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Study Guide to Marx’s Capital for the Anti-capitalist

Study Guide to Marx’s Capital for the Anti-capitalist

Last updated August 4, 2019

Introduction: You Don’t Need Marx To Be an ‘Anti-capitalist’

Why do we need to read Marx’s Capital?

Or should I say: Why do you need to read Capital? And who do I think “you” are, anyway?

Well, let me tell you.

You are, I imagine, a fellow worker. That is, you depend on a wage in order to live. (Or perhaps you have either retired from a life of “wage-slavery” or depend on the wage of a family member.) You are, in other words, one of the 99% – or whatever the exact figure might be).

But I also imagine – as the title series suggests – that you are an “anti-capitalist.” Am I being presumptuous?

I don’t think so. What I mean by “anti-capitalist” is simply that you are, at the very least, dissatisfied with present-day society. You might prefer to describe the object of your frustration as “the establishment,” “the status quo,” “Wall Street,” or something else. But I’m going to take the liberty of lumping this feeling under the category of “anti-capitalist.” After all, we’re living in a capitalist world.

There are certainly millions upon millions of “anti-capitalists” in that broad sense: those whose experiences of living and working under capitalism have brought dissatisfaction and frustration.

In the United States, the extent of the dissatisfaction with the social system has been laid bare by the presidential election. The Sanders and Trump campaigns were able to attract strong support, despite overwhelming opposition among the media and financial elite, by tapping into the anger among workers.

And in the past few days (because I am writing this in late June 2016), the “Brexit” referendum [on Britain leaving the European Union] passed, reflecting widespread dissatisfaction with elite bureaucrats and investment banks as well as fantasies that nationalism might right the wrongs of globalism.

Granted, such anger is being channeled toward “solutions” premised on the continued existence of capitalism (and as such, doomed to fail), but that does negate that these political movements are a manifestation of the wave of frustration with the “status quo” and “establishment” (read: capitalism!).

None of the workers who are fed up with things as they are had to read Marx to arrive at that position. Experience drove home the point much deeper than any book could have done. We can leave it to the workings of capitalism, not the pages of Capital, to generate anti-capitalist sentiment.

Nor do we need Capital to inform us where capitalism is headed – unlike in Marx’s own day, where some readers found in his book an image of the fate awaiting their own (less developed) countries. As Marx’s wrote in 1867 in his preface to the first edition, ‘the country that is more developed industrially only shows, to the less developed, the image of its own future.’ But today, 150 years later, even the least developed nations are firmly integrated into the capitalist world. Workers in those countries have not only tasted but eaten their fill of the bitter fruit of capitalist development.

Some “Marxian economists” might enjoy playing the role of Cassandra by warning us of future wars and crises – secure in the knowledge that eventually they will be proved correct. But how useful are such predictions, really, apart from providing the theorist with the told-you-so joy when the stock prices or bombs are falling? If anything, the knowledge that capitalism has new disasters in store for us can lead to fatalism, passivity, and despair.

My own interest is not to predict what might happen under capitalism, but to contribute to the goal of ridding ourselves of this social system once and for all. And I am convinced that this will not come about by simply listing all the problems of this system. We already know its problems all too well!

Yet it is crucial to understand the source of the problems. That does not mean, however, that understanding the root of capitalist problems puts us in a position to solve them. Indeed, an understanding of the essence of capitalism teaches us that the calamities and tragedies we face today, such as war and poverty, arise naturally from a class-divided system that revolves around profit and exploitation.

The solution, therefore, can only be found beyond capitalism – in a society where there is no room for the problems to even exist in the first place!

And the basic contours of that new society come into view, I believe, through reading Capital. This is an area where nearly all anti-capitalists come up very short. Capital is not a book that provides a blueprint for a future society. But it does have what might be described as a “negative” image of that society, which we call “socialism,” requiring only a bit of development to come into a full-color view. By tracing the fundamental characteristics and limitations of capitalism as a specific historical mode of production, Marx helps us envision what might lie on the other (future) side of the capitalist boundary.

Normally we are so deeply submerged in the reality of capitalism that we find it hard to step back and view it as just one of the forms of society that has existed or will exist in the future. This makes it terribly difficult to imagine an alternative to capitalism. But once we have grasped what distinguishes capitalism from other social forms, as well as what elements are common to any form of society an image of a new kind of society naturally comes into view.

