Capital, commodity production and collapse (III): Collapse of what?

by Jehu

Part 3: Breakdown in Marx’s Theory

So, I have been mulling Marx’s prediction of the ultimate result of capitalist development with increasing confusion — confusion because Marx is extremely precise, yet he never exactly predicts the breakdown or collapse of capitalism itself.

Marx makes three important predictions about capitalism.

First, in the Grundrisse, he predicts,

“As soon as labour in the direct form has ceased to be the great well-spring of wealth, labour time ceases and must cease to be its measure, and hence exchange value [must cease to be the measure] of use value. The surplus labour of the mass has ceased to be the condition for the development of general wealth, just as the non-labour of the few, for the development of the general powers of the human head. With that, production based on exchange value breaks down, and the direct, material production process is stripped of the form of penury and antithesis.”

Second, in Capital Volume 1, he predicts,

“The monopoly of capital becomes a fetter upon the mode of production, which has sprung up and flourished along with, and under it. Centralisation of the means of production and socialisation of labour at last reach a point where they become incompatible with their capitalist integument. This integument is burst asunder. The knell of capitalist private property sounds. The expropriators are expropriated. “

Third, in “Socialism”, Marx and Engels predict,

“In the trusts, freedom of competition changes into its very opposite — into monopoly; and the production without any definite plan of capitalistic society capitulates to the production upon a definite plan of the invading socialistic society. Certainly, this is so far still to the benefit and advantage of the capitalists. But, in this case, the exploitation is so palpable, that it must break down. No nation will put up with production conducted by trusts, with so barefaced an exploitation of the community by a small band of dividend-mongers.

In any case, with trusts or without, the official representative of capitalist society — the state — will ultimately have to undertake the direction of production. This necessity for conversion into State property is felt first in the great institutions for intercourse and communication — the post office, the telegraphs, the railways.”

In these three passages, Marx predicts profound changes are in the offing for society, but he never actually predicts the collapse of capitalism. Why? There are several explanations for this:

a. He didn’t finish capital, or
b. Capital doesn’t collapse, or
c. Whether capital collapsed or not wasn’t the point he was trying to make in the first place.

Production for profit versus production based on exchange value

I think a can be ruled out, because Capital volume 1 is a complete summary of his theory that can stand on its own. If volume 1 is complete, Marx either didn’t think capitalism itself collapses or did not think this was the most important point to be made. Unfortunately, he’s dead, so we can’t ask him but we can examine the three predictions he did make, none of which seems to predict the actual collapse of capitalism.

Marx makes three definite predictions:

  1. Production on the basis of exchange value breaks down;
  2. capitalist private property is expropriated; and
  3. the state undertakes the direction of capitalist production.

None of these three predictions directly states capitalism collapses, although the context for each might be seen as appropriate for precisely such a prediction. Marx deliberately employed the formulation “production based on exchange value”, not “production for profit.” in his Grundrisse. Yet, we know, as he constantly emphasized, that capital is “production of surplus value, production for profit”, not simply production based on exchange value. It has to be asked why, in the Grundrisse, Marx avoids saying “production of surplus value” breaks down.

The simplest, most obvious answer is that Marx either did not think production of surplus value collapses or that this was a possible, but not necessary outcome. My hypothesis is Marx could show the breakdown of production based on exchange value necessarily had to collapse, but not production for profit. For this to be true, production based on exchange value must not be the same thing as production for profit. The two modes of production, although related, must not necessarily be the same thing.

But this contradicts the accepted interpretation of labor theory. Most Marxist theorists who have looked at this question deny there are two distinct modes or systems of production. The dominant view is that Marx’s discussion of simple commodity production in chapter 1 of volume 1 is not meant to be historical, but only theoretical; which is to say, in contradiction to Engels, most Marxists hold there was no period of pre-capitalist commodity production. This is the assumption, for instance, that Moseley makes in his new book; and it has also been made by Arthur.

