Capitalist production must progress, for standing still means retrogression. It cannot cease accumulating without disrupting the whole social fabric on which it rests. Any static analysis of its relationships is purely fictitious, and is excusable only as a possible medium for grasping its real dynamics. In order to secure a continuous production of surplus-value adequate to the constant need to accumulate capital (which is the capitalistically-necessary precondition for a more or less satisfactory social production in real terms – such as sustains social existence) capitalism must unceasingly revolutionize the sphere of production in its search for ever more surplus-value, and must consistently expand its markets in order to transform surplus-value into additional capital. Yet the realization of surplus-value depends not simply on a larger market, but on one which allows for the expansion of capital in the form of new means of production, for the realization of surplus-value as capital.

Accumulation proceeds by way of competition. This is not to say that capitalism depends on competition. Just the same, competition is its true mode of motion. “So long as capital is still weak,” Marx wrote, “it supports itself by leaning on the crutches of past, or disappearing, modes of production. As soon as it begins to feel itself strong, it throws away these crutches and moves about in accordance with its own laws of motion. But as soon as it begins to feel itself as a hindrance to further development and is recognized as such, it adapts forms of behavior through the harnessing of competition which seemingly indicate its absolute rule but actually point to its decay and dissolution.”^[1] In other words, a “healthy” capitalism is a strictly competitive capitalism, and the imperfections of competition in the early and late stages of its development must be regarded as the ailments of an infantile and of a senile capitalism. For a capitalism which restricts competition cannot find its indirect “regulation” in the price and market movements which derive from the value relations in the production process.

Marx was concerned with the competitively-expanding private-property capitalism of his time, which either advances by way of accumulation or suffers crisis and depression. When he speaks of the “self-expansion” of capital, of “accumulation for the sake of accumulation,” he speaks of the compulsive and never-resting drive for exchange-value. This drive, while making capitalism the hitherto most productive social system of production, also accounts for all its social and economic difficulties and, finally, for its tendency to freeze the social forces of production when and wherever their further development collides with the specific capitalist relations of production. The principle of accumulation accounts for both the rise and the decline of capitalism. The contradictions of capital formation – all traceable to the value character of capital production – both foster and retard the general development of the productive powers of society. But at some point in the accumulation process “the development of the social productive power turns into an obstacle to capital, or, what is the same, the capitalist relations of production become obstacles to the further development of the productive power of social labor. At this point, capital and wage-labor stand in the same relation to the development of social production and social wealth as did, previously, the guild-system, serfdom, and slavery. The fetters of capital production must now be shed. Contradictions, crises, social convulsions point to the incompatibility of the social productive development with the capitalist relations of production. In the violent destruction of capital, not by external circumstances, but as a condition of its self-preservation, it becomes evident that capitalism’s time is done and that it must be replaced by a higher state of social production.”^[2]

By contemplating the effect of the increasing productivity of labor upon the capitalist relations as economic value relations, Marx was able to predict the major trend of capital expansion, even though these predictions relate to no more than the broad “historical tendency of capitalist accumulation.”^[3] His highly abstract model of capital expansion can explain only why capital moves by way of expansion and contraction, and why this kind of locomotion finds increasingly more obstacles put in its way by the always growing mass of capital, its concentration and centralization, its rising organic composition, and the latter’s detrimental effect upon its profitability. But these findings are logical conclusions drawn from a model bound to a limited set of economic assumptions, which, though basic to the capitalist system, do not exhaust the concrete capitalist world.

Although there is no real understanding of given reality without a theory of development, such a theory tells only where to look in the attempt to comprehend the unfolding real world of capital production. The logical end-consequence of capital development as a value expansion process need not become a practical reality; yet, at any particular time, the theory provides a point of orientation for a narrower, more concrete analysis of the actual movements of capital production. If capitalism could get out of its own skin, so to speak, and suddenly become something other than itself, then, of course, the value analysis of capital expansion would be quite superfluous. As it is, however, any particular mode of production rests on definite social production relations which remain unaltered no matter how much the mode of production may be modified. So long as social relations are economic value relations and determine the general development as such, capitalist accumulation will have the historical tendency detected by Marx.

Marx’s value theory of capital development is at once a general theory of accumulation and a special crisis theory; that is to say, neither the one nor the other can be dealt with separately. Assuming an uninterrupted capital expansion in a closed system, the general theory reveals the fall of the rate of profit as a consequence of the rising organic composition of capital. However, this general tendency comes to the fore only in periods of crisis, with the over production of capital. Only through these actual occurrences does the general theory gain its practical importance. The real limitations of the capitalist system are not given by the abstract tendential fall of the rate of profit as elucidated in the value model, but reveal themselves in the concrete conditions of the crisis of over-accumulation.