That is the perspective from which I want to read Capital – always keeping in mind the need to create a new society beyond capitalism, and writing for everyone who loathes the status quo but has not yet arrived at a clear and realistic alternative to it.

1: What Is a Commodity?

The first sentence of Capitalstates a fact about capitalism that is so obvious that its significance is easily overlooked; namely, that “the wealth of societies in which the capitalist mode of production prevails appears as an immense collection of commodities.” [Penguinedition, p. 125]

Confronted as we are with so many commodities every day of our lives—a far more immense collection than in Marx’s day—it is easy to view the term “commodity” and “product” as synonymous, since nearly everything that is produced is for sale on the market. But to conflate the two is to overlook the historical character of capitalism. And it is only by keeping in mind that historical character that we will be able to perceive the outlines of a new society.

What, then, is the distinction between a “product” and a “commodity”? Before answering that question, Marx first notes the aspect that a commodity shares with any product of labor, namely that it is a “a thing which through its qualities satisfies human needs of whatever kind.” [p. 125] This is what he calls the commodity’s “use-value.” Here we are dealing with a concept that is common to any mode of production. Human beings obviously must create useful things to satisfy their needs. This is true under capitalism, was true under previous societies that preceded it, and will be true in a socialist world.

Along with this “trans-historical” aspect as use-value, however, commodities also have the aspect of “exchange-value,” which we encounter every day in the prices of the goods on store shelves. Whereas use-value is a qualitative aspect that is “conditioned by the physical properties of the commodity,” exchange-value is “first of all a quantitative relation, the proportion, in which use-values of one kind exchange for use-values of another kind.” [p. 126] Marx underscores this point as follows: “As use-values, commodities differ above all in quality, while as exchange-values they can only differ in quantity, and therefore do not contain an atom of use-value.” [p. 128]

Consider the case of tomatoes grown in a person’s backyard. As long as the tomatoes are grown simply for the consumption of the person or family that cultivates them, we are dealing exclusively with a useful product of labor—with the aspect of use-value. And it is in the consumption of that tomato that the use-value is “realized.” The backyard tomatoes might be more or less delicious than the ones on a supermarket shelf, but in either case they share the quality of being useful.

Where the supermarket tomatoes differ, of course, is that they are produced not merely for consumption but also for exchange (for money) on the market. So that the supermarket tomato is a unity of use-value and exchange-value, whereas the backyard tomato is a use-value, first and last. Here we have the key distinction for an understanding of socialism: production for exchange (and profit) and production for use.

Granted, in capitalism too, human needs are satisfied through the production of useful things. And generally speaking, a commodity will not be produced in the first place if it does not have some sort of use for someone or another. But we have a two-step process, where those needs can only be met once the commodity has been successfully exchanged—finding a purchaser at the other end. No matter how useful a commodity might be, it cannot meet human needs until it makes that leap.

The key point to retain here—and it is a simple one—is that production can exist without commodities. Although we now conflate the terms “commodity” and “product,” there is an important distinction between the two. Products of human labor must have some usefulness (otherwise that labor would be in vain) under any form of society, but only under capitalism do the vast majority of products take the form of commodities, as the unity of use-value and exchange-value.

The distinction Marx makes between use-value and exchange-value is not hard to grasp, but it requires us to call into question what we tend to take for granted. People today are so accustomed to the reality of having to pay to obtain any useful thing, that it is easy to mistake commodity production as an essential element of any form of society. This assumption prevents us from imagining a qualitatively different form of society in the future.

2: Marx’s Labor Theory of Value

Use-value is such an obvious concept that Marx only spends three paragraphs discussing it at the beginning of Capital, focusing his attention instead on the phenomenon of exchange-value, which can be expressed in the simple equation:

quantity of commodity A = quantity of commodity B

Or, to take an example Marx uses later in Capital:

10 yards of linen = 1 coat

“What does this equation signify?” That is the first key question that Marx poses in examining exchange-value. Or, more specifically: What do the commodities on either side of the equation have in common that can bring them into a relationship of equality and exchange?

The equation itself, Marx argues, with two commodities on either side of an equal sign, “signifies that a common element of identical magnitude exists in two different things.” This means that “both are therefore equal to a third thing, which is neither one nor the other.”

