a similar problem with Native American slaves who could escape and return to their communities. See, Linford Fisher, “’Why shall wee have peace to bee made slaves’: Indian Surrenderers during and after King Philip’s War” Ethnohistory 64, no. 1 (January 2017): 91–114.
See, the classic epic poem El Gaucho Martin Fierro by José Hernández (1872).
Like some surplus agricultural products sold by subsistence peasants, the hides gauchos stripped from free cattle and sold did enter an international market for hides, the raw material for the production of shoes, boots, saddlery, and machinery drive belts. Both the agricultural products and hides did embody their labor and as with many farmers, odds have it that they were exploited by unequal trade, but the hunting and stripping was a very minor part of their lives, unlike those whose lives were clearly subordinated to working for capital in either wage labor or production purely for commerce. See, “Some Notes on Argentine Gauchos in the nineteenth century on the Question of ‘Class’” from a letter to George Rawick (1987) in Common Sense 10 (May 1991): 58–61. Besides the gauchos in Argentina and Paraguay, there were vaqueiros and gaúchos in Southern Brazil, llaneros in west-central Venezuela and eastern Colombia, huassos in Chile and vaqueros in Mexico, whether independent or as working as hired hands for ranchers.
For analysis of the difficulties for capitalists in turning gauchos into waged workers see, Ricardo Salvatore, “Class Struggle and International Trade: Rio de la Plata’s Commerce and the Atlantic Proletariat, 1790–1850” (PhD Diss., University of Texas at Austin, 1987). For some comparison between cowboys, gauchos and similar “equestrian cultures,” see Richard Slatta, Cowboys of the Americas: The Realities of Life as a Cowboy (London: Lume Books, 2019).
Some Native Americans claim that some of these wild horses were indigenous and not descendants of Spanish breeds and have devoted themselves to preserving them and are trying to prove it through genetic testing.
Part of the subsidies received by the railroads was land, so much land as to contribute substantially to the enclosure of the frontier. See the maps showing the extent of the grants in the Library of Congress, e.g., that to the Union Pacific Railroad in Nebraska.
This continues to be true throughout the capitalist world, in both the Global North and Global South. Despite sporadic enclosure that has depleted the numbers of family farms and peasant holdings, resistance has continued, e.g., in the US, there was the Farmers’ Alliance and the Populist Party of the nineteenth century, which included millions of farmers and more recently the National Farm Family Coalition. In the Global South, Via Campesina, is made up of farmers’ movements around the world.
Sometimes these have been individual choices, sometimes communal. Examples of the former were discovered by Karen Palazini in a Brazilian favela where she found women who chose to prepare and sell food out of their houses where they could stay in their community and with their children rather than take jobs on the other side of São Paulo, travel to which would cost part of their paycheck and require hours of time. See, “Women’s Work in Lauro de Freitas, Bahia, Brazil: Marginalization or Autonomous Development” (PhD Diss., University of Texas at Austin, 1997). Another example, both within and across borders, was Italy where young, mostly male workers from the South went North to work in factories as capitalists rebuilt after WWII but sent part of their paychecks back down south to support their families and communities. Later, like other North European countries, Italian capitalists welcomed an influx of workers, again mostly male, from North Africa, as their demand for labor-power continued to grow and as women’s struggles reduced the domestic birth rate and slowed the growth of the indigenous labor force. See, Mariarosa Dalla Costa, “Reproduction and Immigration,” originally written and published in A. Serafini, et al., L’Operaio multinazionale in Europa (Milan: Feltrinelli, 1974) 207–242. Translated, in part, for Zerowork 3. A modern example of communal choices – that nevertheless accommodates individual ones – has been documented by Néstor Rodríguez who has identified over fifteen distinct, stable communities of Mexicans in Houston, Texas that are extensions of communities back in Mexico. Those who come north change over time but wages of those who do support both portions of what Rodríguez calls “transnational” communities. See, his “The Battle for the Border: Notes on Autonomous Migration, Transnational Communities, and the State” Social Justice 23, no.3 (Fall 1996): 21–37. This is quite distinct from emigrants sending money home to pay for family members to follow them, as was the case of the Irish in the wake of the great famine, as Marx reports in Capital, Vol. 1, p. 862, or MECW, Vol 35, p. 695.
It seems to be a universal trait of many racist xenophobes to believe that every immigrant worker wants to bring all of his or her family and friends to live in (and threaten the cultural integrity of) their superior country. Whether they believe it or not, they wield it to foment anti-immigrant sentiment, which helps keep immigrant workers terrorized and locals less likely to accept them into a common struggle against capitalist bosses. This belief or pretense is belied by the existence of these transnational communities and the frequent permanent return of successful immigrant workers to their points of origin.
In microeconomic terms, all these cause a leftward shift in the supply curve of labor.
See, David Ross, Ireland: History of a Nation (New Lanark: Geddes & Grosset, 2002).
See, the introduction to Eric Vanhaute, Richard Paping and Cormac Ó Gráda, eds., When the potato failed. Causes and effects of the “last” European subsistence crisis, 1845–1850 (Turnhout: Brepols Publishers, 2007) 1–31.
K. Marx, “Class Struggles in France” MECW, Vol. 10, p. 52.
This was true not only in British South Asia but throughout the world of European colonialism. After WWII, as the US and the USSR vied for influence in the ex-colonial Third World, rivalry and self-interest produced a certain amount of “foreign aid” to devastated areas, e.g., the provision of famine relief aid from US food surpluses conditioned on repayment with policy changes beneficial to US corporations. An example was the demand by US diplomats for India to open its fertilizer industry to US corporate investment in exchange for food aid in coping with the drought and famine of 1965–67. See, H. Cleaver, “Food, Famine, and International Crisis,” Zerowork 2 (Fall 1977): 7–69.
Such was the lament of United Fruit Company executives about the costs involved in maintaining an adequate labor force to work their banana plantations in Central America. See, the report of United Fruit’s medical director, Edward Salisbury, “Costs and Returns of Industrial Health Services,” in Industry and Tropical Health 1 (1950): 172–173. Victor Heiser, in his An American Doctor’s Odyssey (New York: Norton, 1936) describes many such situations where disease and illness proved costly to US companies abroad.
Thomas Mann in his novel Death in Venice (1912), based on extensive research into the history of a cholera epidemic, describes just such flight from the disease-ravaged city by those able to do so, e.g., tourists and locals with enough money. It is the failure of the main character in the novel to join in that flight that results in his death from the disease. This differential continues today. Flight to distant cities, or retreat to country homes are only available to the wealthy. Access to good medical care, especially in countries without universal health care, such as the United States, is also reserved for those able to meet its high cost. The rich can also afford guardians for children kept home from school during epidemics; poorly paid workers cannot. We have seen this play out amidst the Covid-19 epidemic. In the wake of Covid-19, an analysis of cellphone data showed that 40 percent of the people in the richest neighborhoods in New York City fled the city! See, Kevin Quealy, “The Richest Neighborhoods Emptied Out Most as Coronavirus Hit New York City,” New York Times, May 15, 2020, “Hundreds of thousands of New York City residents, in particular those from the city’s wealthiest neighborhoods, left …”
See, Marx’s analysis in Capital, Vol. 1, Chapter 25, Section 5, Subsections (b) and (c), and Engels’ analysis in his later essay “The Housing Question,” MECW, Vol. 23, pp. 317–391.