The only relevant crisis-point in the general theory of capital accumulation is that point at which surplus-value can no longer be sufficiently increased to overcome the tendential fall of the rate of profit by permitting an accelerated capital expansion. In the real world there is no way whatsoever to determine when such a point will be reached. The actual capital accumulation process can be slowed down and is, in fact, constantly slowed down by nonproductive, i.e. non-profitable, capital expenditures, by the outright destruction of capital (as in times of war), and by political interventions in the economy. The average rate of capital expansion, calculated over a period of time, is quite moderate and does not seem to justify the expectation that capital will find its end in the tendential fall of the rate of profit as depicted in Marx’s model of capital accumulation. The distinction between the model and reality must always be kept in mind.

However, it is not the average rate of accumulation over long periods of time which determines social activities, but the actual state of capital production at any given time – during periods of prosperity or periods of depression. Marx’s general theory of accumulation makes clear “that the real barrier to capitalist production is capital itself. It is the fact that capital and its self-expansion appear as the starting and the closing point, as the motive and aim of production; that production is merely production for capital, and not vice versa, the means of production mere means for an ever-expanding system of the life process for the benefit of the society of producers.”^[4] Yet because capital production has this character, it can for a time overcome the barriers it sets in its own way. It is not until this mode of production actually and permanently becomes a hindrance to a further unfolding of the social productive powers that its immanent barriers appear as absolute barriers in the concrete world of capital production.

Although the general law of accumulation points to the historical limits of capitalism, there is no way of telling when these limits will be reached – that is, what particular conditions in the fluctuations of capital production will constitute that crisis point which the system will not be able to overcome. But since capitalism is beset with crises of always greater destructiveness, the social convulsions released by any crisis could – with luck – lead to social actions that could end the capitalist system. With the rise of capitalism there also arose the new class of industrial workers. If these workers become conscious of their class position and of the historical obsolescence of capitalism, it is not inconceivable that they would elect to abolish their own conditions of exploitation and deprivation by ending the capitalist system through political means.

This not only was conceivable but in some measure actually occurred, finding its expression in the rise of an anti-capitalist labor movement. There was also the historical evidence that previously-existing class relations, based on other modes of production, had actually been ended by political means, and there was no reason to assume that this pattern of historical development had come to a close with capitalism. In brief, Marx did not await an “automatic” or “economic” collapse of capitalism. Whether any particular crisis situation would prove to be capitalism’s “final crisis” was determinable only by the probing force of revolutionary actions.

We are not here concerned with the question of whether Marx relied too much upon historical precedent as regards social development, or proved to be over-optimistic or even the victim of illusion in his expectation of the rise of a revolutionary proletariat – which seems to be the case in view of the actual unfolding political conditions of twentieth century capitalism. What concerns us here is merely the limited predictive power of a value analysis of capital development. Marx was aware of this “shortcoming,” as is indicated by his refusal to predict the end of capitalism in other than general historical terms. But however limited his theory may be, due to its high level of abstraction, it is the only theory of capital accumulation which has found verification in the actual course of capitalism’s development. Whether we consider the rising organic composition of capital; the tangentially falling rate of profit as actualized in the capitalist crisis; the increasing severity of crises; the production of an industrial reserve army; the unrelieved misery of the great bulk of the world’s population despite increasing wealth as capital; the elimination of competition through competition (or concentration, centralization, and monopolization of capital) – we cannot fail to notice the pattern of development projected by Marx.

Capital monopolization, concentration, and centralization are generally recognized and widely publicized facts. To quote just one example: at the present time “approximately 50 per cent of American manufacturing – that is, everything other than financial and transportation – is held by 150 corporations, reckoned, at least, by assets value. If finance and transportation are included, the total increases. If a rather large group is taken, the statistics would probably show that about two-thirds of the economically productive assets of the United States, excluding agriculture, are owned by a group of not more than 500 corporations. This is actual asset ownership. In terms of power, without regard to asset positions, not only do 500 corporations control two-thirds of the non-farm economy but within each of the 500 a still smaller group has the ultimate decision-making power. This is ... the highest concentration of economic power in recorded history. Since the United States carries on not quite half of the manufacturing production of the entire world today, these 500 groupings ... represent a concentration of power over economics beyond anything we have yet seen.”^[5]