Although it is true that both commodities, as use-values, share the common quality of being “useful,” it is only because those use-values are different that exchange has any meaning in the first place. Clearly, it would be quite pointless to exchange two things with the same use-value. Marx therefore says that in examining exchange-value, we must set aside the use-value of commodities. “If then we disregard the use-value of commodities,” Marx writes, “only one property remains, that of being products of labor.” And in equating the labor needed to produce each commodity, it is reduced to “human labor in the abstract.”

Labor is thus what fundamentally determines a commodity’s “value.” He uses the term “value” rather than “exchange-value” because the latter is the “form of appearance” of the former. Human labor as the “substance” of value is not something visible to the eye, but in the form of exchange-value, where one commodity is equated to another—or in the case of price, where a commodity is equated to money—the intrinsic value takes on a visible, tangible form.

In any case, the way Marx throws out his “labor theory of value,” simply saying “only one property remains,” must strike many readers as a bit dubious since there are in fact commodities that are the product of little or even no labor that can fetch higher prices than labor-intensive ones. It might seem, then, that Marx is engaging in some sort of intellectual sleight of hand in which he limits discussion to commodities that are products of labor and then, lo and behold, discovers that labor is what determines value. This is a point that nearly every critic of Marx has seized upon. One of the early critics, Eugen von Bohm-Bawerk, described Marx as “one who urgently desiring to bring a white ball out of an urn takes care to secure this result by putting in white balls only.”

In order to understand Marx’s approach, it may help to take a step back and recall the first sentence of Capital, where he explains that the investigation begins with the analysis of the commodity because “the wealth of societies in which the capitalist mode of production prevails appears as an ‘immense collection of commodities’: the individual commodity appears as its elementary form.” There is obviously a vital need in any form of society to produce material wealth in order to sustain the lives of its members and prolong the existence of the society. That is true of capitalism, as it was true of the societies that preceded it.

And it should be equally obvious that this wealth can only be produced through human labor. “Every child knows,” Marx wrote to his friend Ludwig Kugelmann in 18668, “that any nation that stopped working, not for a year, but let us say, just for a few weeks, would perish.” This is a necessary and inescapable reality of any form of society: human beings must labor in order to produce material wealth. Capitalism is no different, except that under this system the vast majority of this wealth takes the form of commodities.

So when Marx is examining the commodity at the beginning of Capital, it is the commodity in this fundamental sense as the capitalistic form of material wealth. And since this wealth is necessarily the product of human labor, it is natural for Marx to identify labor as the common factor that determines commodity value.

It is true, of course, that there are “commodities” that are the product of little or no labor. But Marx thought there was a fundamental distinction between the commodity as the capitalistic form of social wealth and a commodity in the mere “formal” sense as anything with a price. In any case, he was hardly unaware of the existence of such commodities and in fact notes that “things which in and of themselves are not commodities, such as conscience, honor, etc., can be offered for sale by their holders, and thus acquire the form of commodities through their price,” so that a “thing can, formally speaking, have a price without a value.” Marx in fact goes on to explain “formal commodities” such as land or interest-bearing capital, but such explanations are premised on essential concepts such as value or surplus-value, so he is not able to explain them until those concepts have been clarified.

So much of the criticism of Marx is based on an ignorance of, or impatience with, the step-by-step method that Marx employs. His critics expect him to explain everything at once, which Marx thought was ridiculous, since “if one wanted to explain from the outset all phenomena that apparently contradict the law, one would have to provide the science beforethe science.”

So, to review a bit:

Marx begins Capital by examining the commodity as the “elementary form” of wealth under capitalism. As in any other type of society, this material wealth is made up of various products of labor, each with its own specific “use-value.” But in the case of capitalism, these products also have an exchange-value that presents itself as “the proportion in which use-values of one kind exchange for use-values of another kind,” as can be expressed in the simple equation: “quantity of commodity A = quantity of commodity B.”

Marx takes a very close look at this equation, and grasps that it follows from the equation itself that something equal is being expressed in it—namely, that both commodities are the product of labor. And the labor between them can be reduced to abstract human labor in general—abstracting from the specific type of labor that produced each use-value. This is the “substance” of value, whose form of appearance or mode of expression is exchange-value (or price).

Identifying “labor” as the fundamental determinant of value seems easily refuted by the existence of commodities that are the product of little or no labor. But this criticism ignores the fundamental concept of the commodity as the “capitalistic form of material wealth,” while also overlooking the step-by-step, scientific approach that Marx adopts, whereby he elucidates fundamental concepts before accounting for derivative phenomena. If instead we get completely lost in economic phenomena, we will completely lose sight of capitalism as one mode of production among others; and that is probably very much the point of much of the writing found in economics textbooks—to constrict the student’s vision to the point where nothing before or beyond capitalism can be imagined.