However, if there was a period of pre-capitalist commodity production, capital itself arises both as a form of this production and as a peculiar manifestation of it: its distinctive characteristic being that labor itself has become a commodity to be sold in the market. With capital we have two distinct players in the market: one who directly produces his product for sale and another who sells her labor power to a capitalist who, in turn, employs it to produce commodities for sale in the market. Capital, as a specific historical form, is indirectly founded on the first and directly founded on the second of these two.

Thus, it is possible, at least in principle, to conceive the first form of commodity production might disappear, while the second form continues. And, in fact, this is the principle argument Marx makes in chapter 32 of Capital volume 1: The Historical Tendency of Capitalist Accumulation. The direct producer is expropriated, leaving behind huge capitals that gradually reduce their own numbers through competition. Kautsky goes so far as to argue the whole of society would end up selling its labor power to a single capital. Thus, it is possible to conclude the collapse of production based on exchange value is not the same as the collapse of production of surplus value. If this is true, Marx’s choice of the formulation, “production based on exchange value breaks down”, was significant.

Exactly who is expropriating the expropriators

In Marx’s second prediction, taken from Capital, I find an equally ambiguous formulation. In that formulation, Marx argues capitalist private property is abolished. However, the interesting thing about Marx’s formulation is his employment of the passive voice. Who, exactly, is expropriating this capitalist private property? Certainly not the social producer, because, in Marx’s argument, the producer is “given”, “individual property based on the acquisition of the capitalist era.” The employment of the passive voice with regards to who is expropriating capitalist private property and the passive role of the producer who is given individual property, suggests there is possibly a third player who is actually doing the expropriating and giving.

Why does Marx employ this frustratingly ambiguous formulation when he could have just as easily said: “The proletariat seizes capitalist property and realizes production based on each according to their work”? Again, I think Marx employs this (awkwardly) passive formulation because the actual situation is necessarily contingent of other historical (i.e., political) factors. What he can say unambiguously is that capitalist private property is expropriated, but who does this expropriation and how it is accomplished cannot be determined because it relies on a number of contingencies. There is a necessity arising directly from the law of value — capitalist private property is abolished — but how this necessity is expressed concretely is contingent.

To put this in concrete terms, capitalist private property would have to go, but it could be abolished by the working class or the state. And, interesting enough, this is exactly the prediction Marx and Engels make in “Socialism”. The conversion of capitalist private property into public property becomes inevitable even if the present state has to do this.

It seems to me, at least in his published works, Marx is not engaged in speculating of the outcome of merely political events. He basically confines his argument to those points about capital he can argue are economically necessary in its development. For instance, production for profit necessarily leads to collapse of production on the basis of exchange value. It also leads to expropriation of the direct producers and ultimately of capitalist private property. Finally, it leads to the public management of the entire process of production. What is contingent in all of this are the definite political forms within which “the necessary” is expressed.

Production based on exchange value breaks down — and Marx predicts this — but Marx does not predict production for profit breaks down.  Capitalist private property is expropriated, but Marx does not predict the working class does the expropriating. The state undertakes production, but Marx does not assert this is directly undertaken by a state of the social producers. In sum, capitalism is making definite and irreversible alterations in society that must be expressed no matter its form of state, but what remains to be determined by history is the form of state under which these changes will be made.

Marx and Neoliberalism

To pull all of this together into a single thread, Marx predicts an event where production based on exchange value collapses; capitalist private property is abolished; and management of production becomes a public function.  This predicted event, however, may not immediately result in the abolition of production for profit; instead, Marx and Engels leave open the possibility the break down of production based on exchange “does not do away with the capitalistic nature of the productive forces”; rather, the state becomes the national capitalist.

Where this leads next is the big unanswered question. All we know is that Marx and Engels believed the state “topples over.” Why this must happen remains so far unaddressed by labor theorists. But I suggest it may be exactly what we call neoliberalism, the bizarre spectacle of capitalism trying to kill its own state.