1
In the field of present-day Marxism, Ernest Mandel occupies a leading position. His industry and ambition have produced a small library of Marxism to which even bourgeois economists pay some respect. In his book Late Capitalism, Mandel practices a sort of self-criticism with respect to his earlier works. In particular he criticizes his Marxist Economic Theory, first, for its "exaggeratedly descriptive character," and then for its "too small effort to explain the contemporary history of capitalism by its immanent laws of motion" (p. 7, German ed.).Since the later book contains Mandel's corrections of his earlier works, Late Capitalism must be seen as representing, if not Mandel's final conception, at least his ideas of the moment, which makes a look back at his Economic Theory largely superfluous.
In the course of his various works, Mandel came to the conclusion, which should have been obvious from the beginning, "that our explanation of the history of the capitalist mode of production is only possible through a mediation between the laws of motion of 'capital in general' and the concrete forms of appearance of the 'many capitals"' (p.7, German ed.; see English ed., pp.8-9). The contemporary concrete form of appearance Mandel condenses into the concept of "late capitalism," although this does not feel quite right to him, since this term is not intended to suggest "that capitalism has changed in essence," although its purely chronological significance is also "unsatisfactory." In any case, calling the present state of the system "late capitalism" can in no way make "the analytic findings of Marx's Capital and Lenin's Imperialism out of date" (p.10).
Since Lenin also claimed to hold to the analytical findings -Marx's Capital, one cannot speak of the analytical findings of Lenin's Imperialism: it only represents Lenin's interpretation of a particular situation, namely the First World War, on the basis of the
incorrectly understood, to be sure Marxian laws of motion of capital. Thus Mandel can make but little appeal to Lenin, even when his political position compels him to place Lenin next to Marx, although, as Mandel himself points out, Lenin "does not provide a systematic theory of the contradictions of capitalist development" (p.38, n.).
Up to now, according to Mandel, the relationship between the Jaws of motion and the history of capitalism has not been satisfactorily explained. He wants to fill this gap, which necessarily brings him into opposition with nearly every previous interpretation of capitalist development. Mandel nevertheless devotes the customary introductory pages to the "dialectical analysis"- now become a "commonplace" which traditionally precedes every explanation of development, in order to emphasize that "to reduce Marx's method to a 'progression from the abstract to the concrete' . . . is to ignore its full richness" (p. 14). The concrete is the real starting point, as it is the goal, of the process of knowledge. The truth of the laws of development produced by theory must be empirically proven. Although there is nothing to object to here, the question remains whence the empirical proof will come.
Mandel attacks those who think that the capitalist mode of production stands in the way of a direct empirical verification of the Marxian theory, and who therefore restrict themselves to the abstract analysis of developmental tendencies. In opposition to them, he wants to describe not only the "tendencies" discovered by the abstract analysis but also the development of capitalism as a concrete, historical process, since Marx "categorically and resolutely rejected this quasi-total rift between theoretical analysis and empirical data" (p.20). In this respect there is certainly little to be found in Marx, unless one sees empirical proof of his theory of capitalism in the fact that the production process, examined in the first volume of Capital in isolation from the rest of the system, is represented in the third volume as the process of production as a whole in the concrete forms in which it is experienced. But even in
terms of the process as a whole, and despite the many illustrations taken from reality, one cannot speak of quantitative and empirical proof of the validity of Marx's developmental theory, since the data necessary for such a proof are in capitalism neither available nor to be expected.
But, Mandel objects, "In the first volume of Capital Marx calculated the mass and rate of surplus value for an English spinning mill, basing himself on exact data (declarations) from a Manchester manufacturer, as they had been given him by Engels..."
(p.21 n.). Now it goes without saying that one can represent the process of surplus-value extraction on the basis of the data, given in prices, for each capitalist enterprise. These data can also illustrate the degree of exploitation of the workers by the capitalists, and similar data on investments can be used to illustrate the organic composition of various capitals. In none of these cases, however, is any light shed on the developmental tendencies of capital. But this is the point of Marx's theory, not proving that capitalist production is the production of surplus value and is based on the exploitation of labor power something known long before Marx and felt by every worker in his own life. It is impossible to prove the detrimental consequences of value and surplus value production by empirical statistics as long as capitalism's internal contradictions can be overcome by accelerated accumulation. What Man-del claims to show, namely how "the real history of the past hundred years" can be represented "as the history of the unfolding development of the internal contradictions of this mode of production" (p. 22), comes down, for him as for everyone else, to the concentration and related centralization of capital and to capitalism's susceptibility to crisis. The tendency to crisis arises from the valorization requirements of capital under the conditions of blind market processes. The "regulation" of the capitalist economy by the law of value means that the contradictory movement of capital cannot be continuously known and followed directly in its concrete manifestations. If this could be done, there would be no need for the theory of value to understand the history of the last hundred years.