3: Marx’s Concept of “Value”

Coming to grips with the terminology that Marx uses is more than half the battle for understanding Capital. And no concept is more important than “value.” It may seem confusing that Marx begins by speaking of “exchange-value” and then introduces the term “value.” So before proceeding further, it is important to clearly distinguish between the two.

Exchange-value simply concerns the rate at which a commodity will be exchanged for another commodity at a given point in time. And when this rate of exchange, or exchange-value, is expressed in money, it is the commodity’s “price.” Exchange-value or price will fluctuate depending on the relation between supply and demand, whereas value can be thought of as the center point around which those fluctuations occur. Consider, for instance, the following exchange equation at some given point in time:

1 bicycle = 5,000 pencils

(Or, expressed in each commodity’s price: 1 bicycle = $500 / 1 pencil = $0.10)

Depending on various factors, most notably the relation between supply and demand for each commodity, the exchange-value of a new bicycle might rise to, say, 6,000 pencils or fall to 4,000, but no matter how severe the fluctuations, it would never fall to the level of “1 bicycle = 1 pencil.”

The continual fluctuations of exchange-value or price do not negate the labor theory of value, since it concerns the level around which exchange-value or price fluctuates—rather than being equivalent to price. The theory explains why the exchange-value of a bicycle would never sink so low as to be equivalent to a single pencil. The answer, according to Marx, is that the intrinsic value of a bicycle and pencil each depends on the magnitude of labor necessary for their production. This includes, not only the new (“living”) labor expended in the production process but also the old (“dead”) labor embodied in the means of production and raw materials that are consumed in that process.

Marx argues that the labor-time “objectified,” “crystallized,” or “congealed”—to borrow some of the terms he uses—in a commodity constitutes the “substance” of its value. This intrinsic value is what fundamentally determines the the level around which the commodity will tend to be exchanged.

More specifically, it is not merely “labor” but the “amount of labor socially necessary, or the labor-time socially necessary for its production,” that forms the substance of value. Marx defines this as “the labor-time required to produce any use-value under the conditions of production normal for a given society and with the average degree of skill and intensity of labor prevalent in that society.” This is important to note, because otherwise it might seem that a commodity “would be the more valuable, the more unskillful and lazy the worker who produced it, because he would need more time to complete the article” (p. 129).

Marx explains this further by using a historical example:

The introduction of power-looms into England, for example, probably reduced by one half the labor required to convert a given quantity of yarn into woven fabric. In order to do this the English hand-loom weaver in fact needed the same amount of labor-time as before; but the product of his individual hour of labor now only represented half an hour of social labor, and consequently fell to one half its former value.

Even though the fabric producers still using the old method had to expend more labor-time on production, the value of their commodities was determined by the social average for that particular type of commodity (fabric), not by the exact amount of labor that they expended on its production. In other words, in considering the value of a particular commodity, any individual unit can be viewed as an average sample, whose value is determined by the quantity of labor socially necessary to produce that particular commodity type.

The full significance of the concept of value to an understanding of capitalism can only unfold gradually in the course of clarifying how it fundamentally determines other concepts, such as “surplus-value.” And it is also too soon, at this point, to explain why there would be no room for the category of value to exist in a post-capitalist, socialist world. For the moment, however, I think it is sufficient to simply be aware of the important conceptual distinction between “value” on the one hand, and “exchange-value” and “price” on the other.

4: The “Unconscious” Functioning of Capitalism

Although it might seem, at first glance, that prices are determined by the dynamic relation between supply and demand, and the resulting fluctuations of price negate the labor theory of value, we have seen that supply and demand cannot explain the level around which the price of a commodity will fluctuate. Moreover, it is through the relation of supply and demand and price fluctuations that the “law of value” can function as the regulator of the distribution of overall labor of society to the various production sectors.

Consider our earlier example of 1 bicycle = 5,000 pencils. Or: 1 bicycle = $500 and 1 pencil = $0.10. What fundamentally determines the difference in price between these two commodities is the difference in the amount of labor necessary to produce each one (including the “dead labor” embodied in the raw materials used up in production).