In recent times, such differential impacts have been experienced from the slums of cyclone-battered Philippines or Bangladesh to the 9th Ward in New Orleans, devastated by the Hurricane Katrina (2005). Despite the promises of President George W. Bush, most working-class housing there has never been rebuilt. The same pattern was repeated with Hurricane Maria (2017) that wrecked Puerto Rico. President Donald Trump infamously tossed paper towels to the victims but denied the extent of death attributable to the hurricane and refused to provide adequate aid to rebuild. While urban fires may be more likely to destroy city slums, forest fires in California and grass fires in Hawaii have demonstrated how this is not always the case. Workers’ homes built far from city centers and ever deeper into surrounding woodlands have been burned in California. So have homes in Maui in 2018 and the entire town of Lahaina in the summer of 2023 as wildfires swept through the dry grass and abandoned sugar cane of now closed plantations. See, Cost of Government Commission, Report on Wildfire Prevention and Cost of Recovery on Maui, July 2021.
Unfortunately, despite the discovery by modern medicine of the nature of these diseases and of effective methods of treatment, new or mutated bacteria and viruses, often spread by thoughtless capitalist practices, have caused repeated pandemics, each requiring new research and new discoveries in order to cope with each outbreak. The cholera pandemic in Latin America (1991–1995) is thought to have begun with a ship from Asia dumping its human wastes or ballast water in the harbor of Lima, Peru. It reached Chiapas, Mexico in 1995 in the midst of the Zapatista struggle for indigenous rights and democracy. At that time, I posted a series of interventions on one solidarity listserv about cholera and the political history of disease.
More recent pandemics have included those of cholera (a whole series, including 1961–75) spread by water contaminated by human feces, of HIV/AIDS that started in the 1980s, spread by humans, and of a whole series of influenza pandemics, e.g., the Spanish Flu (1918–1919), spread by humans, Swine Flu (2009), spread by animals and humans, SARS and MERS, and today, Covid-19. For an overview of the history see the Wikipedia entries for pandemics in general and for particular cases. We are currently seeing this differential impact play out as Covid-19 sweeps across the globe. As schools, businesses, sports arenas and other meeting places have been emptied and people ordered to stay home, “social distancing” and “self-quarantining” to slow the spread of the virus. Clearly those who can best afford to do these things are those higher up the income hierarchy and those least able to do so are those lower down. Those with savings can draw on them; for those dependent on current wages for food, rent or mortgage payments, the loss of a job immediately undermines their ability to pay bills and buy necessities. When schools are closed, children from low-waged households dependent on school breakfasts and lunches can be in serious trouble. When their only access to classes is via computer and they have none, they are left out of school-from-home. All of this played out before our eyes in 2020–21 during the Covid-18 pandemic. See, Lizzie Wade, “An Unequal Blow: In past pandemics people on the margins suffered the most,” Science 368, no. 6492 (May 15, 2020): 700–703, and Liliana Dávalos, et. al., “Pandemics’ historical role in creating inequality,” Science 368, no. 6497 (June 19, 2020): 1322–3.
Another exception to localization, only recently recognized, has been human-accelerated global warming with its ever increasing effects on a wide variety of disasters, including flooding, fires and species extinction. (More on this in Chapter 5 on predispositions).
The global character of the current Covid-19 pandemic has caused such widespread ruptures in supply chains that the business press regularly reports on such ruptures, providing estimates of their severity, their consequences and expected duration. See, the daily email bulletins of the Bloomberg group. For example, “The cost of shipping a 40-foot container from Shanghai to L.A. reached $11,569 in the past week, almost eight times higher than pre-pandemic levels, according to the Drewry World Container Index. One illustration of the strained system is the queue of ships outside the twin ports of L.A. and Long Beach, which jumped to a record 49 vessels as of late yesterday.” (9/10/2021)
An obvious example was how government neglect and capitalist discrimination against victims during the HIV/AIDS pandemic led to massive and ultimately successful mobilization demanding resources for both research and treatment for victims. Our most recent experience of such outrage and uprising exploded in June 2020 in the US. Although triggered by videos of police murdering an unarmed black man, the event came amidst the Covid-19 pandemic in which growing numbers of reports pointed to the differential effect of the disease on those minorities continuing to work in “essential jobs” or suffering from being laid off with inadequate unemployment compensation and having the least health insurance to help cope with the disease. Sadly, efforts by right-wing politicians to utilize the pandemic for their own political ends, has also resulted in the confounding phenomenon of conservatives raging against masks, vaccines, and social distancing – measures designed to protect them!
See, Isser Woloch, “Napoleonic Conscription: State Power and Civil Society” Past & Present 111 (May 1986): 101–129 and Louis Rouanet and Ennio Piano, “Drafting the Great Army: The Political Economy of Conscription in Napoleonic France,” The Journal of Economic History 83, no. 4 (December 2023): 1057-1100.
Capital, Vol. 1, p. 791, or MECW, Vol. 35, p. 632.
In modern times, where youths have been subjected to conscription, the unwaged have also been plucked from schools.
On the use of “coolie” laborers as late as WWI, see, Guoqi Xu, Strangers on the Western Front: Chinese Workers in the Great War (Cambridge, MA: Harvard University Press, 2011).
This problem of labor shortages caused by wars that draw off men became familiar during World Wars I and then II as it became difficult to “man” factories and even farms for plantings and harvest. Special efforts had to be made by capitalists and governments to replace absent male workers – sometimes with prisoners or immigrants, but often with local women. The problem persisted after WWI, and to a lesser degree after WWII, especially in Europe, because of the high death rate in the war. Governments also formulated pro-natalist policies to encourage women to have more children to replace those who had been killed.
For a wide-ranging survey of worker flight from work, which includes multiple examples of workers absconding from armies and navies, see A Global History of Runaways, op. cit.
True then, true ever since. This kind of Malthusian argument has been reformulated and trotted out again and again in opposition to all forms of “social safety net” expenditures, right up to recent opposition to those designed to offset the effects of the Covid pandemic.
Marx, “Economic and Philosophic Manuscripts of 1844”, MECW, Vol. 3, pp. 294–296, Marx and Engels, “The German Ideology,” MECW, Vol. 5, p. 44, 180–181.
Marx and Engels, “Manifesto of the Communist Party”, MECW, Vol. 6, p. 494.
Ibid., p. 502.
Ibid., pp. 501–502.
Capital, Vol. 1, p. 519, fn 40, or MECW, Vol. 35, p. 399.
Friedrich Engels, “The Origin of the Family, Private Property and the State” (1884), MECW, Vol. 26, pp. 129–276.
Ibid., p. 175.
Ibid., p. 181.
Ibid., p. 179.