For Mandel the law of value is not a key to the understanding of capitalist development but a sort of law of nature that must
also apply to the pre-capitalist period. In this connection he cites Engels, who in a letter to Werner Sombart (and also in other places) declared that in pre-capitalist times, at the "beginning of exchange," commodities were evaluated by reference to their labor-time content, so that value had "a directly real existence." Only in capitalism is labor-time value so thoroughly modified that it can no longer be recognized in prices.Both Engels and Mandel, however, are la-boring under a misconception that is not alleviated by Marx's suggestion that the value concept has historical as well as theoretical significance. It makes no difference whatsoever whether commodities were exchanged in precapitalist times in accordance with their labor-time contents or not. In capitalism, in any case, this possibility is excluded, since here we find the special commodity labor power that produces a surplus value in addition to its value. The production of value and surplus value obviously had roots in pre-capitalist exchange, and in this sense these social categories have a historically factual aspect arising from the general necessity of taking the labor time involved in production into account. But labor time and value are not the same thing. Whether or not the exchange of labor-time equivalents takes place, it has nothing to do with the value character of capitalist production, which reflects the social relations of production peculiar to this system.
Capitalism is ruled by value not because production is regulated by labor time but because the exploitation of the workers is accomplished by means of exchange. To say that the value of the commodity labor power is determined like that of every other commodity is to explain the origin of surplus value (that is, extra labor for the capitalists). While the commodity market is constituted by the exchange of the products of the total labor time employed, there is no exchange of labor-time equivalents, since the capitalists have nothing to exchange but only appropriate a portion of the workers' total product. Thus the law of value can have neither a "directly" nor an "indirectly" real existence in exchange.
The law of value does not operate in reality as in the theoretical model developed to understand reality. It is based on the dual character of labour as a process both of production and of capital expansion, which appears in the dual character of the commodity, including the commodity labor power, as use value and
exchange value. Capitalist production is the production of exchange value, and the use value of commodities is only a means to this end. With the increasing productivity of labor the quantity of goods produced increases while their exchange value falls, the one change counteracting the other. In this way the increasing productivity of labor results in the accumulation of capital, and the opposite movements of use value and exchange value have no visible detrimental effect on capitalist development.
The accumulation of capital thus expresses the growing productivity of labor, while the growth of productive capital in turn improves the productivity of labor. This process indicates that expansion of capital is tied to changes in labor-time relations. More total labor time is expressed in more poducts, or more products expressed in labor time, is needed if the goal of capitalist production, the growth of capital, is to be attained. Every capitalist firm attempts to expand production in order to make the maximum profit, and the general result of these attempts is the accelerating accumulation that overcomes the decline of exchange values by the more rapid growth of the mass of use values.
The increase in the productivity of labor implies that the use value-for the capitalists-of the commodity labor power rises more rapidly than its exchange value. In other words, productivity races ahead wages. Expressed in terms of labor time, this means that a growing part of the total labor time-in any particular enterprise or in the society as a whole - must serve the ends of accumulation, while a decreasing part appears as the exchange value of labor power. In practical terms this implies that less labor must valorize (expand) a greater capital, i.e., that the organic composition of capital changes in favor of constant relative to variable capital. In this sense capital is only continuing the general development of society, insofar as this can be described as the improvement of the forces of production and the increase of production with less labor, although on the basis of a set of social relations compelling accumulation this is occurring at a previously unknown tempo and to a previously unknown extent.
In the change of the organic composition of capital, which is only another expression for the growing productivity of labor, the contradictory movement of exchange value and use value manifests itself as a contradictory movement of accumulation and profit. The increasing use value of labor power, or the rise in the rate of surplus value, confronts the tendency of the rate of profit to fall or the tendency of exchange value to decline relative to use value. But this too is a matter, at first, of mutually counteracting tendencies. So long as the rate of surplus value can be increased more rapidly than the rate of profit falls, these tendencies are factors stimulating accumulation without being distinguishably visible in it.
