The collapse already happened, Adam

by Jehu

In his essay, Is capitalism collapsing?, Adam Buick is skeptical that capitalism will collapse any time soon as Ben Reynolds has argued in his book, The Coming Revolution. Capitalism in the 21st Century.

According to Adam, Ben’s argument is based on an out of context fragment pulled from Marx’s writing in the Grundrisse that purports to predict the eventual collapse of capitalism owing to the progressive reduction of labor time required to produce commodities.

Says Adam of this prediction:

“This, in fact, is the only place in the whole of Marx’s published and unpublished writings where he used the words ‘break down’ (zusammenbrechen) in connection with capitalism as an economic system. Not that this is how he expected capitalism to come to an end. This passage was a thought experiment about what would happen if capitalism were to continue indefinitely and which showed that in fact it couldn’t. Marx’s view about how he expected capitalism to end is set out at the end of the last-but-one chapter of Capital on the ‘Historical Tendency of Capitalist Accumulation’ where he wrote that the working class would end capitalism by ‘expropriating the expropriators’, i.e. by human action not mechanical breakdown.”

First, let me say that the concept of ‘mechanical breakdown’ introduced here by Adam is nonsense. There is nothing ‘mechanical’ about the idea of a capitalist breakdown. Capitalism is a social relation composed entirely of human beings. All action within the mode of production result from human actions. That the event takes place outside of human control no more makes it mechanical than anthropogenic climate change or the law of value, both of which operate outside of human control but both of which result from human action.


That said, while Adam is partially correct in this statement — this is, in fact, the only place where Marx actually predicts a “collapse” — let me be irritatingly pedantic enough to insist that Marx does not actually predict the collapse of capitalism. Let me argue for a reading of Marx that is at once both more precise and less restrictive. More precise in that it focuses precisely on what Marx actually stated and less restrictive in that it ties together arguments Marx makes in a number of texts that aren’t usually explored together by writers.

Of course, it is alright to reject my approach on this question since I am so far outside conventional thinking, but bear with me because I am usually right about this stuff.

So when did Marx predict capitalist collapse?

Let’s look at Marx’s actual prediction in the Grundrisse and compare it to Adam’s unfortunate paraphrasing:

Marx says:

‘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 … With that, production based on exchange value breaks down …’

Adam reads this to mean:

“In other words, commodities would be so cheap that they would have to be given away free, which would remove the incentive of capitalist firms to produce them as there would be no profit to be made by doing this. Production for sale with a view to profit would come to a stop.”

In my opinion, this is the most common interpretation of Marx’s argument. But is it accurate? Actually, no. Since we are dealing with production for profit, all that would be required for production to come to a halt is that commodities could no longer be sold at a profit. Commodities could still be sold, but capitals would not make a profit by selling them.

This is important to note because, in truth, Marx actually only predicts the collapse of production based on exchange value. Why does production based on exchange value collapse? The most likely explanation is because production based on exchange value has become incompatible with production for profit; which is to say, the capitalist cannot make a profit selling commodities at their values.

Another way to say this is that for some reason the rate of profit has fallen to zero. Since the rate of profit has fallen to zero, commodities must be sold at a price above their values. This is impossible so long as production is based on exchange value. Another solution was proposed by Henryk Grossman in 1929: labor power would have to be sold below its value. This would also be impossible so long as production is based on exchange value.

Either way, if production for profit were to continue, production based on exchange value would have to go away. While the production of surplus value and production based on exchange value are commonly conflated, they are not the same. Marx did not predict the end of capitalism in the fragment, he predicted the end of production based on exchange value.

There is, I argue, another term for production based on exchange value. As Marx makes clear in Capital, exchange value is the value of a commodity expressed in the form of the use-value of another commodity. The universal form of exchange value is the money commodity. When Marx predicts the collapse of production based on exchange value, he was essentially predicting the collapse of production based on commodity money — what economists used to call the gold standard.

The gold standard actually collapsed at the beginning of the Great Depression in the 1930s — and this likely marks the end of production based on exchange value.

Production based on exchange value not only collapsed as Marx predicted, it collapsed almost 90 years ago. Marxists, however, continue to analyze capitalism as if production for profit is still compatible with production based on exchange value. Thus, they can’t explain how capitalism continues to produce profits decades after the rate of profits has fallen to zero — or, what is the same thing, they can’t explain why the prices of commodities keep rising even as the value contained in commodities keeps falling.

The profit rate falls to zero

As I stated, the collapse of production based on exchange value predicted by Marx in the Grundrisse was triggered by the reduction of necessary labor in the production of commodities, but this reduction also triggers another event also predicted by Marx, but this time in chapter 15 of volume 3 of Capital. In that text, we read the one-off prediction that the reduction of direct labor time in production must also lead both to a fall in the rate of profit to zero and to the absolute overproduction of capital.