But the exchange-value between the two commodities could (and indeed will) change depending on the demand for and supply of each. Let’s say that demand for bicycles increases, while demand for pencils stays the same, so that a bicycle now exchanges for 600 pencils and sells for $600.

This change has occurred even though the labor needed to produce each commodity has not changed. A critic of Marx would hasten at this point, with a smirk, to declare the labor theory of value null and void. But let’s not be so hasty and first consider what would occur in the realm of production in such a case.

Since the price of the bicycle commodity now significantly exceeds its intrinsic value, the producers of that commodity type will be able to obtain a higher profit than a producer whose price is closer to value. But if this situation continued, with demand continuing to exceed supply, it would obviously either attract new producers or lead existing ones to increase production, so that eventually the supply would be more in line with demand, and the price would again fluctuate (this time downward), so that the price of the commodity would again be hovering somewhere around the level of amount of socially necessary labor expended to produce it.

The key point here, though, especially in relation to an understanding of socialism, is not the narrow question of price fluctuation, but rather the way that the continual divergence of price from intrinsic value regulates the distribution of labor under capitalism. In the case we just looked at, labor was distributed to the sector producing bicycles because prices temporarily exceeded value by a significant margin.

In any mode of production, the overall labor of society has to be distributed to the various production sectors. This goes without saying. But under capitalism the starting point is privateproduction. “Private” here simply means that the production decisions are made at the discretion of those producers. (Incidentally, this is true even if an enterprise is state-owned.) The labor of all those private producers forms the total labor of society. This is what is sometimes described as the “anarchy” of capitalist production. That is to say, each producer freely producers for the market, but it is only clear later whether the commodities produced appropriately meet social demand.

A commodity producer can never know for sure whether the commodities produced will actually be sold, which is why Marx referred to the conversion of the commodity into money via a sale the “fatal leap” (salto mortale). If supply exceeds demand, the leap will prove fatal for some commodities—or they might only get to the other side at a bargain price; while in other cases where demand for the commodity is intense (as in our bicycle example), an eager buyer might lasso the commodity and yank it over to the other side. In any case, it is only after production has been carried out that one can know if the distribution of labor to a given production sector was appropriate or not. And then, depending on that result, more or less labor might be distributed to that sector from the aggregate labor of society.

This is the unique way that the social division of labor is regulated under capitalism. People under this system are so accustomed to privately expended labor being the starting point of production that they can hardly imagine that a fundamentally different approach might be possible. But if we look at the history of human society to date, it becomes clear that the complex and indirect way of distributing labor to production under capitalism is very much the exception, not the rule.

In pre-capitalist societies, the distribution of labor and products was still decided by the conscious will of human beings, albeit often in line with traditions and customs. Of course, apart from the earliest “primitive communist” societies, these decisions were made by the conscious will of the ruling class who appropriate the communal order toward their own ends. Nevertheless, the situation is quite transparent and easy to understand compared to the roundabout way that labor is distributed under capitalism.

The communal order is fundamentally dissolved under capitalism. The private producers each pursue their own interests and freely exchange their products on the market, indifferent to the overall distribution of society’s labor and the resulting products. There is no one, in other words, consciously deciding how to distribute labor and products. And yet the social division of labor can be regulated through the operation of the law of value, as simply sketched above.

There would be no need whatsoever for the convoluted approach to labor distribution in a socialist society. First of all, unlike capitalism, the production of useful things would be the ultimate aim, rather than a means to an end (profit). The needs of the members of society would be what guides the production decisions. So at the stage of production there is no mystery about whether the things that are produced would be useful or not. (Actually, even under capitalism, it could be clear at the production stage whether something is useful as a product, but in this strange, inhuman system something can only be truly useful if can be sold and allow the producer to obtain a profit. Very useful things can rot on the shelf or never be produced in the first place if those conditions cannot be met.)

The starting point, in other words, is not private producers whose sights are narrowly set on their own immediate interests, but rather a community that recognizes the need to work together in order to meet both collective and individual needs. The question becomes simply: what things should we produce and how can we go about producing them? All the related decisions will be made consciously through democratic means.

It is curious that such a simple approach to production is deemed impractical or utopian, while the waste- and crisis-ridden capitalist system (which is the exception in human history) is thought to be a ‘natural’ state of affairs. This is a testament to how accustomed we are to commodity production, which is all we have ever known.

to be continued