Ibid., p. 182.
Capital, Vol. I., pp. 519–520 fn. 40, or MECW, Vol. 35, p. 399, fn. 2).
See, Silvia Federici, Patriarchy of the Wage: Notes on Marx, Gender, and Feminism (Oakland: PM Press, 2021) Chapter Three: Gender and Reproduction in Marx’s Capital, pp. 32–50.
Mikko Myrskyla, et. al., “Advances in development reverse fertility declines,” Nature 460, no. 7256 (August 2009): 741–743. Although this source is modern, rising income was decreasing fertility long before.
In the post-WWII decades, women’s gains and the slower growth of the labor force contributed to rising wages, forcing capitalists to have recourse to immigrant labor. See, Dalla Costa’s “Reproduction and Immigration”, op. cit.
Capital, Vol. 1, Section 1, p. 771, or MECW, Vol. 35, p. 616.
Marx points this out in the “Manuscript of 1861–63,” MECW, Vol. 30, pp. 52–53 and in Capital, Vol. 1, pp. 278 and 1066, or MECW, Vol. 35, pp. 184–5. This situation still obtains, even with salaried workers, who are usually paid at the end of a month’s labor. In isolated mining or mill towns, it has also often been the case that the local company extends consumer credit to the workers in the period running up to the day they are paid – at which point they pay back the company with their just received wages. There’s a revealing scene in the film Coal Miner’s Daughter (1980) where Loretta Lynn, still a little girl, is with her father who comes out of the company office with his pay and says “Let’s go give the company its money back” as they head for the company store where they had been buying on credit. Besides low pay and high interest on “store credit,” Marx also writes of a third opportunity for exploitation used by such companies with isolated and dependent labor forces: rent on ill-built and unhealthy housing. See, Capital, Vol. 1, pp. 585–6, 820–2, 837–842, MECW, Vol. 35, pp. 460, 659–660, 673–677. Some years later, in 1872–4, Engels wrote a series of articles addressing such housing issues. See, MECW, Vol. 23, pp. 317–391.
MECW, Vol. 30, pp. 52–53.
Given the refusal of most Native Americans to submit to the labor market, trade was one of the few ways their labor could be annexed. Another, notoriously practiced by early European invaders, was slavery. See, the entire issue of Ethnohistory 64, no. 1 (January 2017) on “New Directions in the History of Native American Slavery Studies.” Assuming far more labor was involved in trapping and preparing pelts for sale than in manufacturing the items for which they were traded, Native Americans and trappers were being exploited through unequal exchange.
This form of annexation of labor-power was akin to that employed by merchants in the “putting-out system” wherein capitalists bought raw materials such as flax, wool or cotton from both capitalist and non-capitalist peasants, then “put the materials out” to spinning and weaving artisans, and then bought the resulting thread, yarn, and cloth from them as MP. Both cases deserve Marx’s characterization of such annexation of labor as a purely formal one in the sense that capitalists had not yet enclosed and taken over either the fur industry or textile manufacturing. When takeovers involved a reshaping of the production process, he called the process a real subordination of people’s labor. The same kind of transition took place in C′ – M′ but I deal with that in my analysis of the third stage of the circuit.
The market for beaver fur eventually rebounded with the demand for new kinds of hats, e.g., cowboy hats, providing some income for remaining trappers. More recently, long after capitalist industrialization came to dominate hide and fur production, strong animal rights campaigns against the use of animal hides and fur and for the substitution of synthetics have begun to reduce the demand for such products in some markets, by both fashion houses and final consumers.
That said, barter, as one form of “countertrade”, has never disappeared from capitalism. In the post-WWII period, the destruction in those parts of Eastern Europe taken over by the USSR resulted in most trade between Soviet state-capitalism and its clients taking the form of barter. Even today dozens of countries and businesses organize their exchanges through barter. See the Wikipedia entries on barter and countertrade.
As previously indicated transportation of MP is also a process of production – a spatial displacement – but because it involves different workers, often managed by different capitalists, it constitutes a different sphere of production. Sometimes the sale of MP takes place before their transportation, sometimes after.
MECW, Vol. 32, p. 125–126.
Manuscript of 1864–65, p. 226, Capital, Vol. 3, p. 213. MECW, Vol. 37, p. 119.
Marx almost always assumes that the minimum acceptable level of profits is the “average,” but clearly this is not always so. Capitalists attempting to penetrate new markets and carve out a share for themselves have often accepted below average profits in the short term. So-called “loss leaders” are commodities sold at below profit prices in order to draw customers into buying other items being sold at profitable prices.
The same distinction holds between the capitalist “theft” of workers’ time and energy by imposing work, and their “direct (re)appropriation” of their time. Capitalists, of course, call the former legitimate work time and the latter “time theft.”
See, Chapter Five: Socking, the Hogshead and Excise, pp. 153–183.
Ibid., Chapters Eight and Eleven.
When working as a landless laborer on a fruit farm in France, I observed and took part in such direct appropriation during harvests. In the case of cherries, “Une pour le boss, une pour la bouche” was an unspoken but common mantra among workers harvesting fruits that could be easily consumed. For other fruits, e.g., peaches, such appropriation for consumption was virtually impossible to conceal and therefore not practiced.
Peasants in Bihar Sharif, Bihar, India, described to me in 1976 at length how, after their legal public protests were violently repressed by the Indira Gandhi regime, in the middle of the night during harvest season they directly appropriated crops from the better irrigated and more heavily fertilized land of the local rich landlord – despite the threat of his armed goondas.
Piracy of MP has by no means disappeared in the twenty-first century, e.g., Somali pirates taking oil tankers in the Gulf of Aiden and holding them for ransom. Both the ransom and increases in insurance raise the price of this energy MP, c, lowering profits s/(c + v). As in earlier periods, their actions provoked both the arming of crew and support from military forces deployed to protect such commercial shipping. The films The Highjacking (2012), by Tobias Lindholm, Stolen Seas (2012), by Thymaya Payne, and Captain Philips (2013), by Paul Greengrass, all portray the conflicts between pirates and commercial capitalists. Two other films show the situation of the poor Somali fisherfolk whose circumstances led to their turn to piracy: The Pirates of Somalia: The Untold Story (2011), by Neil Bell, and Fishing without Nets (2014), by Cutter Hodierne.
See, Marcus Rediker, Villains of All Nations: Atlantic Pirates in the Golden Age (Boston: Beacon Press, 2005).
Modern examples include the criminal activities of the Coal Mafia in the Indian coal belt that buys stolen coal from the poor and resells it to power companies. See, Frank Daniel and Matthias Williams, Special Report: The ‘Coal Mafia” plunders India, Thomson Reuters, (May 14, 2013). “Corruption and crime: How coal mafias fuel India’s power crisis,” Reuters, (December 20, 2014).