However, Marx’s general law of capitalist accumulation derives its real importance not so much from the transformations of the capitalist system in the course of accumulation as from the effect of these changes upon the lot of the laboring population. To reiterate: Competition forces all enterprises to enlarge their capital, and to enlarge it faster than the labor it employs. As the larger capital beats the smaller, the minimum amount of capital required to engage in business increases. While the growth of the total social capital implies the emergence and growth of many individual capitals, it also increases the concentration of accumulated capital. Competition is thus a centralization process, transforming many small into fewer, larger capitals. As it requires no more than a change in the distribution of the available capital, it takes place whether capital accumulates or not, in periods of prosperity as well as in periods of depression. Concentration is greatly enhanced by the credit system, which becomes a “formidable weapon in the competitive struggle, and finally transforms itself into an immense social mechanism for the centralization of capital.”^[6]

According to Marx, centralization supplements the work of capital expansion. Accumulation alone, i.e., “the gradual propagation of capital by a reproduction passing from a circular into a spiral form, is a very slow process as compared with centralization, which needs but alter the quantitative grouping of the integral parts of the social capital.”^[7] The centralization process in any particular “line of industry would reach its extreme limit, if all the individual capitals invested in it would have been amalgamated into one single capital. This limit would not be reached in any particular society until the entire social capital would be united, either in the hands of one single capitalist, or in those of one single corporation.”^[8] Meanwhile, however, the centralization tendency adds to the exploitation of labor the expropriation of capital by capital, pointing to its final destruction. The whole process is summed up by Marx in the well-known statement that the expropriation of capital follows directly from the immanent laws of capitalist production. “One capitalist always kills many,” Marx wrote, “hand in hand with this centralization, or this expropriation of many capitalists by a few, develops, on an ever extending scale, the cooperative form of the labor-process, the conscious technical application of science, the methodical cultivation of the soil, the transformation of the instruments of labor into instruments of labor, only usable in common, the economizing of all means of production by their use as the means of production of combined, socialized labor, the entanglement of all peoples in the net of the world-market, and with this, the international character of the capitalist regime. Along with the constantly diminishing number of magnates of capital, who usurp and monopolize all advantages of this process of transformation, grows up the mass of misery, oppression, slavery, degradation, exploitation; but with this too grows the revolt of the working-class, a class always increasing in numbers, and disciplined, united, organized by the very mechanism of the process of capitalist production itself. The monopoly of capital becomes a fetter upon the mode of production, which has sprung up and flourished along with it, and under it. Centralization of the means of production and socialization of labor at last reach a point where they become incompatible with their capitalist integument. This integument is burst asunder. The expropriators are expropriated. ”^[9]

We are here only concerned with the underlying general tendencies of value production and capital accumulation. Capital accumulation increases the number of both capitalists and workers absolutely, while reducing their number relative to the growing mass of capital. With a decreasing rate of accumulation, this relative decline tends toward an absolute decline. Workers cease to produce surplus-value and capitalists cease to appropriate it, thereby ceasing to be capitalists. The decrease in the number of capitalists merely increases the number of proletarians, employed and unemployed. Thus, the accumulation and centralization of capital polarizes society into a diminishing number of owners of capital and a growing number of propertyless people who can exist only through the sale of their labor-power, or not at all.

The twofold character of capitalist production, expressed in the single commodity in its double nature as both exchange- and use-value, and in society at large in the contradiction between material and capital production, reappears and determines capital development in its various manifestations and in its manner of motion by way of expansion and contraction. The life conditions of the propertyless masses are dependent on the movements of capital as determined by its profitability; and the more capital accumulates, the more precarious their dependence becomes. While the accumulation of capital increases the proletariat, it also decreases the demand for labor relative to the growing capital. It produces a surplus population of laborers, both as a result and as a condition of capital accumulation, since the changing needs of capital expansion require now a larger, now a smaller, mass of exploitable labor power. “The whole form of the movement of modern industry depends upon the constant transformation of a part of the laboring population into unemployed or half-employed.”^[10] The accumulation of capital is thus simultaneously an accumulation of misery. According to Marx: “The greater the social wealth, the functioning capital, the extent and energy of its growth, and, therefore, also the absolute mass of the proletariat and the productiveness of its labor, the greater the industrial reserve army. The same causes which develop the expansive power of capital, develop also the labor-power at its disposal. The relative mass of the industrial reserve army increases therefore with the potential energy of wealth. But the greater this reserve army, the greater is the mass of the consolidated surplus-population, whose misery is in inverse ratio to its torment of labor. The more extensive, finally, the Lazarus-layer of the working class, and the industrial reserve army, the greater is official pauperism. This is the absolute general law of capitalist accumulation. Like all other laws it is modified in its working by many circumstances, the analysis of which does not concern us here.”^[11]