Aside from the fact that the price mechanism of the market economy, together with the competition-enforced tendency to the formation of an average rate of profit, makes exact observation of changes in the labor-time relations underlying this process impossible, capitalism's economic data are produced from the viewpoint of capital, not from that of Marx's theory of value. These data cannot be translated directly into Marxian categories, although the latter are embodied in market events and find in such phenomena as the fall of prices of production and of the level of the average rate of profit in the course of capitalist accumulation some confirmation of their relevance. Even if it were possible to transform all the available data into the terms of the labor theory of value, however, this would still lead only to the discovery that with sufficient surplus value, capital accumulates, and that with less it does not
a piece of knowledge that can be ascertained directly from the data of the bourgeoisie and of which everyone becomes aware in the course of the actual crisis cycle, without any need of further investigation.
The demonstration that commodity prices must be derived from labor-time values is not the goal of Marx's theory of value but its starting point. The aim of the value theory is rather to gain insight into capital's laws of motion. All price relationships only mirror the exchange relations, not the production relations which underlie them. In a system like the capitalist one, continuous and accelerating accumulation is the prerequisite for progressive development. If the level of exploitation cannot be increased more than the rate of profit falls, the capitalist dynamic turns to stasis, thus destroying the essence of the capitalist mode of production, the production of capital.
The exchange value of labor power is necessarily the equivalent of the labor time, embodied in products, required to produce and reproduce it; this is not contradicted by occasional and partial departures from the norm. The use value of labor power yields profit, the capitalist share of the total labor time, likewise in the form of products. Given a constant number of workers, the process of accumulation would require a continuous increase in their exploitation, which can be accomplished either by lengthening the absolute labor time or by shortening the labor time necessary to secure the workers' existence. If the possibilities of the first method are exhausted in the course of accumulation, those of the second will also be exhausted, since the necessary labor time is not reducible to zero. If exploitation can no longer be increased, accumulation will come to an end. The number of workers must therefore increase absolutely if the process of accumulation is to continue. And of course the accumulating capital requires further growth in the number of workers, while at the same time the potential for exploitation of these workers is progressively diminished.
This narrowing of the basis of accumulation appears in the changing organic composition of capital. While more and more workers are involved in the production process, the number of workers falls relative to the growing mass of capital (which is only another way of saying that less labor is used to produce more commodities). As a result the production of surplus value tends to decline, as the use value of labor power its production for capital cannot be extended to fill the total labor time but must stop at the point where the exchange value of labor power would fall below its reproduction requirements. The contradiction of capitalist accumulation, then, lies in the fact that the very process that increases the number of workers exploited, and with this the mass of profit, at the same time calls the continuation of accumulation into question. The increasing productivity of labor decreases the quantity of labor time employed, and therefore the surplus value produced, in relation to the growing mass of capital. This is manifested in the fall in the rate of profit (which is the ratio of surplus value to the total capital).
The rate of accumulation at any moment determines both the growth of labor power and its displacement by the extension of production and the increase of exploitation. The increase of exploitation, however, is the prerequisite for the extension of production; and so long as the latter does not come up against objective limits, the former has an unobstructed path. These objective limits are set by labor-time relations, specifically by the relation between value and surplus value, between wages and profits. If the surplus value produced by a given quantity of labor power cannot be increased, it becomes impossible to exploit additional labor power, since this would require additional means of production, made available by accumulation.
The complex interrelationship of all these factors should be enough to show that the consequences of the process of capitalist accumulation can only be represented abstractly, by an analogical model based on the fundamental capitalist social relations. Although, according to the logic of the theory of value, the whole development of capitalism is to be explained in terms of the capital-labor relation, the incredible complexity of the real capitalist world forms an impenetrable agglomeration of apparently unconnected factors, which in practice cannot be made use of to provide empirical proof for the abstract theory. (It should be noted that if this is a "deficiency," Marx's theory shares it with bourgeois "economic science," which, despite its exclusive concern with prices, is also compelled to construct models if it is to become comprehensible a state of affairs in no way altered by either the theoretical or the practical use of the modern apparatus of econometrics.)