Such rustling has been portrayed not only in movies about the American West but also in those about Australia and other places where ranching is big business. Examples in the US include Conagher (1991), Open Range (2003), or others cited in the Wikipedia entry on range wars. In Australia, the operations of modern cattle “duffers” (rustlers) are seen in “Dirty Pool,” Season 1, episode 14, in the TV series McLeod’s Daughters (2001–2009). Another kind of theft has been practiced by oil and gas companies who used horizonal drilling to tap resources under an adjacent property.
Examples abound from the beginnings of industrialization to today. One story, from the nineteenth century is told in Daniel Gross’s article “Industrial Espionage and Cutthroat Competition Fueled the Rise of the Humble Harmonica: How a shrewd salesman revolutionized the instrument industry”, Smithsonian Magazine, September 17, 2014.
Capital, Vol. 1, Chapter 12, or MECW, Vol. 35, Chapter 12.
See, Debin Ma, “The Modern Silk Road: The Global Raw-Silk Market, 1850–1930,” Journal of Economic History 56, no. 2 (June 1996): 335. On how technologies developed in England were diffused to France, see, Alessandro Nuvolari, et. al., “British-French Technology Transfer from the Revolution to Louis Philippe (1791–1844): Evidence from Patent Data” The Journal of Economic History 83, no. 3 (September 2023): 833–873.
John Harris, “The Rolt Memorial Lecture, 1984, Industrial Espionage in the Eighteenth Century,” Industrial Archaeology Review 7, no. 2 (1984–1985): 127. Also, John Harris, Industrial Espionage and Technology Transfer. Britain and France in the Eighteenth Century (London: Routledge, 1998).
John Harris provides abundant examples.
And sometimes these situations have unfurled in close temporal proximity, see the example of the Cotton Famine below.
MECW, Vol. 32, p. 126.
Karl Marx, “The Crisis in Trade and Industry,” (Jan. 8–22, 1855) MECW, Vol. 13, pp. 571–578. On the impact of the telegraph and transoceanic cables on international trade in grain see, A. J. H. Latham and Larry Neal, “The International Market in Rice and Wheat, 1868–1914,” The Economic History Review, New Series, 36, no. 2 (May 1983): 273–274.
Revealing fiction, because based on real historical sources, including the Naval Digest, that tell stories of these blockades can be found in the Aubrey/Maturin novels of Patrick O’Brian. The story line of the 2003 film Master and Commander: The Far Side of the World was extracted from the novels’ stories.
Such government-imposed blockages of imports predated the Corn Laws and have been repeatedly used in the years since. The motives behind such blockages have often been mixed, sometimes economic, e.g., to benefit domestic producers, and sometimes political, e.g., aimed at wartime enemies or to punish other governments for some reason. Raising prices for domestic producers were behind not only the Corn Laws but the many protectionist measures discussed in Section 4.3.3.2. below. Napoleon’s interdiction of trade with England was a political act of war. Obviously, the distinction has limited meaning when embargoing trade is both an economic act and a political one. In recent decades, we have seen the US impose a whole series of overtly political embargos although they have often served economic interests as well. An obvious case has been the embargo of all trade with Cuba. Because Cuba was a major sugar producer and exporter, this has obviously been of great benefit to sugar producers in the US. The embargos of Vietnam and Iran after their revolutions, of arms with Argentina and South Africa over human rights abuses, of grain to Russia after its invasion of Afghanistan in 1980, of exports to some oil importers by OPEC in 1973–4, of Iran by the US and European governments after its revolution in 1978, and of Russia again after its invasions of Ukraine in 2014 and 2022, are all examples of actions that have been explicitly politically motivated but with substantial economic effects.
Although beyond the scope of this treatment, and despite being ignored by many Marxist treatments of wars between capitalist nation states, class struggle always plays a role in their genesis, evolution and ends. This is obvious in the case of Napoleon’s empire building in the wake of the French Revolution (1789). It’s also obvious in the runup to the Civil War in the US, which was preceded by slave revolts in Haiti (1791–1804) and the slave states. In the twentieth century it was obvious as the Russian Revolution of 1917 extricated that country from WWI and throughout the anti-colonial, independence struggles that dominated much of the century. Class struggle was also a determining factor during the Cold War as the specter of nuclear holocaust was wielded by both the Soviet and US governments as a means of domestic social control. Orwell’s novel 1984 (1949) captured, among other things, the usefulness of endless foreign conflicts for domestic control.
Eugene Brady (1930–1991) argued that because of previous stockpiling the cutoff caused no dearth of cotton for the mills, rather the fear of future dearth, combined with previous overproduction, caused a dramatic increase in the cost of cotton, a decrease of production and an increase of unemployment. See, Eugene Brady, “A Reconsideration of the Lancashire ‘Cotton Famine’,” Agricultural History, Vol. 37, no. 3 (July 1963): 156–162.
See, Marx’s journal articles of 1861 on the “Cotton Crisis” in MECW, Vol. 19 and his analyses in Volume 1 of Capital, Chapter 15, Section 7, pp. 575–588, or MECW, Vol. 35, pp. 450–462, Manuscript of 1864–65, pp. 232–236, Capital, Vol. 3, Chapter 6, Section 3, pp. 219–225, or MECW, Vol. 37, pp. 125–130.
Besides being more expensive, working shorter, dirtier Egyptian and Indian cotton slowed down machinery, further reducing productivity, wages and profits. Capital, Vol. I, p. 585, or MECW, Vol. 35, pp. 459–460, Manuscript of 1864–65, pp. 237–238, Capital, Vol. 3, pp. 228–233, or MECW, Vol. 37, pp. 132–136.
Although this has always been clear to capitalist managers, it took a remarkably long time for economists to recognize that “labor” was no simple input, such as the “L” hypothesized in production functions of the sort Q=f(K, L). It was not until the recognition of how “efficiency wages” (those intentionally higher than market clearing rates) could result in more work and higher productivity that they effectively acknowledged the difference Marx had noted long before, between the “ability and willingness” to work (LP) and actual work. Sociologists and psychologists were studying this issue much earlier – paid by capitalists to help manage discontented workers – creating specialized fields such as “industrial sociology” and “industrial and organizational psychology.”
Grundrisse, p. 404, or MECW, Vol. 28, p. 331.
See, George Caffentzis’ insightful analysis of capitalist efforts to choose those workers most willing to channel their energy into work, i.e., those with the lowest entropy, in his, “The Work/Energy Crisis and the Apocalypse,” Midnight Notes II, Vol. 1 (1980). See too any of the numerous business publications on “personnel” selection written to guide the evaluation of potential hires.
See, Marx’s analysis of capitalist “nibbling and cribbling” to increase work in Chapter 10 of Volume 1 of Capital and my highlighting of workers’ methods of achieving the opposite in my commentary on that chapter. Capital, Vol. 1, p. 352, or MECW, Vol. 35, p. 250. Cleaver, 33 Lessons on Capital, 235–236.
Thanks to the United Farm Workers providing almost daily postings on Twitter, we have plenty of illustrations, with videos, of how, under varying circumstances, farm workers – who are often paid piece-wages – vary the rhythm of their work. When conditions warrant, e.g., low piece rates and bad weather, they are forced to work faster and harder to earn enough to live. When conditions are better, either higher piece rates, better weather or hourly wages, they can earn enough with less intense work.
