Chapter 10 : 
The Expropriation of Capital
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Author : Paul Mattick

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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.


     From : Marxists.org

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     Chapter 10 -- Added : March 03, 2021

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