The increasing misery accompanying the accumulation process is here seen as a general tendency which underlies the actual movements of labor and capital, but which may be modified in the same sense in which the accumulation process itself is modified by the specific nature of its contraction and expansion at any particular time. Marx does not expect that increasing misery will always be an empirical reality, just as the fall of the rate of profit is not always an observable fact. In the same way in which a sufficient capital expansion will compensate the fall of the rate of profit through an increase in the mass of capital, so the tendency of misery to increase will be suspended in periods of capital expansion which increase the demand for labor and raise the price of labor through the reduction or elimination of the industrial reserve army. To be a socially significant fact, the increasing misery must be accompanied by an actual and steady decline in the demand for labor. It can become an ever-present social reality only under conditions of crisis, depression, and capital stagnation. However, the absence of wide-spread and increasing misery during periods of capital expansion is also only a temporary condition and can never gain permanence under conditions of capital production. With the increasing frequency of crises, the lengthening of periods of depression, the increasing difficulty of accelerating capital accumulation – taking “good” times and “bad” times together – increasing misery will be revealed both as a social fact and as the “absolute general law of capitalist accumulation.”

Increasing misery follows from the law of value only in so far as the accumulation of capital decreases the demand for labor relative to the growing mass of capital and thereby produces an industrial reserve army. Employment fluctuates with the expansion and contraction of capital production. A steadily decreasing rate of accumulation – as a permanent condition – would increase the industrial reserve army constantly, and, therewith, the mass of pauperized people living on the offal of society. But as long as an accelerated capital expansion is actually possible, the industrial reserve army lives up to its name and provides the accumulation process with the required exploitable human material. To expect an absolute impoverishment of an always greater portion of the proletariat is to expect a steadily declining rate of accumulation. Marx did expect this to be the final outcome of the accumulation process, even though the time of its actual arrival was unpredictable.

Marx’s value theory of capital accumulation assumes that employed labor-power always receives its full exchange-value, i.e., its production and reproduction costs. On the basis of this assumption, there is no increasing misery but merely the misery of wage-labor. But there is displacement of labor and consequently the production of misery, because “labor power is only salable so far as it preserves the means of production in their capacity as capital, reproduces its own capital, and yields in unpaid labor a source of additional capital.”^[12] All other labor-power, without either use-value or exchange-value, ceases to be part of the social production process and, consequently, of society itself. But even on the assumption that those who work receive the value of their labor- power, accumulation finds its “logical end” in the falling rate of profit.

In theory the value of labor-power is determined by its production and reproduction costs. But these labor-costs themselves are variable within definite limits. The price of labor-power may be higher or lower than its value. With a large surplus population, for instance, there may be no need to reproduce the whole of the working population and for some workers at least wages may be lowered without consideration for their reproduction needs. Under different conditions, the wages of many workers may exceed the value of their labor-power, particularly when the demand for labor exhausts the industrial reserve army. Wages may be raised by way of wage struggles; or fluctuations in wages due to supply and demand, may be offset by the monopolization of certain types of labor or by political interventions in the labor market. Under competitive conditions, however, and considering the working class as a whole, “the general movements of wages are exclusively regulated by the expansion and contraction of the industrial reserve army, and these again correspond to the periodic changes of the industrial cycle.”^[13] Whatever the circumstances, a rise of wages, or “the diminution of unpaid labor, can never reach the point at which it would threaten the system itself... Accumulation is the independent, not the dependent, variable; the rate of wages, the dependent, not the independent, variable.”^[14]

The wages of the working population may not decrease, or may even increase, in the course of accumulation, but this will not end the misery for the expendable part of the population. According to Marx, the actual value of labor-power, moreover, is not identical with the physical minimum of existence; “it differs according to climate and conditions of social development; it depends not merely upon the physical but also upon the historically developed social needs, which become second nature. But in every country and at a given period the regulating average wage is a given magnitude.”^[15] This average wage, no matter what kind of living standard it may imply, constitutes the necessary labor, or the value of labor-power. The capitalists may see no need, or may not find a way, to lower it. And if the productivity of labor is high enough and yields sufficient surplus-value to satisfy the requirements of accumulation, it does not matter what the quantity or quality of the commodities that express the equivalent of the value of labor-power, or constitute the social average wage-rate. It is only that such a situation, i.e., one of high profits and high wages, requires a high productivity of labor and, therefore, a high organic composition of capital and a rapid rate of accumulation. But just as wages reach their highest point shortly before the onset of a particular crisis, so Marx expected that the general trend of capital accumulation, though accompanied by rising wages, was bound to reach a point where the available surplus-value would not suffice to sustain the customary profits and further capital expansion. At this point accumulation could only proceed at the expense of necessary labor, through a reduction of wages below their historically-established value. The continuing accumulation process would then be quite literally an increasing misery of the proletariat.

