CLASS THREE: HOW CAPITALISM WORKS (Part Two)
1. WHAT IS THE ACCUMULATION OF CAPITAL?
The transformation of surplus value into new capital so as to increase the amount of capital in the hands of an individual or firm. Even if the rate of exploitation remains unchanged, the accumulation of capital enables the number of exploited workers employed by a particular individual or firm to be increased, so increasing the total surplus value obtained by the individual or firm concerned.
2. THE NEW MEANS OF PRODUCTION
OBTAINED AS A RESULT OF THE ACCUMULATION OF CAPITAL TEND TO BE MORE MECHANISED
THAN THE OLD.
WHAT ADVANTAGE DOES THIS GIVE TO THE FIRM CONCERNED?
The increased productivity resulting
from the increased mechanisation reduces the cost of production of each
commodity, enabling the firm concerned (as long as it enjoys a technical
advantage over its rivals) to make an above-average rate of profit.
NOTE: We call the ratio of constant capital (plant, etc.) to variable capital (wages), the organic composition of capital. Thus, the organic composition of capital tends constantly to increase.
3. WHAT IS CONCENTRATION OF CAPITAL?
The enlargement of individual capitals into larger and larger units. The concentration of capital follows from the process of accumulation of capital. (Note by Alliance: Sometimes known under the term "Primitive accumulation").
4. LEAVING ON ONE SIDE THE ACCUMULATION
AND MECHANISATION OF CAPITAL, HOW ELSE CAN A CAPITALIST FIRM INCREASE ITS
Only by increasing the amount of surplus value it obtains from each of its workers, for example:
The division of the value produced by the workers between the two classes -- the working class and the capitalist class. Leaving on one side the accumulation and mechanisation of capital, higher profits can be obtained only at the expense of the living and working conditions of the working class, while improved living and working conditions for workers can be obtained only at the expense of profit.
There is, therefore, a fundamental conflict of interest between the working class and the capitalist class. At times smouldering beneath the surface, at times bursting into the open flames of strike or lock-out, the class struggle is inherent in capitalist society. No repressive measures can do more than hold it down for a while. It will disappear only when capitalists and capitalism no longer exist.
6. WHAT IS THE BASIC CAUSE OF SLUMPS?
8. WHAT IS MONOPOLY?
A firm, or association of firms, which possesses monopoly power, i.e., which controls so much of the output of a commodity within a market that a competitive market can no longer be said to exist.
9. WHAT ARE THE ADVANTAGES OF
MONOPOLY POWER TO THE CAPITALISTS POSSESSING IT?
A monopoly can price its commodities higher than would be possible under conditions of competition, i.e., it can sell its commodities above their value. It can assist this process further by restricting output. Thus, a monopoly can make a higher rate of profit than would be possible under conditions of competition.
10. A MONOPOLY MAY BE:
(i) A TRUST; (ii) A COMBINE, OR (iii) A CARTEL.
WHAT ARE THE CHARACTERISTICS OF EACH?
12. WHAT IS FINANCE CAPITAL?
As capitalism develops, concentration and centralisation, of capital proceed in banking as in industry, and a merging of bank and industrial capital takes place, so that a small group of monopoly capitalists -- a financial oligarchy -- comes to control the large banks and financial institutions as well as the large industrial firms. This merged bank and industrial capital is called finance capital.
13. WE HAVE SEEN THAT THE CAPITALIST
CLASSES OF ALL COUNTRIES ARE FACED WITH A MARKET PROBLEM HOW DO THEY ENDEAVOR
TO SOLVE THIS PROBLEM?
'In theory' they could raise the workers' wages to equal the value of the commodities they produce, but since this would reduce their profits to nil, capitalists reject this solution. Consequently, they endeavor to solve their perennial market problem by exporting commodities. Since all the developed capitalist countries have a market problem, each tends to direct its export drive primarily towards less developed countries.
14. WHY DOES THE EXPORT OF COMMODITIES
TEND TO LEAD TO THE EXPORT OF CAPITAL AND TO COLONIALISM?
Because an underdeveloped country is economically backwards, its population as a whole tends to be poor. Furthermore, its economy tends to be autarkic (that is, relatively self-contained). Consequently, an underdeveloped country provides a poor market for the surplus commodities from a developed capitalist country unless its economy is radically transformed.
This is one reason why capitalist firms in developed capitalist countries 'export capital' to such underdeveloped countries, i.e., invest it in the acquisition of large tracts of land for conversion into plantations or mines.
These capitalist firms flood the underdeveloped country with cheap manufactured goods which ruin many of the native artisans (who still use handicraft methods which cannot compete with machine production). And if they can control the administration of the underdeveloped country -- a process known as colonialism -- they can force a large part of the peasantry from the land they traditionally held (for example, by imposing money taxes which can be met only from wages).
These ruined artisans and landless peasants are compelled to seek employment at starvation wages in foreign-owned plantations or mines producing cheap raw materials and food for the developed capitalist countries (at a very high rate of profit for the firms involved). This provides a second important reason for the export of capital.
15. WHAT ARE SUPER-PROFITS?
Surplus value which a capitalist class obtains by the exploitation of workers outside its own country, particularly in underdeveloped colonial-type countries where the degree of civilisation (and so the value and price of labour power) is lower than in the developed capitalist country, so that the rate of profit is (often very considerably) higher.