See, the examples in Bill Watkin’s “Counterplanning on the Shopfloor,” Radical America, May-June 1971, pp. 77–85.
See, Donald Pizer (ed.), Jack London: Novels & Stories (New York: Library of America, 1982) 817–833. A more recent story of learning [to work less]-on-the-job, in a different setting, is told in Patti Smith’s autobiographical song “Piss Factory” (1974) on New Wave, Vertigo Records, 1977.
Eventually, long after Marx and Engels time, workers in some industries won time for such organizing on the part of shop stewards or union reps with no loss of pay. When reaction to the Japanese “invasion” of the US auto industry in the 1970s resulted in “quality circles” to improve labor productivity, they were often used by workers as breaktime, rather than just another form of work.
These natural devastations have continued to plague the labor force in the twentieth and twenty-first centuries, especially in South Asia and Sub-Saharan Africa, e.g., famine in India in 1967, drought throughout the Sahel in the early 1970s and most recently – augmented by global warming – drought and famine have been driving massive displacements of population in Africa.
Manuscript of 1864–65, pp. 156–179, Capital, Vol. 3, pp. 181–190, or MECW, Vol. 37, pp. 80–106.
Capital, Vol. 1, p. 303. When Marx writes “does not count in the product or enter into its value,” he is telling us the real meaning of a failure to “transfer” or “preserve” value in a way that demystifies the usual interpretation of these terms. See, the commentary on Chapter 8 in H. Cleaver, 33 Lessons on Capital.
Ibid., fn 18, pp. 303–304. It seems likely slaves played on white racism, which would attribute breakage to the stupidity of their black slaves. As with machine breakage, tool breakage results in work stoppages and perhaps the diversion of energy into more interesting repair work.
John Cairnes, The Slave Power: Its Character, Career, and Probable Designs: Being An Attempt to Explain the Real Issues Involved In the American Contest, 2nd ed. (New York: Carleton, Publisher, 1862) 40, fn*. Omstead and Cairnes’ and hence Marx’s perception of how slave resistance prevented the use of the best tools, has been countered by a considerable literature demonstrating that this was not always so. Moreover, it is noticeable that Marx did not share their judgement of slave innate inferiority but clearly saw tool breakage purely in terms of resistance by exploited workers. Indeed, it has been shown that in some places slaves worked as artisans rather than field labor and, moreover, seem to have contributed to developing new, more efficient technologies. See, Veront Satchell, “Innovations in sugar-cane mill technology in Jamaica, 1760-–1830” in Verene Shepherd, Working Slavery, Pricing Freedom: Perspectives from the Caribbean, Africa and the African Diaspora (New York: Palgrave, 2001) 93–111 and Jenny Bulstrode, “Black metallurgists and the making of the industrial revolution,” History and Technology 39, no. 1 (June 2023): 1-41. Regardless, given how frequent the resort to sabotage has been throughout capital’s labor force, including wage labor, it seems likely that some slaves also mistreated their owner’s tools in acts of resistance.
Quoted in Capital, Vol. 1, p. 377, from Cairnes, The Slave Power, p. 73.
Marx to P. V. Annenkov, December 28, 1846, MECW, Vol. 38, p. 99.
Capital, Vol. 1, p. 532, MECW, Vol. 35, p. 411.
Ibid., p. 563, MECW, Vol. 35, p. 439. Also: “Since 1825, the invention and use of machinery resulted solely from the war between masters and workmen.” Marx to P. V. Annenkov, December, 28 1846, MECW, Vol. 38, p. 99.
On the Luddites see Charles Poulsen, The English Rebels (London: Journeyman, 1984), David Noble, Progress Without People: In Defense of Luddism (New York: Charles Kerr, 1993) and Peter Linebaugh, Ned Ludd & Queen Mab: Machine-Breaking, Romanticism and the Several Commons of 1811–12 (Brooklyn: PM Press, 2012). One literary portrayal of such actions is in Charlotte Brontë’s novel Shirley (1849) where both sides are represented in a dialog, where the workers argue for saving their jobs and the capitalist argues he has no choice, given the competition of other capitalists – the very dynamic of inter-capitalist competition Marx analyzes in Chapter 12 of Capital as one vehicle for the spread of technological innovations. It also illustrates how the relative ability to compete depends on a capitalist’s relative control over his workers.
Capital, Vol. 1, p. 554, MECW, Vol. 35, pp. 430–431.
On the Swing Riots see Eric Hobsbawm and George Rudé, Captain Swing (London: Lawrence & Wishart, 1969). For a broader view, see E. P. Thompson, The Making of the English Working Class (New York: Vintage Books, 1963), Chapter Seven, “The Field Labourers.” The development and adoption of labor-displacing machinery in agriculture has continued, often in response not merely to the rise in wages but the anticipation of a rise in wages. An example of the former was the mechanical reaper in the American Mid-West. See, Paul David, “The Mechanization of Reaping in the Anti-Bellum Midwest” in Henry Rosovsky, ed., Industrialization in Two Systems (New York: John Wiley & Sons, 1966) 3–39. An example of the latter was the development of tomato picking machines in the 1960s in response to the successful formation of farm worker organizations. See, Jim Hightower, Hard Tomatoes, Hard Times: A Report of the Agribusiness Accountability Project on the Failure of America’s Land Grant College Complex (New York: HarperCollins Publishers, 1978).
Thompson, The Making of the English Working Class, 225–226.
Capital, Vol. 1, p. 363, fn 54, MECW, Vol. 35, p. 260, fn 1.
Although the English economist John Hobson in his Imperialism: A Study (1902) emphasized underconsumption and the consequent need for new markets as the “taproot” of colonial expansion, he recognized that the search for both cheap raw materials and new, more profitable investment opportunities were also prime motivations. So did Vladimir Lenin (1870–1924) in his Imperialism, the Highest Stage of Capitalism (1917) and Nicholai Bukharin (1888–1938) in his Imperialism and World Economy (1917).
Among the many expressions of mining struggles in literature see Emile Zola, Germinal (1884–1885) based on the author’s investigative reporting in the coal mines of Northern France – frequently adapted to film. Twentieth century miners’ struggles exploded in the US in the 1920s, as illustrated in John Sayles’ magnificent film Matewan (1987) and continued in the decades that followed. See, William Blizzard, When Miners March (edited by Wess Harris) (Oakland: PM Press, 2010), Wess Harris, Truth be Told: Perspectives on the Great West Virginia Mine War: 1890 to Present (Gay, WV: Appalachian Community Services, 2015), William Cleaver, “Wildcats in the Appalachian Coal Fields” Zerowork 1 (1975): 113–127, and the documentary Harlan County, USA (1976) about a 1973 strike by Kentucky coal miners.
