Vol III: Part 5 Chapter 25: Credit and Fictitious Capital

Why does credit arise?

Credit arises as a means of payment, loans develop for industrial capital (borrowers and lenders emerge, globally), bankers act as representatives of social capital (interest bearing capital as social capital). As credit arises from the needs of capitalism, so too do social democrat arguments about financial regulation or reform.

This chapter got us thinking about the function of workers’ collective debt and savings. The social level of saving at some point effects the total level of capital that can be lent out. Anyone got any suggestions for what to read on this? (Post links eh).

Vol III: Part 5 Chapter 24: Interest Bearing Capital as superficial form of the capital relation

General points: 1) Interest is a product of a social relation, and so 2) interest bearing capital is about a relation of quantities – a ration between a principle as a given value, and itself as self valourising value.

Think Australian small business, where managers of capital (or owners of borrowed credit) have their profits defined by interest rates, as such they are compelled to intensify labour processes (see chapter 23, p505 for more on the general disciplining character of capital). In that way the most irrational form of capital comes to structure material reality. “The fetish character of capital and the representation of this capital fetish is not complete. In M-M’ we have the irrational form of capital” (p516). And later, “But if surplus value is conceived in the irrational form of interest, the limit is only quantitative, and beggars all fantasy” (p523).

The juiciest part of this chapter, I think, is in the sections on the length of production periods and the appearance of them. Marx raises the question of the “total working day” (see page 523) – social conflict determines length of working day, but there is a physical limit to the total social labour can be exploited. Here, perhaps it would be useful to think about current attacks on welfare, the NT intervention and other attempts to force people into certain forms of labour.

Vol III: Part 5 Chapter 23: Interest and Profit Enterprise

What’s the relationship of interest to productive labour? How do rates of interest become established?

Marx argues that interest lies outside the movement of industrial capital, referring us back to the original formulas outlined in volumes I and II concerning the motion of circuits. Borrowers (presuming they are active capitalists) accrue profits – “the fruit of merely functioning with capital”; and lenders accrue interest – “the fruit of property in capital” (p498). Interest-bearing capital is capital as property, as contrasted with capital as function. Historically, interest-bearing capital is seen as ready-made subordinate form of surplus value.  “If the gross profit is equal to the average profit, the size of profit of enterprise is determined exclusively by the rate of interest” (p496) Transformation into money capital depends upon the presence of people to buy and valorise the means of production (p501). The proportion of the capitalist class who seek to act as money capitalists effects the value of interest at any given time.

“Interest therefore simply expresses the fact that value in general – objectified labour in its general social form – value that assumes the form of means of production in the actual production process, confronts living labour-power and is the means of appropriating unpaid labour; and it is this power in so far as it confronts the worker as the property of another”. (p503)

Bosses come to see interest rates as their wages (p504) – see more discussion on this in chapter 24 notes.

Labour-Power is bought for its inherent ability to create value. Capital is much the same, it is the “thing of its borrower”, whether or not the capitalist uses it as capital, when set in motion it has the inherent property of producing surplus value. “What he pays for in both cases is the surplus value inherently contained in the commodity of capital as a potentiality.” (p505)

The last part of the chapter makes an interesting argument about the visibility of the boss – and the social character that work assumes. Once attained a certain level of development, capitalism attains a certain motion with its particular disciplinary functions. We raised different ways of reading on this final section (see p511) – is this a simple critique of the “large landlord” present in cooperatives or/also perhaps Marx is referring to latent social relations beyond capitalism (tending towards some readings of the Grundrisse).

A comment on law, tendency & crisis

In Chapter 14 Marx gives variations on the theme:

“The same factors that bring about a fall in the general rate of profit provoke counter effects that inhibit this fall, delay it and in part even paralyse it. These do not annul the law but they weaken its effect. […] The law operates therefore simply as a tendency, whose effect is decisive only under certain particular circumstances and over long periods” (346).

We can immediately note that there are not parallax lines determining the development of capitalism, but instead a single line that may either cause the profit rate to fall or to cause it to increase. This single line is labour productivity: how much of a given market can be held with the least investment in labour-power? The increase in labour productivity both leads to the decline n the rate of profit and the increase in the mass of profit. Given the interaction of different industries, labour productivity can increase the rate of profit by decreasing the value of constant capital, particularly, but also variable capital.

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Capital III. Chapter 15: Development of the Law’s Internal Contradictions

parts 1 and 2 (3 & 4 to follow)

Throughout this chapter we run up against the various manifestations of the limitations and barriers to the accumulation of capital and the ways in which, as capital overcomes the barriers it sets itself, the internal contradictions become more acute. The relations of production and distribution limit the production of wealth.

I General Considerations

The fall in the rate of profit and the acceleration of accumulation both express the increase in the productivity of social labour, and result from the formations of higher compositions of capital, a higher proportion of constant capital to variable capital, which as productivity grows manifests as a relative, or even absolute, reduction in the amount of variable to constant capital: a smaller (relatively or absolutely) amount of variable capital (amount of workers) is able to set in motion a larger total capital as productivity grows. This same process accelerates the concentration and centralization of capital, as smaller capitals are ‘dispossessed’.

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Reading Capital in Sydney records reading notes on Marx’s Capital I, II and III, and other bits and pieces.

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