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Speculative Capital
Unit One: About Capitalism
Study overview and general reading list
Concepts
Discussion questions
Readings
Online study group on speculation
Concepts
What is capitalism?
Capitalism: form of commodity production; form of class society; private ownership of the means of production; labor power as a commodity
Some laws of the capitalism law system
1. The source of value is human labor
2. Commodities exchange according to the amount of socially necessary labor that goes into their production.
3. Purpose of production for capitalist is profit
4. Profit comes from surplus value -- unpaid human labor.
5. Value is bound up in and borne by commodities.
6. Commodities must circulate, that is, they must be sold. If commodities cannot be sold, the value in them cannot be realized, and the capitalist will not profit.
7. Capitalists must strive for the maximum profit -- if not, they will be driven from the market by other capitalists who do achieve the maximum profit.
8. [Requires constant expansion of market [Why the market must ever-expand Vol III, p 353 Penguin]
M -> C -> M+ (aka "The General Formula for Capital") (Capital, Vol. I, Ch. IV)
Money -> commodity -> More Money
Consider this in the industrial sphere: The M - C part: Money buys means of production + labor power; they are destroyed as such and created as commodities (production process). The C - M part refers then to taking those commodities to market, to sell, and realize value as more money. (circulation)
Represents a circuit -- Negation of negation. Looks like a spiral:
Capitalism is a circuit, but it expands (or contracts) and develops with each circuit, so we should represent it as a spiral.
The production process can be represented as:
c + v + s = C (Capital, Vol. I, Ch. IX)
[Any questions about any of these terms?]
Value:
1. Historical category
2. Emerges with exchange, trade. Aspect of commodity production.
3. Determined "socially necessary labor", measure of "abstract labor", borne by commodities."The total labor power of society is embodied in the sum total of all values of all commodities produced by that society..." (p. 46 Vol I)
4. Value comes from human labor.
Okay - but what is capital?
Key points:
1. Where values "not just maintained in the course of its movement, but creates a surplus value for its owner." (C III p 462 Penguin)
2. The control of living labor by dead labor (huh?)
3. it's a relationship, or expresses a relationship between classes
As we've seen, different types of capital. Significance? Marx describes different types of capital, in different contexts (productive, commodity, money; fixed, circulating; constant, variable; industrial, merchant; etc.) Try and define these types. What is the significance of different types?
1. Capital takes different forms.
2. Capital is transformed in the course of production and circulation.
3. Still capital.
What is profit? Rate of profit?
Varies with amount of value of constant capital -- level of technical development. So varying rates in different sectors of economy, different industries, different countries.
[Say something about Vol I of Capital, completed by Marx, focuses on the production process; Vol III, published some 12 years after Marx's death, looks at "The Process of Capitalist Production as a Whole"]
Through markets, investing, mobility of capital, a general rate of profit forms. [review quote on handout page]
Key points:
1. *** Through formation of general rate of profit, all capitalists partake of total exploitation.
2. Even if no workers employed, a capitalist can profit. (Through transfer of value from backward sectors to advanced sectors in transitional economy):
"...a capitalist who employed no variable capital at all in his sphere of production, hence not a songle worker (in fact an exaggerated assumption), woul have just a smuch intest in the exploitation of the working class by cpital and would just as mcuh derive his profit from unpaid surplus labor as would a capitalist who employed only variable capital (again an exaggferated assumption) and therefore laid out his entire capital on wages." [Vol III, p. 299 Penguin]
3. Equalization affected by level of development of capitalism.
4. Equalization is acommplished more quickly the more mobile capital is.
5. No matter if industrial (production), or commercial (circulation), part of general system of exploitation. Don't need to be involved in production to exploit workers.
Credit
Draw circuit. Show circuit stretched out further and further (in time and space). Necessity of credit as the connective tissue of the economy. Credit as a necessary outcome of growth in trade.
Through credit, individual capital -> social capital, social labor, social property
Credit system accelerates development of productive forces, formation of foundation of new society; also accelerates crises.
Bankers as representatives of all lenders, "the general managers of money capital." [p. 528]
Key point: Expansion of credit as a necessary aspect of the expansion of capitalism, or production.
Fictitious Capital
References to a few different things [see readings pages]: Claims to future production that trade as something separate from the "real capital".
Govt bonds, bills, notes. Stocks. Substantial part of money wealth]
Also: Fictitious Capital (from the Encyclopedia of Marxism)
Wealth vs Capital
Marx makes a distinction btwn wealth and capital (capital must be employed in the reproduction of capital and production of s.v.)
Wealth as dead labor, not employed in production of surplus value.
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Discussion questions
What is capital? What is the difference between wealth and capital? What does it mean to say that "capital is a social relation"? What is fictitious capital? [use the Marx excerpts and chapters, and look up terms as needed. Here's a hint from Marx: "...capital, i.e., value that is not just maintained in the course of its movement, but creates a surplus value for its owner." (p. 462 Penguin)]
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About capitalism: Reading excerpts
"Capitalism as a system operates in accordance with a handful of laws: The source of value is human labor. Commodities exchange according to the amount of socially necessary labor that goes into their production. Profit comes from surplus value -- unpaid human labor. This value is bound up in and borne by commodities. The commodities must circulate, that is, they must be sold. If commodities cannot be sold, the value in them cannot be realized, and the capitalist will not profit. Capitalists must strive for the maximum profit -- if not, they will be driven from the market by other capitalists who do achieve the maximum profit." (LRNA, "Political Resolution", April 1998).
"... capital becomes conscious of itself as a social power, in which every capitalist participates in proportion to his share in the total social capital." (Marx, Capital, Vol III, p. 297)
"If commodities were sold at their values, however, this would mean very different rates of profit in the different spheres of production ... according to the differing organic composition of the masses of capital applied. Capital withdraws from a sphere with a low rate of profit and wends its way to others that yield higher profit. This constant migration, the distribution of capital between the different spheres according to where the profit rate is rising and where it is falling, is what produces a relationship between supply and demand such that the average profit is the same in the various different spheres... Capital arrives at this equalization to a greater or lesser extent, according to how advanced capitalist development is in a given national society ... This constant equalization of ever-renews inequalities is accomplished more quickly, (1) the more mobile capital is, i.e. the more easily it can be transferred from one sphere and one place to others; (2) the more rapidly labour-power can be moved from one sphere to another and from one local point of production to another." (Marx, Capital, Vol III, p. 297-8)
"Whether capital is invested industrially in the sphere of production, or commercially in that of circulation, it yields the same annual average profit in proportion to its size." (Marx, Capital, Vol III, p. 459)
"... the function of money as means of payment develops out of simple commodity circulation, so that a relationship of creditor and debtor is formed, With the development of trade and the capitalist mode of production, which produces only for circulation, this spontaneous basis for the credit system is expanded, generalized and elaborated. By and large, money now functions only as means of payment i.e. commodities are not sold for money, but for a written promise to pay at a certain date." (Marx p. 525)
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