Sociology 250

January 29-31, 2003


Marx’s Theory of Capitalist Economics


The following notes are in point form only.  For a fuller explanation of the notes in this section see Marx’s Labour Theory of Value – notes of September 23, 1999.


1. Background


Study of alienation in 1844 – resident in Paris, France

      combines    philosophic-historical approach

            labour and material roots of alienation

            beginnings of study of political economy


1848 revolutions – Marx goes to Germany and then settles in London

      embarks on extensive study of history, British industry, and political economics

      continues journalistic and political work

      studies British political economy

            Adam Smith (1723-1790, Scottish)     

                  Wealth of Nations, 1776 – father of modern political economy

                                    surplus emerges from production, not exchange

                  social labour creates wealth

                  division of labour creates progress – invisible hand

                        advantages associated with markets and competition

                        opposed to feudal and other monoplies


            David Ricardo (1772-1823)    

                  advantages of trade – comparative advantage

                  value of commodities depends on amount of labour embodied in them

                  dismal view of future possibilities – declining rate of profit

                  Ricardian socialists – workers deserves product of own labour

                        trade unionists and socialists


1859 – Grundrisse – Foundations of political economy

      Marx sketched his analysis of capitalism in this work

      Continued further study and publishes Capital eighteen years later  


1867 – Capital – three volumes with first volume published in 1867

      critique of political economy

      detailed historical and theoretical study of emergence and development of capitalism


      1. labour theory of value

            surplus value



      2. study of historical development of capitalism

capitalist and worker – historical conditions

            dispossesion of peasants and creation of original fortunes – primitive accumuln

            capitalist dynamics – expansion, economic crises, declining rate of profit


      3. praise for capitalism

            most productive system in human history

            creates incredible wealth

            could produce plenty for all, which earlier systems could not

            revolutionizes means of production

            self-generating expa      nsion – accumulation

            sweeps away all previous systems and forms of production


      4. but – promise not fulfilled

            poverty instead of wealth


            unemployment and bankruptcy

            deforms worker and distorts and denies humanity

            separation of mental and manual labour


      5. replacement with proletarian revolution and socialism


2. Labour theory of value – “Capitalist Economics” Adams and Sydie, pp. 129-31


commodity – any goods or service traded or bought and sold

      two contractory aspects of a commodity

            use-value or usefulness of commodity

                  is part of any good or service that is purchased – useful for purchaser

                  goods and services are useful for people

                        eg. food, clothing, insurance services

                  utility – what commodity used for and how long it can be used (p. 131)

            exchange-value – created by trade or exchange

                  what a good or service receives in exchange when sold

                  could be exchange for other goods and services (barter) or money

      contradiction between use and exchange-value

            latter comes to dominate society as markets develop and expand

                  life and development of society dominated by market considerations

            development of markets leads to

                  wider exchange – more products become marketed/wider geographic scope

                  expansion of use of money

                  capital and its self-expansion

            commodity fetishism (Adams and Sydie, p. 128)

                  manner in which it was produced may not be apparent

                  source of value of commodity is hidden

                  “in a hollow way pretends to give meaning to life” (p. 128)

                  “ends in themselves, without giving true meaning to life” (p. 131)

                        conspicuous consumption

                  eg. television advertisements for SUVs


value of commodities – exchange in proportion to labour required to produce them

      all commodities are products of human labour

      only common element in all commodities is that they are products of human labour

present or living labour – amount of labour-time workers spend producing

past or dead labour – capital equipment, tools, infrastructure

            as these are used, this past labour is transformed into commodities

                  ie. depreciation of capital is transferring dead labour to commodities

      exchange of equal values – no expansion of value through trade

            how does surplus and profit emerge?          


source of surplus-value is human labour

      human labour is productive in transforming nature – use of land and raw materials

            humans use manual and mental abilities to create products

            creative ability of humans through their work and labour

            labour produced a surplus throughout history

            eg. pyramids, palaces, cathedrals of precapitalist period


      labour as useful activity and labour-power as commodity

            historically – workers separated from possession of tools, land, etc.

                  enclosures of common land, impoverishment of peasants

            workers have no means to survive except to sell own ability to work

                  ability to work or labour power becomes a commodity

                  as a commodity labour power has a use and exchange value

                        use-value of labour-power is what worker can produce

                        exchange-value of labour-power is the wage paid


      capitalist buys labour-power or ability of worker to work

            labour-power is only commodity that has ability to produce a surplus

            worker obtains a wage, sufficient for survival, but no more

                  ie. capitalist/employer pays worker the value of his/her labour-power

            capitalist/employer gets to use the labour-power of worker 


      worker works extra hours for capitalist

            ie. exploitation of worker by the capitalist

            worker paid for the value of his/her labour-power

                  ie. wage paid is what it cost to produce labour-power – subsistence

                  but human labour is productive – can create a surplus

            capitalist/employer can use labour-power of worker for whole day

                  labour-power produces more products than required to pay wage

            extra products produced by worker are property of capitalist/employer

                   these extra products sold by capitalist – are surplus-value

                  value of these extra products is surplus-value or profit to the capitalist

            surplus was always produced in human history

                  but in capitalism, surplus becomes surplus-value and profit

                  benefit of surplus is not for workers, but for capitalists


expansion of surplus-value takes two forms

      i. absolute surplus value is expansion is amount of surplus-value

            longer working day – capitalist attempts to impose these on worker

            early capitalism – 14+ hour working day not uncommon

            labour of more workers incorporated into commodity form

                  ie. peasantry transformed into working class

                  larger number of workers means more total surplus-value or profit

            limits to how far this can be extended

                  health and livelihood of workers threatened

                  only so many more workers available   

      ii. relative surplus value – main form of expansion in 20th century

            change means of production

                  ie. reduce portion of working day necessary for paying subsistence wage

            cheapen subsistence – food, clothing, housing – lowers wages

            intensify work – Taylorism and scientific management

            new technology – organize production more efficiently

                  produce more with same human labour

            today – shift production to regions of cheaper labour


struggle between workers and capitalists

      contradiction built into commodities and especially labour-power as commodity

      workers wish to raise wages and capitalists attempt to prevent wages from increasing

      struggle over length of working day, intensity of work, wages

      integral aspect of organization of capitalism – not one that can be resolved


surplus-value becomes profit, rent, and interest


accumulation – self-expansion of capital

      great transformation – markets earlier limited and embedded in society

            capitalism – markets become dominant over society

      history of markets, trade, capitalism has been one of change and expansion

            capitalism does not stand still but is always changing

            forces of competition and search for more surplus-value

      capital extends itself to new markets, new products, new regions

      globalization – beginnings with merchants and traders

            colonialism and imperialism – nineteenth and early twentieth century

            multinational corporations

            factories established in regions of low cost labour today

            universal effects of markets and capitalism – affect whole world

      domination of society by markets and commodity exchange




contradictions in capital accumulation

      struggle over working day and surplus-value

            capitalist and worker have opposed interests

      crises – periods of boom and bust in economy

            recessions and depressions

      falling rate of profit threatens capital accumulation

      creates a larger working class that Marx predicts will overthrow capitalism



      good description of nineteenth century capitalism

      useful way of looking at production

      struggle over working day – between employer and worker

      expansion of markets and forces of globalization today

society dominated by market exchange and capital accumulation


Last edited January 31, 2003


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