At this point we must remember that Capital was written a hundred years ago. Under the social and technological conditions then prevailing a projection of capital development based on the labor theory of value could easily lead to an underestimation of the resilience of capitalism through an overestimation of its difficulties. The lot of the working class was at that time deplorable, and under conditions of cutthroat competition the extraordinary greed for surplus-value accelerated capital expansion from one crisis into another, with only a slow improvement in the general social conditions of existence. The future of capitalism did not look too bright. In any case, Marx desired its early demise.

Although Marx’s theory does not really require the rise of conditions such as those depicted in his foreshortened view of development, there is no point in denying that he did expect that the actual accumulation process would increase the social misery far more rapidly and extensively than was actually the case. However, capitalism’s ability to better instead of worsening the living conditions of the large bulk of the industrial proletariat in the advanced capitalist nations would have forced Marx, had he experienced it, to revise only his time-conditioned subjective estimation of the concrete aspects of capital expansion, not his general theory of accumulation. This theory is not committed to a specified time-span; so long as capital moves along as predicted by Marx, the social consequences of this development cannot be set aside.

Marx’s theory of development offers various “counter-tendencies” which interrupt capital’s “self-destructive” course as determined by its inherent contradictions. The “counter-tendencies” substantiate the general trend, for they are merely reactions to it. They are historically conditioned, as is the whole of capitalism, but they of greater consequence at one time than at another. Their effect upon the general development of capitalism cannot be estimated in advance; their actual force can only be observed and adjudged with reference to the actual course of capital accumulation.

Marx mentioned only a few such countertendencies: raising the intensity of exploitation, depressing wages below their value, cheapening the elements of constant capital, relative overpopulation, increase of stock capital, and foreign trade. All these counter-tendencies fall outside the general law of accumulation as established for a closed system operating strictly in accordance with the value principle. In the same sense, the capitalist crisis is a countertendency, or for that matter any concrete phenomenon which either raises the surplus-value for the operating capitals or reduces the value of the operating capitals relative to the available surplus value. It is thus not possible to appraise the capitalist system with respect to its durability or fragility, except by having recourse to actual occurrences and their specific weights upon the general scheme of capital expansion, or, vice versa, by looking upon the latter from the position of the real capitalist world.

Although capital accumulation implies an increase in the productivity of labor, the actual extent of this increase is not foreseeable, as it depends on both the evolution of technology and its recurrent revolutions, with their specific effects upon the accumulation process. The effect of the widening world market upon the production and realization of surplus-value, and therewith upon the tempo and viability of capital expansion must be gauged not merely by the spread of commodity production but also by the capitalistic “international division of labor” and the exploitation of extra-capitalist territories.

While Marx saw the destructive aspects of industrial crises, which arrested the growing discrepancy between profitability and accumulation, he could not envision the destruction of capital on a scale such as was achieved during the two world wars. Nor did he envision the possible end of capitalism in an atomic holocaust. Marx also did not concern himself sufficiently with the possible internal modifications of the capitalist structure through persistent state interventions, because he was interested in the abolition of capital itself, and not in its modification. Furthermore, he was fully convinced that no reform of capitalism could alter its essential capital-labor relationship or the value character of its social production. Any reformed capitalism was therefore bound to suffer the same fate that he predicted for the conventional laissez-faire system of his own time.

1. K. Marx, Grundrisse, p. 544

2. Ibid., p. 635.

3. Capital, Vol. I, p. 834.

4. Capital, Vol. III, p. 293.

5. A. A. Berle, Economic Power and the Free Society, New York, 1957, p. 14.

6. Capital, Vol. I, p. 687

7. ibid., p. 688.

8. ibid.

9. Ibid., pp. 836-37.

10. Ibid., p. 695

11. Ibid., p. 707.

12. Ibid., p. 678.

13. Ibid., p. 699

14. Ibid., p. 679.

15. Capital, Vol. III, p. 1000.