16. WHAT IS A COLONY?
A colonial-type country which is administered directly by a developed capitalist country, e.g., Gibraltar, Northern Ireland.
17. WHAT IS A SEMI-COLONY?
A country which is nominally independent but is in fact dominated by a foreign power (e.g., Saudi Arabia).
18. SOME PEOPLE CLAIM THAT THE
WORKING CLASS OF A DEVELOPED CAPITALIST COUNTRY AS A WHOLE SHARES IN THE
EXPLOITATION OF COLONIAL-TYPE COUNTRIES.
IS THIS TRUE?
No. Super-profits from the exploitation of the working people of colonial-type countries go to the capitalists of the developed capitalist countries concerned. While a small portion of these super-profits may be used to bribe a stratum of highly-paid workers (mainly the officials in the labour movement who act as agents of capital) the workers as a whole receive only the value of their labour power in wages and do not share in the super-profits.
Nevertheless, the existence of the small stratum of workers bribed by imperialist super-profits (the so-called 'labour aristocracy') creates an objective split in the working class which complicates the development of the socialist movement.
For the most part, however, the fact that the standard of living of the British workers has risen over the past hundred years is not because they receive in wages more than the value of their labour-power, but because the value of their labour-power has increased.
A considerable part of the super-profits from colonial-type countries has been used to accumulate capital and mechanise production at home, so that productivity has risen and with it the 'degree of civilisation' which contributes to the determination of the value of labour power. In other words, total production has risen very considerably over the last century and the working class has been accorded a minor portion of this in the form of increased real wages. However, the share of total production received in wages by the working class has fallen, so that the exploitation of the British working class has increased over this period.
19. THE ECONOMIC TRANSFORMATION
OF A COLONIAL-TYPE COUNTRY LIMITS IN TIME THE USEFULNESS OF THE COUNTRY
TO THE DEVELOPED CAPITALIST COUNTRY CONCERNED.
HOW DOES THIS COME ABOUT?
The capitalists of the dominating country need a stratum of well-educated native people to serve them as civil servants, office workers, etc., and these people become frustrated by the fact that the higher positions are reserved for representatives of the foreign dominating power.
Furthermore, although the foreign capitalists try to limit capitalist development in the colonial-type country, they need railways, harbours, etc. in order to bring out raw materials and food from the country. This helps to bring about the development of a national capitalist class or national bourgeoisie which, although frustrated in many ways by the dominating foreign power (frustrations which assist in developing the political consciousness of the national bourgeoisie), develops a degree of native capitalist industry which competes with the export industries of the developed capitalist country.
It also creates an industrial working class, small in size but relatively concentrated; this naturally gives rise to a labour movement, which begins to struggle for higher wages and better working conditions.
In time, all these factors lead to the rise of a national liberation movement, led initially by the national bourgeoisie, the aim of which is to free the colonial-type country from the domination and exploitation of the foreign capitalists.
20. HOW DO THE CAPITALISTS OF THE DOMINATING FOREIGN POWER RESPOND TO THE RISE OF A NATIONAL LIBERATION MOVEMENT?
ii) Karl Marx: Various chapters
from part VIII of "Capital": including:
Chapter xxvi "The Secret of primitive accumulation"; p.100-103; "Selected Works" Volume 2; Moscow; 1973; OR: http://www.marxists.org/archive/marx/works/1867-c1/ch26.htm
Chapter xxvii Expropriation of the land from the agricultural population; p.103-118; Selected Works Volume 2; Moscow; 1973; OR: http://www.marxists.org/archive/marx/works/1867-c1/ch27.htm
Chapter xxxii "Historical tendency of Capitalist accumulation"; p.142-146. "Selected Works"; Volume 2; Moscow; 1973; OR: http://www.marxists.org/archive/marx/works/1867-c1/ch32.htm
2) On the Labour Aristocracy:
i) Frederick Engels: "Trade Unions-I"; "Marx & Engels, Articles on Britain"; Moscow 1971; In pp373-380; OR: http://www.marxists.org/archive/marx/works/1881-ls/ls03.htm
ii) Frederick Engels: chapter entitled "labour Movement"; (p501-530) of the Working Class in England"; in "Collected Works"; Volume 4; Moscow 1975. or: http://www.marxists.org/archive/marx/works/1840/cond-wce/cwe10.htm
iii) Lenin Vladimir I: "What Is To Be Done?" section entitled :"Trade-Unionist Politics & Social-Democratic Politics" In Selected Works Volume 1; Moscow 1977; pp.132-165. NOTE: that the term "Social-Democratic" was used to mean Marxist, before Social-Democrats betrayed Marxism. OR AT: http://gate.cruzio.com/~marx2mao/Lenin/WD02i.html#WD3
3) On Colonialisation
i) Marx Karl: "The British Rule in India"; p.166; This is not so far on the web, but "Marx & Engels, Articles on Britain"; Moscow 1971; Progress Publishers; OR: IN Collected Works"; Volume 12; Moscow 1979; p.125;
ii) Marx Karl: "The Future Results of the British Rule in India"; p.197-203; In"Marx & Engels, Articles on Britain"; Moscow 1971; or "Collected Works"; Volume 12; Moscow 1979; 217-223.
4) On Imperialism
Vladimir I Lenin: "Imperialism The Highest Stage of Capitalism"; Selected Works; Volume 1; p.633-726; Collected Works Volume 27; OR: http://gate.cruzio.com/~marx2mao/Lenin/IMP16.html