Postone’s argument is surprisingly simple:
There is a real material limit to the sum of value that can function as capital, as self-expanding value. That limit is equal to the sum of exchange value paid out to the working class in the form of wages.
Capital is production for profit and it requires for this production the employment of wage labor. It follows from this that the limit on production for profit is given by the limit on employment of labor power for purpose of value self-expansion. Labor power, the quintessential capitalist commodity, thus not only mediates the production of material wealth and its own production, it also mediates the production of capital, i.e., self-expanding value.
In Capital, (v3, ch15) Marx explains that the extraction of so much surplus value from the worker is not the end of capitalist production. The extracted surplus value must now be converted back into money:
“As soon as all the surplus-labour it was possible to squeeze out has been embodied in commodities, surplus-value has been produced. But this production of surplus-value completes but the first act of the capitalist process of production — the direct production process. Capital has absorbed so and so much unpaid labour. With the development of the process, which expresses itself in a drop in the rate of profit, the mass of surplus-value thus produced swells to immense dimensions. Now comes the second act of the process. The entire mass of commodities, i.e. , the total product, including the portion which replaces the constant and variable capital, and that representing surplus-value, must be sold. If this is not done, or done only in part, or only at prices below the prices of production, the labourer has been indeed exploited, but his exploitation is not realised as such for the capitalist, and this can be bound up with a total or partial failure to realise the surplus-value pressed out of him, indeed even with the partial or total loss of the capital.”
Even if we assume production for profit, the extraction of surplus value from the worker is not necessarily realized in the profits of the capitalist. Production and realization of surplus value are two separate phases in the circulation of capital.
Not just this, however: even if we assume variable capital has gone through both phases successfully, it has not yet been converted back into capital again until it has been exchanged for labor power once again.
To function as capital, a mass of money must be converted into labor power; put to work producing a mass of commodities; that mass of commodities sold; and, the money once again converted into labor power.
Money is not capital. To become capital money must be exchanged for labor power and the labor power put to work producing surplus value. This has to be emphasized because many folks conflate money — especially very large amounts of money — with capital. The massive hoard of cash that Apple is sitting on today, according to reports in the financial press, is not capital. It is money. To become capital it would have to be converted into (exchanged for) labor power and set to work producing surplus value.
Money is capital only to the extent it is exchanged for labor power for purpose of self-expansion of the value of the money. Although this appears to be unproblematic, in fact the employment of labor power for self-expansion of the value of the money is not a straightforward as it appears. Witness, for instance, the massive hoard of corporate cash Apple has — now estimated at nearly a quarter-trillion dollars.
Apple is sitting on such a large pile of cash precisely because this cash cannot become capital, can not find a way to be exchanged for labor power for purposes of self-expansion of its value.
Interestingly, in volume 3, chapter 15, Marx predicts that this must eventually occur as the rate of profit falls to a level that only the very largest capitals find it possible to profitably employ l;labor power:
“A drop in the rate of profit is attended by a rise in the minimum capital required by an individual capitalist for the productive employment of labour; required both for its exploitation generally, and for making the consumed labour-time suffice as the labour-time necessary for the production of the commodities, so that it does not exceed the average social labour-time required for the production of the commodities. Concentration increases simultaneously, because beyond certain limits a large capital with a small rate of profit accumulates faster than a small capital with a large rate of profit. At a certain high point this increasing concentration in its turn causes a new fall in the rate of profit. The mass of small dispersed capitals is thereby driven along the adventurous road of speculation, credit frauds, stock swindles, and crises. The so-called plethora of capital always applies essentially to a plethora of the capital for which the fall in the rate of profit is not compensated through the mass of profit — this is always true of newly developing fresh offshoots of capital — or to a plethora which places capitals incapable of action on their own at the disposal of the managers of large enterprises in the form of credit. This plethora of capital arises from the same causes as those which call forth relative over-population, and is, therefore, a phenomenon supplementing the latter, although they stand at opposite poles — unemployed capital at one pole, and unemployed worker population at the other.”
As I read Marx, it would seem that Apple’s quarter-trillion dollars worth of dead capital is now below the minimum required by Apple for the productive employment of labor. The very idea is staggering to me. How can this be? In what alternative reality would $250 billion be too little capital to make a decent profit?
Marx explains that is can only be caused by a massive superfluity, superabundance, of capital, such that additional investment results in general devaluation of the total capital:
“As soon as capital would, therefore, have grown in such a ratio to the labouring population that neither the absolute working-time supplied by this population, nor the relative surplus working-time, could be expanded any further (this last would not be feasible at any rate in the case when the demand for labour were so strong that there were a tendency for wages to rise); at a point, therefore, when the increased capital produced just as much, or even less, surplus-value than it did before its increase, there would be absolute over-production of capital; i.e., the increased capital C + ΔC would produce no more, or even less, profit than capital C before its expansion by ΔC. In both cases there would be a steep and sudden fall in the general rate of profit, but this time due to a change in the composition of capital not caused by the development of the productive forces, but rather by a rise in the money-value of the variable capital (because of increased wages) and the corresponding reduction in the proportion of surplus-labour to necessary labour.”
We are all familiar with what is called simple capitalist overproduction. It is when capitalist firms produce too many shoes or houses. When a firm produces too many shoes or too many houses to sell them profitably in the market because the sudden glut of shoes and houses collapse prices.
Marx went one step further. He predicted that eventually capitalism would not just produce too many shoes and houses, but too much capital to be invested at a profit. At that point new investment would halt. He called this form of overproduction the absolute overproduction of capital.
Does Apple’s quarter-trillion dollars of dead capital signal we have reached absolute overproduction of capital? How would we know if this was the case? Even Postone claims Marx’s theory can’t be verified empirically. The question is pertinent because, as of March 2017, the dead capital of the Fortune 500 now amounts to almost 3 trillion dollars. Basically, three trillion dollars is now an insufficient mass of capital to invest profitably.
Just to be clear what that means, only four countries have a GDP greater than three trillion dollars: the United States, China, Japan and Germany.
Although converting money into capital may seem like a pretty straightforward proposition — you buy a bunch of labor powers and set them to work producing widgets — the minimum mass of capital sufficient to engage in this sort of behavior now exceeds three trillion dollars.
The question this massive hoard of dead capital should raise to everyone is whether it is a practical expression of what Postone means when he says value has become anachronistic? Is this hoard of dead capital now entirely superfluous to the production of material wealth and (thus) incapable of further self-expansion?
And even if it is superfluous as capital can it still be employed for purpose of addressing problems like poverty, environmental degradation, inequality and so on?
The first question addresses the implications of dead capital as capital — as a mass of value seeking its own self-expansion. The second question, however, asks if value itself, aside from its purpose as capital, has any other usefulness to society.
Even if we assume, based on the behavior of the Fortune 500, that the hoard has no usefulness as capital, Postone has argued that it is not just useless as capital, but anachronistic as value as well. For any social real purpose, the hoard of dead capital might as well not exist at all.
Many people might concede Apple’s hoard is far in excess of what can be employed by Apple to produce surplus value. But no one I know of suggests Apple’s hoard can’t be employed as (for instance) state revenue — that is for a purpose other than capitalistic self-expansion; for ‘investment’ in infrastructure, basic income, national healthcare, etc.
However, Postone’s argument is that, even for these purposes, Apple’s hoard of dead capital is completely superfluous.