It is thus an essential feature of capitalism that the quantitative linking of market phenomena to Marx's basic categories, which Mandel claims he is attempting (p.21), is quite impossible to achieve. Even apart from this, what data there are for market phenomena are quite inaccurate. Although economic statistics has come a long way, it is still largely a matter of unreliable and inadequate indices that can hardly be taken' seriously as a basis for conclusions about the laws of motion of capital. What partial notice has been taken of the development of production prices and commodity prices, of investment and employment, of income and its distribution, of trade relations, etc., provides no understanding
of capitalist accumulation that can be correlated with Marx's basic categories.
Capital produces for the market, to which it abandons the regulation of social production within the framework of the production of surplus value. Its representatives can therefore understand neither the allocation of the total labor time necessary for the satisfaction of the social needs peculiar to capitalism nor the valorization difficulties that arise from the accumulation process. Without regard for social consequences, unknowable in any case, each firm seeks to maximize the profit it can realize on the market, and in accordance with this goal it seeks to reduce its costs of production to the minimum. This general effort alters the relation of social surplus value to the mass of the existing capital, influencing the continuation of the accumulation process in a positive or negative way. This influence is negative when the organic composition of capital does not permit an increase in profits sufficient to continue accumulation under the given conditions of production. The slowdown in accumulation itself indicates that not enough surplus value is being produced or, to put the same thing in other words, that too much capital has been accumulated in relation to the going rate of exploitation.
This state of affairs, engendered by changes in labor-time relations, appears from the capitalist viewpoint not as a problem of surplus-value production but as a phenomenon of the market, since the latter is not only viewed as the regulator of the economy but actually is its only regulator. It must be demonstrated in the market whether or not the preceding production was adequate to "social needs," and whether or not this production has yielded a surplus value sufficient for a profitable expansion of capital. Were it possible to explain market processes in terms of the law of value, it could be shown, in the negative case, that the relationship of labor to surplus labor does not meet the valorization requirements of capital, and (since the needs of society in general are defined within the framework set by these valorization requirements) that the discrepancy between surplus value and capital's need to expand affects all economic relations.
Since the market is the actual regulator of the capitalist economy, the changes in labor-time relations occuring in the sphere of production work their way through the system in the form of market processes, although in truth it is the value relations at the point of production that govern the market. The power of the law of value over social production manifests itself above all in economic crisis, which is experienced in the market, not directly as the overaccumulation of capital but in the form of insufficient demand and the overproduction of commodities. The fact that the reality of the law of value is demonstrated in the capitalist crisis indicates that this law had been infringed throughout the previous production period, to the point where the labor-time relations governing the production of surplus value and so the process of capital's self-expansion, together with the allocation of the total social labor time bound up with it, objectively excluded an unlimited continuation of accumulation. Just as the law of value works its way through crisis, the overcoming of crisis is nothing but the restoration -realized in the market but essentially concerning the sphere of production -of labor-time relations yielding a mass of profit adequate for further accumulation.
Instead of explaining the crisis cycle and capitalist development as governed by the law of value, Mandel does the reverse: he seeks confirmation of the law of value in the surface appearances of capitalist accumulation. He bases this attempt on the idea t;
history cannot be reduced to theory. Although there is without doubt more to the history of capitalism than is covered by the theory of value, the latter is nonetheless necessary if the general developmental trend of the history is to be recognized. According to Mandel, however, all previous Marxist theories of capitalist development led to no useful result, since they illegitimately attempt
"to reduce this problem to a single factor" (p.34), while in his view, reference to "the interplay of all the laws of motion of capital" is necessary in order to explain a particular result of this
development (p.42). His understanding of this leads Mandel to oppose, to begin with, Rosa Luxemburg, Henryk Grossmann, Nikolai Bukharin,and Rudolf Hilferding,all of whom are supposed to have derived their theories of accumulation exclusively from the reproduction schemas of the second volume of Capital, thanks to which their work must be judged a failure.