In recent years, the rise of struggles to protect the environment has resulted in miners gaining three new sources of support in their struggles. Ecological and human rights activists have joined with indigenous people, whose lands have been threatened or destroyed by mining, to resist and disrupt production. Critical focus on this particularly destructive area of capitalist activity has given new prominence to the term extractivism, i.e., exploitation of both miners and the earth in the mining industry. See, for example, Michael Becerril, Resisting Extractivism: Peruvian Gold, Everyday Violence, and the Politics of Attention (Nashville: Vanderbuilt University Press, 2021).
See, Peter Linebaugh’s analysis of such methods in his The London Hanged, Part Three: Industry and Idleness in the Period of Manufacture, 1750–1776, especially Chapters Seven and Eight. Until criminalized, such scraps complemented money wages as part of workers’ income. The appropriation of machines for personal use is described in great detail in Miklós Haraszti, A Worker in a Worker’s State (New York: Penguin, 1977) about how Hungarian workers use the machines in their bosses’ factory to make “homers.”
An amusing hymn to such appropriation in the age of the automobile is Johnny Cash’s song “One Piece at a Time” (1976).
Appearing random to observers in the nineteenth century, the extent and frequency of drought and flooding, like wildfires and hurricanes, are now understood to be influenced by human practices. “Human-caused” (i.e., capitalist caused) climate change is now recognized as causing many of these “natural” phenomena to occur more frequently and to be more severe.
Although I have yet to come across any reference in Marx and Engels’ writings, a similar blight devastated European viticulture in the late 1850s to the mid-1870s, especially but not uniquely in France.
Marx to Engels, 29 Jan. 1853, MECW, Vol. 39, pp. 274–277.
Engels to Weydemeyer, 12 Apr. 1853, MECW, Vol. 39, pp. 303–311.
Marx, K. “The Causes of the Monetary Crisis in Europe,” (circa October 14, 1856) MECW, Vol. 15, pp.117–122, and “The Monetary Crisis in Europe -- From the History of Money Circulation,” (circa October 17, 1856) MECW, Vol. 15, pp. 123–129.
Grundrisse, pp. 120, 127–130, or MECW, Vol. 28, pp. 58–59, 65–68
While technological advances in ore mining have sometimes involved the machinery of direct extraction, e.g., the replacement of pickaxes in deep coal mining by Continuous Mining Machines and in open pit surface mining of hand tools by giant electric shovels and draglines, just as important have been the development of new technologies in metallurgical engineering or ore processing which have made it possible to profitably extract valuable metals from ores with ever lower proportions of metals to mineral deposit.
Here too, technological advances in discovery, drilling, pumping, transporting, and refining have made ever greater mining and recovery of petroleum and natural gas possible. Controversy over the most recent innovation – hydraulic fracturing or “fracking” – has added to growing opposition to the use of hydrocarbon fuels because of their contribution to global warming.
As in the recent case of the Covid pandemic that seriously disrupted global shipping and supply chains.
Depreciation in terms of value involves not only wearing out but drops in the value of existing machines in the presence of newer, more efficient ones – a common phenomenon that undermines the competitive profitability of those stuck with the old machines. Marx analyses this in his discussion of how competition results in the diffusion of new technology – when capitalists can afford it, they replace the old with the new – to maintain their share of relative surplus value. See, Capital, Vol. 1, Chapter 12, or MECW, Vol. 35, Chapter XII.
A contemporary example – as I write – has been the failure of Southwest Airlines to update its computer equipment, which failed to cope with the severe winter weather in December 2022, resulting in large numbers of canceled flights and stranded passengers. “Southwest put investors ahead of its customers and employees,” Washington Post, December 28, 2022.
MECW, Vol. 6, p. 488.
Capital, Vol. 1, p. 436, or MECW, Vol. 35, p. 312.
And, eventually, things like health care, paid leave, etc.
For this he has been reproached by some Marxists for not devoting as much time and words to wage struggles as to those to reduce work time. Among those lamenting the “absence of a chapter on wage struggles” are Michael Lebovitz and Toni Negri. See: Lebowitz, Beyond Capital: Marx’s Political Economy of the Working Class (New York: Palgrave MacMillan, 2003) and Negri, Marx Beyond Marx, op. cit. Nevertheless, it is clear enough in Marx’s analysis that not only can increases in wages undermine profits, but that increasing productivity makes it possible for employers to make concessions to workers while maintaining profits.
Capital, Vol. I, pp. 533–534, or MECW, Vol. 35, pp. 412–413.
Manuscript of 1864–1865, pp. 321–322. Capital, Vol. 3, p. 319; MECW, Vol. 37, p. 211.
Manuscript of 1864–1865, p. 321. Capital, Vol. 3, p. 318; MECW, Vol. 37, p. 210.
Grundrisse, p. 415; MECW, Vol. 28, p. 342.
Ibid., p. 421; MECW, Vol. 28, p. 350.
Ibid., p. 422; MECW, Vol. 28, p. 351.
Ibid., p. 699; MECW, Vol. 29, p. 85.
Ibid., p.705; MECW, Vol. 28, p. 91.
Ibid., pp. 704–705; MECW, Vol. 28, p. 90.
Capital, Vol. 1, p. 284.
This very material mixture is often overlooked in contemporary discussions of so-called “immaterial labor.”
While not yet obvious in Marx’s time, it certainly is in ours, e.g., computers, computer-controlled equipment and artificial intelligence programs (AI).
Ibid., p. 705; MECW, Vol. 29, p. 91.
Still true today. In principle, wherever slavery, of one sort or another, has been outlawed, various police forces, both local and national, are supposed to shut it down. But given their neglect, corrupt complicity, or failure, it has persisted. Therefore, contemporary opponents of slavery have organized to pressure governments into more effectively enforcing existing laws against human trafficking and enacting new laws against other forms of forced labor, e.g., the de facto slavery of children in factories, of adults in prisons, and of forced marriages. See, the work of the Anti-Slavery International, Freedom United, the Anti-Slavery Society, and the list at https://www.endslaverynow.org/connect (accessed 2024). Current conservative efforts to weaken or revoke laws prohibiting child labor have been making it harder for these efforts to succeed. See, Jennifer Sherer and Nina Mast, “Child labor laws are under attack in states across the country,” Economic Policy Institute, March 14, 2023.
Grundrisse, p. 405, or MECW, Vol. 28, p. 332.
Grundrisse, p. 407, or MECW, Vol. 28, p. 334.
Grundrisse, p. 407–408, or MECW, Vol. 28, pp. 334–335.
Grundrisse, p. 419, or MECW, Vol. 28, p. 345.
Grundrisse, p. 408, or MECW, Vol. 28, p. 335.
Capital, Vol. 2, p. 156, or MECW, Vol. 36, pp. 82–83.
The other common meaning of consumption in the nineteenth century was “the lung disease” or tuberculosis, so-called because the disease appeared to consume or waste away the body.
Completely in the case of raw materials, partially in the case of fixed capital such as machines or factories.