Marx then defines what he means by this:

“There would be absolute over-production of capital as soon as additional capital for purposes of capitalist production = 0. The purpose of capitalist production, however, is self-expansion of capital, i.e., appropriation of surplus-labour, production of surplus-value, of profit. 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.”

A number of Marxists have also tried to dismiss Marx’s prediction of absolute overproduction of capital as another so-called thought experiment for obvious reasons: The idea capitalism could encounter absolute overproduction implies capital has reached the absolute material limit of its development — a point where all additional surplus value produced would simply crowd out an equal or greater quantity of existing capital already actively employed in the production of surplus value.

A portion of the capital would no longer be able to act as capital, would no longer be able to produce value. Either the new capital would be forced to stand idle, or some portion of the old capital would be forced to give way and stand idle, while its place would be taken up by the new capital. The fall in the rate of profit would be accompanied by a fall in the absolute mass of profit. This would give rise to a fierce struggle among capitals as each tried to find a place in production. This situation could not be resolved by a crisis.

As I have stated, it is entirely possible that this is what we witnessed in the Great Depression of the 1930s — when production based on exchange value collapsed.

Who expropriates the expropriators?

To bring this discussion full circle, let’s return to Adam’s statement regarding the end of capitalism and the role of the working class. To be absolutely accurate, in chapter 32 of volume one of Capital, Marx does not actually write that the working class would end capitalism by expropriating the expropriators. He makes a much more ambiguous statement.

He simply says:

“The expropriators are expropriated.”

Bizarrely, in this one-off prediction Marx employs the passive voice, so we never actually know exactly who is doing the expropriating. Naturally, we assume the working class does this expropriating and up until the Great Depression it would have been correct to accuse me of misreading Marx. But then the depression hit and the working class failed to expropriate diddly.

Here is the thing: Chapter 32 is all about capital. The text actually deals with the role capital plays in the most cruel expropriation of the small producers, who are summarily driven into the ranks of the proletarians. Once this ugly process is mostly completed in the advanced countries, capital turns its attention to the gory fratricide of smaller, and then progressively larger capitals, as well as extending its barbarous reign of terror to the less developed regions of the world market, where is commences to rinse and repeat the foregoing process.

Nowhere in this process, as described by Marx in chapter 32, do the proletarians make an appearance, yet we are supposed to believe that at the end of it, the working class just walks on stage and expropriates the expropriators.

Are you fucking kidding me?

Ignore, for a moment, the actual historical record of the Great Depression. Instead, examine Marx and Engels’ own argument in the popular, widely read Socialism, Utopian and Scientific. In that tract, Marx and Engels propose the capitalists are likely expropriated not by the working class, but by the bourgeois state itself:

“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.

Capitalist crises, they write, demonstrate the bourgeoisie is incapable of managing modern productive forces; they have become superfluous. The mode of production is actively reducing them to the ranks of the surplus-population, “although not immediately into those of the industrial reserve army.” No matter what the proletariat ultimately does, the state will be forced by events beyond its control to intervene. Moreover, this intervention by the state would not be a matter of policy. The state would be forced to become the direct exploiter of the proletariat in its own right, the national capitalist. In a footnote, the two writers note that this intervention would represent a real economic advance. It would not be socialism, but it would technically prepare the way for socialism.

It has to be emphasized that Socialism, Utopian and Scientific was not a minor work. At the time of its publication, it easily eclipsed the Communist Manifesto in distribution. Although most communists identify Marx’s theory with the latter work, Socialism was Marx and Engels’ definitive statement on the subject at the time of its writing.

It is likely that this event occurred during the Great Depression of the 1930s as well. In the United States, we call it the New Deal; while in Germany they were praising Hitler for bringing back “full employment.”

United States or Germany, it was the same animal: fascism.


If in fact the collapse of production based on exchange value occurred in the 1930s, as the rate of profit fell to zero and capitalism encountered absolute overproduction of capital, it would come as no surprise that this event also saw the first systematic attempts by various states to manage national economies across the world market. None of this required that commodities become so cheap that they had to be given away. It only required that commodities could no longer be sold for a profit at their labor values.

Marx essentially predicted an event that would precede the final collapse of capitalism by decades. Production for profit would eventually become incompatible with production based on exchange value. As Engels stated it in Socialism, Utopian and Scientific, in crises “The mode of production is in rebellion against the mode of exchange.” This rebellion intensifies until the point is reached where the mode of production is literally incompatible with its own premise.

At that point the mode of exchange must collapse.