The Contradictions of Capital

The wealth disparity of the world we live in today is unlike that ever-recorded in human history. The centralisation of wealth, and thus power, has seen global society fractured down many lines. The result is a struggle between those with a monopoly on wealth, and those without access to its rewards; but it is not a struggle that the majority seems to be winning.

It seemed to me that it was time to revisit the work of Karl Marx. What follows is an extract from the introduction to my current thesis which looks to marry Marx’ analysis of the relations between Wage-Labour and Capital to current predictions concerning the impact of automation and artificial intelligence on the labour market.

In the final chapters of Wage-Labour and Capital Marx approaches the crux of his argument – the unsustainability of capitalist social relations. For Marx, the capitalist and the worker have a symbiotic relationship. Just as the worker, under capitalism, needs the wage-labour of the capitalist to survive, capital requires a class of workers to facilitate its function. ‘The existence of a class which possess nothing but the ability to work is a necessary presupposition of capital’. The two are codependent, a change in the nature of one will undoubtedly affect the nature of the other.

Moreover, as Marx’ explains, the success of capital is the best hope for an improvement in the quality of life of the worker under the system of wage-labour. ‘The fastest possible growth of productive capital is, therefore, the indispensable condition for tolerable life to the labourer’. This notion of ‘trickle-down’ economics is one that has become an ethic in the modern day system of Capitalism. As Adam Smith labelled it, ‘the invisible hand’ of capital distributes a fraction of its profit to the worker through reinvestment in its productive forces.  This is a central facet of the neoclassical laissez-faire economic system of capital, and Marx actively corroborates its existence.

Marx breaks from this logic, however, when considering whether this system is in the interest of the worker. Whilst classical Smithian economics, and more recently Keynesian economics, understands an improvement in the absolute financial position of the worker as not only permissive, but positive; Marx focuses on the relative wealth of the worker in relation to the capitalist. As capital will always seek to maximise profits, an increase in surplus value will always be taken on in greater measure by the capitalist than is donated to the worker in wages. With an improvement in the means of production, the capitalist will reap the financial reward at the greater rate than that of the worker. Thus, Marx explains, as capital improves, the relative position of the worker in relation to capital is degraded;

‘To say that “the worker has an interest in the rapid growth of capital”, means only this: that the more speedily the worker augments the wealth of the capitalist, the larger will be the crumbs which fall to him, the more can the mass of slaves dependent on capital be increased’

The emphasis Marx’ places here on relative income over real or nominal wages is the basis of his central critique of capitalism, and this point is made emphatically in chapter 8 of this work, ‘The Interests of Capital and Wage-Labour are Diametrically Opposed’ .

For Marx however, it is not just the relative wage of the worker that is constantly depressed under Capitalism, but similarly the worker’s life-activity. As inequality extends with the rate of return on capital increasing over that of wage-labour, the worker’s dependency on capital is exaggerated. Using increasingly productive fixed capital and division of labour, the capitalist extracts greater labour from the labour-power of the worker, often in the form of a multiplication in the hours of labour or the intensification of work itself. As a result, the labourer increasingly submits to capital, furthering their own alienation and entrenching the system by which they are estranged.

‘The Social Chasm’

The diametrically opposing interests of wage-labour and capital create the social tensions that underline the basis of Marx’ theory set out in The Communist Manifesto that ‘All history is the history of class struggle’. This underpins his theory of historical materialism. In the final chapter of Wage-Labour and Capital Marx asserts that the continued growth in the relative disparity between the wealth of the capitalist class and that of the working class leaves behind a  ‘a widening of the social chasm’. As the power of the capitalist over the class of workers intensifies, the social position of the worker is worsened, this tension creates periodic crises in the workings of the system. Not only is the worker naturally disillusioned through an alienation from the system itself, but the dwindling in their relative earnings means the ever-increasing requirement of capital for a consumer base is matched with a relative reduction in the buying-power of the consumer.

Marx’ theorised that this contradiction, without intervention, would make the system of capitalism unsustainable. As he put it;

‘in short, the crises increase. They become more frequent and more violent, if for no other reason, than for this alone, that in the same measure in which the mass of products grows, and there the needs for extensive markets, in the same measure does the world market shrink ever more, and ever fewer markets remain to be exploited, since every previous crisis has subjected to the commerce of the world hitherto unconquered or but superficially exploited market’

The failure of capital to locate a consumer base to support its insatiable bid for reproduction creates ‘industrial earthquakes’, that will inevitably lead to a breakdown of the system. This breakdown would represent the destruction not only of capital itself, but of the workers dependent on that capital; ‘Like a master, at once distinguished and barbarous, it [capital] drags with it into its grave the corpses of its slaves, whole hecatombs of workers, who perish in the crises’. Thus ‘what the bourgeoisie produces, above all, are its own grave-diggers’. 

Image Courtesy of Period Paper

Key Sources:

K. Marx, Wage-Labour and Capital

K. Marx, The Communist Manifesto

K. Marx, The German Ideology 

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s