Grundrisse, pp. 412–413; MECW, Vol. 28, p. 339. This recognition by Marx (and Storch) made it impossible for him to fall into the trap of those who saw in the “underconsumption” of MS the source of crisis in capitalist reproduction. This has included both Marxists and non-Marxists, such as John Hobson, who have based their theory of crisis on the idea that workers could not buy back all that they produced, but failed to recognize how inadequate aggregate demand could also be due to a lack of markets for MP due to a lack of capitalist investment. See Hobson’s The Physiology of Industry (1889), written with Albert Mummery, and his Imperialism: A Study (1906). The latter would influence the two Bolsheviks, Nicolai Bukharin and Vladimir Lenin whose books Imperialism and the World Economy and Imperialism: The Highest Stage of Capitalism, both published in 1917, have been foundational for many subsequent Marxists.
Grundrisse, p. 421, fn *; MECW, Vol. 28, p. 349.
MECW, Vol. 6, pp. 450–465.
Ibid., p. 465. Compare with Engels’ treatment of this same issue in his second “Speech at Elberfeld,” February 15, 1845, MECW, Vol. 4, pp. 256–264.
Capital, Vol. 1, pp. 208–209, or MECW, Vol. 35, p. 123.
Capital, Vol. 1, p. 209, or MECW, Vol. 35, p. 124.
The exception, recognized by political economists as well as by Marx and Engels, were small, local markets where capitalists producing the same commodities could form an oligopoly, set common prices, and divide up the market.
The inevitable problems in meeting these requirements provided Rosa Luxemburg the foundation for theories of both crisis and imperialism. See, her “The Accumulation of Capital,” now included in The Complete Works of Rosa Luxemburg, Vol. II: Economic Writings 2 (New York: Verso, 2015).
For a long time and for obvious historical reasons, MS was considered to take two distinct forms, literal means of subsistence consumed by workers and luxury goods consumed by capitalists. The development of a continuous income hierarchy encompassing everyone who works for capital, from the unwaged in the reserve army through blue and white collar waged and salaried workers up to highly paid managers – those Marx called the “functionaries” of capital – has made that simple dichotomy obsolete. I assume, as Marx did most of the time, that the vast bulk of the consumption of MS is by workers and ignore the tiny pool of those whose only contribution to the expanded reproduction of capital is buying commodities out of surplus value, i.e., the leisured rich who, like the landed aristocracy who preceded them, live entirely off unearned income derived from financial assets and rent.
Capital, Vol. 1, Chapters 27 and 28 analyze the expropriation of land and tools and the violence with which capitalists have forced people into the labor market in search of the money they need to purchase C(MS).
MECW, Vol. 10, pp. 397–482. Marx and Engels also followed such struggles in other countries, e.g., Russia and Poland. See, “Author’s Note to Polish Readers” in this volume.
See, Christopher Hill, The World Turned Upside Down: Radical Ideas During the English Revolution (London: Penguin, 1984) 107–124, and listen to Leon Rosselson’s songs resurrecting and celebrating their struggles.
See, Winstanley, The New Law of Righteousness (1649). Hill’s book recounts many events of the momentous year of 1649 when the Diggers seized land, Cromwell invaded Ireland and the king was beheaded.
Such struggles were renewed in the twentieth century. They included not merely small-scale land occupations but widespread revolutionary risings by peasants, including their central roles in the Mexican, Russian, and Chinese revolutions. In all these three great revolutions peasants and landless laborers seized land. See, Eric Wolf, Peasant Wars of the Twentieth Century (New York: Harper & Row, 1969). To a considerable degree this was also the motivation of peasants supporting anti-colonial, “national liberation” movements, such as the Vietnamese revolt that retook land stolen by French colonialists (who had converted the land from subsistence to production for export, e.g., rice and rubber). Then, in the wake of independence from colonialism, the failure of new elites in country after country to redistribute land led to widespread seizures and aggressive legal demands for land reform. Such efforts have continued by, among others, the Zapatistas in Mexico, the Movimento dos Trabalhadores Sem Terra (MST, or Landless Workers’ Movement) in Brazil and other wings of Via Campesina.
But not necessarily their use-value. Not only does consumption of directly appropriated MS sustain the unwaged as part of capital’s necessary reserve army, but because so many MS are designed for social control, e.g., to divert energy from struggle by entertaining buyers, such use-values to capital persist.
Whether selling to a “fence” or selling on the black market, they re-insert their purloined goods into the sphere of circulation and like legal merchant capitalists take a cut of the value.
The imposition of price-fixing and rationing in periods of crisis, e.g., wartime, also removed some C(MS) from circuits of profit making or reduced their value and hence profits. On the other hand, the spread of food stamps and other forms of income in the wake of uprisings have subsidized both workers’ income and sales of C(MS). Dissatisfaction and protests against capitalist price gauging have been among the forces leading to the removal of unhindered capitalist control over the production and distribution of a few C(MS), e.g., electrical power and water, and their transfer to public utilities, regulated by the government. Since the rise of neoliberalism in the early 1980s, the push for the privatization has been aimed at restoring capitalist control.
For examples from the nineteenth century see, John Bohstedt, The Politics of Provisions: Food Riots, Moral Economy, and Market Transition in England, c. 1550–1850 (London: Routledge, 2010). For our times see, David Seddon, Riot and Rebellion: Political Responses to Economic Crisis in North Africa (Tunisa, Morocco and Sudan) Discussion Paper No. 196, School of Development Studies, University of East Anglia, October 1986.
Although, to all appearances, most urban uprisings involving direct appropriation have been more or less spontaneous actions, some have taken the form of organized protests involving the “self-reduction” of prices. See, Bruno Ramirez, “The Working Class Struggle Against the Crisis: Self-Reduction of Prices in Italy”, Zerowork 1 (December 1975): 142–150.
In neoclassical microeconomic theory, different reactions are approximated by the “elasticity of demand.” With “inelastic demand”, variations in price will have little impact on sales and profits, but with more elasticity, reduced sales will offset higher prices leaving the seller worse off.
According to the Fur Institute of Canada, 65–75 percent of the furs produced in that country come from fur farms (and 85 per cent worldwide).
In our contemporary world, too many people trap (torture) and kill animals such as beavers just for the fun of it! That vicious past-time is currently fought by those trying to protect trapped species from all trapping because of its cruelty. See, for example, NH Citizens Against Recreational Trapping.
Widespread examples of such crises for producers and sellers happened in the wake of the collapse of the USSR and the regimes of its client states in Eastern Europe and the subsequent imposition of austerity. In Poland I visited the factory of a major producer of ship engines that had to almost completely shut down because it could no longer sell its wares. Similar problems beset businesses in countries where IMF debt-rollover packages of “structural adjustment” required the reduction or elimination of protectionist measures during the international debt crisis of the 1980s-1990s.
Capital, Vol. 2, p. 206, MECW, Vol. 36, p. 132.
See, H. J. S. Cotton, “The Rice Trade of the World,” Calcutta Review, Vol. 58, Issue 116 April 1874, pp. 288–9.
Given variations in the elasticity of demand, mentioned above, sellers must judge whether and to what degree to pass along increases in costs to buyers, sellers guestimate customers’ likely responses.