While this criticism may tell against Luxemburg, Bukharin, and Hilferding, it does not bear on Grossmann, who explained capitalism's tendency to breakdown on the basis of the law of value and accumulation. Although Mandel's rejection of the theories of development based on the reproduction schemes must be seconded, his performance in this regard indicates insufficient knowledge of the material, something that cannot be made up for by appealing to the writings of Roman Rosdolsky.It did not occur to Marx, as Mandel peculiarly maintains it did, to prove by means of the reproduction schemas "that it is possible for the capitalist mode of production to exist at all" (p. 25). (It could not have occurred to him simply because no one doubted the existence of capitalism.) According to Mandel Marx saw capitalism's existence as dependent on an equilibrium of the relations of exchange between the production of producer goods and that of consumer goods, although the reality of capitalism is "a dialectical unity of periods of equilibrium and periods of disequilibrium" (p. 26). Thus for Mandel Marx's reproduction schemas represent a one-sided, undialectical view of capitalist reproduction, incapable of yielding insight into capital's laws of motion.
Mandel would like to correct this by proposing an outline
which of course remains unrealized of "other schemes which incorporate from the start this tendency for the two Departments [of production] and all that corresponds to them to develop un-evenly." Of these schemes "Marx's reproduction schemas will only constitute a special case just as economic equilibrium is only a special case . . ." (p.27). Now Rosa Luxemburg, unlike Bukharin and Hilferding, had, to be sure, seen Marx's reproduction schemas as implying a perpetual disturbance of equilibrium; but this, according to Mandel, is also wrong, since capitalism is really a dialectical unity of equilibrium and disequilibrium. For Mandel the one arises from the other, both concepts referring to actual states of the economy.
For Marx, in contrast, any equilibrium, whether in the relations between departments of production or in the market generally, was a pure accident, obstructed as a rule by disproportionality. This did not prevent him from starting from the assumption of equilibrium in order to expose the essential traits of capita production and accumulation. Thus, for example, he used the assumption of an equilibrium of supply and demand in order to lay bare the laws of motion underlying competition. In the same way the reproduction schemas represent assumptions that certain contradict reality but can nevertheless help in explaining it. T production process is at the same time a process of reproduction that requires circulation for its completion. For the demonstration of this process it is sufficient to analyze total social production into two departments in order to represent the conditions of imaginary frictionless exchange. Although capitalist production essentially the creation of exchange value, it nevertheless remained tied to use value. While the individual capitalist strives only to enlarge his capital as accumulated surplus value, he can do this only within the framework of social metabolism, which is also a social metabolism operating on use values. In the social context the theoretically conceivable equilibrium of capitalist exchange presupposes an equilibrium of the use values necessary for reproduction.
Just as competition cannot be explained by competition, the circulation process cannot be explained in terms of circulation. The possibility of reproduction, simple or expanded, depends on the circulation of goods containing definite quantities of labor time, represented in the form of values and use values and distributed in a definite way. To show this is the sole task of the reproduction schemas. They are depictions not of the real process of reproduction but of the necessities underlying this process. Since they make themselves felt only through capitalist categories, these necessities are unnoticed, but nevertheless must be respected, behind the backs of the producers if the accumulation of capital is to be possible. The reproduction schemas are a further illustration of the working of the law of value in the capitalist production and reproduction process. This means that the process represented abstractly in the schemas is in reality shot through with disproportionalities and crises.
The reproduction schemas constitute neither an equilibrium nor a disequilibrium model but simply the demonstration that accumulation depends on a certain proportionality between the departments of production, which must be established in the market but is determined by the law of value. For Mandel, however, the reproduction schemas are a method of equilibrium analysis to which he wants to add an apparatus of disequilibrium analysis. In this he follows in the footsteps of Rosdolsky, for whom the reproduction schemas on the one hand represent a "heuristic device" but on the other picture a real state of the economy. Thus Rosdolsky writes, for example, that in the capitalist mode of production
the proportional development of the various branches of production, and the equilibrium between production and consumption, can only be obtained.. . in the midst of continuous difficulty and disturbances. Naturally, this equilibrium must at least be attained for short periods of time, or else the capitalist system would not function at all. In this sense, however, Marx's schemes of reproduction are in no way a mere abstraction, but a piece of economic reality, although the proportionality of the branches of production postulated by these schemes can only be temporary, and "spring as a continual process from disproportionallty."There are thus, according to Rosdolsky and Mandel, periods of equilibrium and periods of disequilibrium, without the first of which capital cannot survive. The contradictions intrinsic to capital thus only appear from time to time, which suggests the question, why they are sometimes there and at other times not. Rosdolsky answers, citing Marx, with the observation that accumula-tion is broken by "pauses," namely "periods of rest, during which there is a mere quantitative extension. . . on the existing technical basis," for which the reproduction schemas are valid, since they show "the possibility of extended reproduction through the mutual adjustment of the production-goods and consumption-goods industries, and hence also the possibility of the realisation of sur-plus-value."" This of course implies that the capitalist system can only function when accumulation is very slow and that any quickening of the pace must lead to crisis. And Rosdolsky actually explains that with the introduction of technological progress into the reproduction schemes, "the conditions for equilibrium of production turn into conditions for the disturbance of equilibrium," so that the equilibrium schcemas must be supplemented by Marx's theory of crisis and collapse.