Credit and debt, of course, also existed in relationships between individuals or between individuals and banks or between governments and banks. Individuals have borrowed from others to meet temporary unusual costs, say a marriage or a medical bill. The wealthy, with collateral in the form of property or dependable income from land rents or financial assets, have long been able to borrow from moneylenders and banks. Probably the best-known example in literature of a person borrowing from a moneylender is Bassanio borrowing from Shylock in Shakespeare’s Merchant of Venice (1596–99).
In the post-colonial era of the mid-twentieth century, a major concern of “development” economists was the concentration of surplus money in the hands of moneylenders rather than banks. The “modernization” of finance – and of the economy more generally – required such surplus be channeled through banks, whether private or governmental. The argument was that moneylenders (like Shylock) tended to make loans for “unproductive” activities (such as Bassanio’s courtship of Portia), whereas banks were more likely to make loans to capitalists who would employ their borrowings “productively.” See, for example, Frank Moore, “A Note on Rural Debt and Control of Ceremonial Expenditure in India,” Economic Development and Cultural Change, Vol. 2, 1954, pp. 408–415. For many years, the literature of economic development included critical evaluations of inadequate financial institutions in the Global South and policy proposals for improving them, especially for the creation of new credit instruments for financing both manufacturing and agricultural investment. Focusing on accessing land rent and giving credit to Adam Smith, Walt Rostow (1916–2003) expressed this idea as clearly as other essays focused on finance per se, “surplus income … must, somehow, be transferred out of the hands of those who would sterilize it in prodigal living into the hands of the productive men who will invest it in the modern sector and then regularly plow back their profits as output and productivity rise.” Stages of Economic Growth: A Non-Communist Manifesto (Cambridge: Cambridge University Press, 1960) 24. See also: Hugh Patrick, “Financial Development and Economic Growth in Underdeveloped Countries,” Economic Development and Cultural Change 14, no. 2 (January 1966): 174–189.
Governments have also used bank loans to finance various expenditures, from palaces to wars. Their ability to impose taxes and create money mostly guaranteed their ability to repay. The “sovereign” character of their debt increased the appeal of lending to them by banks. In Capital, Vol. 1, Chapter 31 on the rise of industrial capitalism, Marx presents this use of the state by banks as an important vehicle for the primitive accumulation of investable funds. Books on the history of credit and debt are numberless, but a recent one of interest providing an historical and anthropological perspective is David Graeber’s Debt: The First 5,000 Years (New York: Melville House, 2014).
Wikipedia has a nice intro to “The History of Banking” but also see Graeber’s book on debt.
As one form of money, “means of payment” is analyzed in Capital, Vol. 1, Chapter 3, but most of Marx’s analysis of credit and its role in capitalism can be found in the Manuscript of 1864–65, in Capital, Vol. 3 and in his journalism and notebooks.
Although ignored at this point in his exposition, I have already indicated how Marx points out in Vol. 2 of Capital, how transportation – almost always an integral part of commercial operations – is another source of surplus value, extracted from the transport workers employed by merchant capitalists. See, Capital, Vol. 2, pp. 134–135, or MECW, Vol. 36, pp. 61–62.
By “simply wealthy” I refer mainly to “old money,” individuals and families rich from inherited wealth and pre-capitalist sources of income, such as land rents and purely merchant buying and selling. As primitive accumulation progressed and landowners either became capitalists or hired others to manage their estates as agribusiness enterprises, such differentiation faded and as commerce became an integral part of capitalist operations meaningful distinctions between “old” and “new” money blurred and came to refer more to the chronological order of the acquisition of wealth than to that between pre-capitalist and capitalist sources.
Friedrich Engels, “Violation of the Prussian Constitution,” “The Prussian Bank Question” and “The Prussian Constitution” MECW, Vol. 6, pp. 52–53, 57 and 64–71, respectively. See his and Marx’s analyses of speculation and its roles in the crises of the 1840s in Chapter 2.1. above.
Among the many new credit instruments created were government ones both for local financing and for international loans, supposedly guaranteed sovereign debt but revealed during the international financial crisis of the 1980s and 1990s to be far more vulnerable to collapse than anticipated. In this neoliberal period of the deregulation of finance, there has been a veritable explosion in the varieties of credit instruments, a great many of which provide platforms for speculation. The speculative housing booms of 1980s brought on the collapse of 1987 and that of the early 2000s brought on that of 2006, generating a general economic crisis in 2007–2008.
Whereas institutions of crédit foncier, e.g., land banks, base loans on the security of landed, immovable property, those of crédit moblier base loans on movable property, i.e., financial assets such as shares in both public and private companies available to both wealthy and middle classes with enough money to save and invest. On the development of capitalist finance in France that takes Marx’s analysis into account, see Joseph Ricciardi, “Essays on the Role of Money and Finance in Economic Development” (PhD Diss., University of Texas at Austin, 1985). Some of his analysis has been made more readily available in Joseph Ricciardi, “Marx on Financial Intermediation: Lessons from the French Crédit Mobilier in the New York Daily Tribune,” Science and Society 79, no. 4 (October 2015): 497–526.
See, the three articles “The French Crédit Mobilier,” in MECW, Vol. 15, pp. 8–13, 14–18, and 19–24.
This was how international banks, backed by the International Monetary Fund, handled the international debt crisis of the 1980s and 1990s, created by the Fed’s dramatic increase in interest rates which plunged the world into depression. Those unable to repay their international debts could – IF they met IMF conditions to impose austerity on workers – borrow to finance repayment, thus accumulating even more debt.
Capital, Vol. 1, Chap. 3, p. 233, or MECW, Vol. 35, p. 146.
This is true whether interest is interpreted – as Marx does – as a sharing of surplus value generated by industrial capital or as payment for a service. In the latter case, it forms a part of the costs of production and thus has the same relation to surplus value as other components of c. For one argument in favor of the latter interpretation, see “The Source of Financial Profit – Revising Marx” in Cleaver, Rupturing the Dialectic, 165–180.
Assuming constant rates of productivity and of the intensity of labor.
Of course, capitalists are not always blind to such effects and sometimes raise v in the expectation of raising productivity and s. An example referenced by Marx was mine owners forcing their workers to eat beans. See, Capital, Vol. 1, p. 718, fn 9, MECW, Vol. 35, p. 572, fn 1. When planned by capital, such increases in v are known today as investments in “human capital.”
As workers have forced up wages sufficiently to acquire wealth and gain access to credit from banks, the primary uses of loans has been to finance consumption, thus “consumer” credit and debt, whether the consumption be immediate or long term as in the case of consumer durables and housing. Although businesses have come to understand the advantage to them of increased purchasing power, as with business debtors, any reduction of income threatens the ability to repay, the inadequacy of “means of payment” and the threat of default. During periods of widespread rising unemployment and disappearing or falling wages, defaults can be equally widespread, terminating the income to creditors, causing a financial crisis and eliminating those consumption expenditures based on credit. Thus, a crisis for Department II businesses producing C(MS) can have a negative ripple effect on those in Department I. (More on this in the section on the circulation of crisis.)