3
While Marx explained all the fundamental phenomena of capitalism on the basis of the law of value, Mandel takes as his starting
point six distinct developmental tendencies, or "basic variables of the capitalist system. He emphasizes "that up to a certain point all the basic variables of this mode of production can partially and periodically perform the role of autonomous variables naturally not to the point of complete independence but in an interplay constantly articulated through the laws of development of the
whole capitalist mode of production" (p.39). By "basic variables" Mandel means: the organic composition of capital in general and of the two departments (of producer goods and of consumer goods, as in the reproduction schema) in particular; the division of
constant capital between fixed and circulating capital, again in general and for the two departments separately; the development of the rate of surplus value; the development of the rate of accumulation; the development of the turnover time of capital; and the exchange relations linking the two departments of production.
The history of capitalism, and its law-governed regularity, can, according to Mandel, "only be explained and understood as a function of the interplay of these six variables" (p 39). It does not occur to him that with this he is saying that the history and inner regularity of capital can only be understood by reference to the history and inner regularity of capital. The consequences of the production of value and surplus value show themselves, among other ways, in the phenomena of accumulation picked out by Mandel, all of which are governed by the law of value and in accordance with it are manifested by fluctuations in the rate of profit. For Mandel, however, these fluctuations "are only results which must themselves be explained by the interplay of the variables" (p.39). Again, it does not occur to him that he is explaining the profit rate by the rate of profit when he explains the history and inner regularity of capital by its history and inner regularity.
It is in this way that Mandel wishes to bridge the gap between theory and reality. Abstractly considered, all the fundamental phenomena of capital follow from the postulates of the value theory. But in reality, Mandel assumes, the various aspects of capitalist accumulation resulting from the law of value have autonomous functions, at least at times, and independently influence the process as a whole. Therefore special attention must be devoted to
these aspects, and their effects must be empirically investigated. This naturally presupposes a criterion by which the empirically determined facts can be made comprehensible and their connections with other such facts exhibited. For capitalism the theory of value is this criterion, as it deals with the basic production relations of this system. The value analysis makes it possible to discover the general tendency of capitalist development from any particular set of changes in Mandel's variables, while the observation of these variables, without application of the value analysis, permits no conclusion about the trend of development but remains the mere description of given circumstances.
Mandel gives a few examples to demonstrate the correctness of his thesis. He shows that the rate of surplus value is at all times a function of the class struggle. "To see it as a mechanical function of the rate of accumulation, . . . is to confuse objective conditions which can lead to a particular result . . . with the result itself. Whether or not the rate of surplus-value does in actual fact rise depends among other things on the degree of resistance displayed by the working class to capital's efforts to increase it" (p.40). "Other things" refers to the influence on the rate of surplus value of the industrial reserve army of the unemployed. Thus for Mandel there are "numerous variations" in the determination of the rate of surplus value, as "can readily be seen from the history of the working class and the labor movement over the past 150 years." But this history also shows that accumulation, despite its interruption by crisis, was a continuous process that presupposed an adequate rate of surplus value and thus confirmed Marx's dictum that "the rate of accumulation is the independent, not the dependent variable; the rate of wages is the dependent, not the independent variable."
Since capitalism still exists today, the "numerous variations" in the determination of surplus value have done it no apparent harm during the last 150 years, in any case not with respect to its developmental tendency. Despite all class struggles the rate of surplus value has remained sufficient for accumulation. As a "partially autonomous basic variable," the development of the rate of surplus value has had no effect. All that Mandel's approach allows him is to follow the history of the class struggle in the context of surplus-value production a history that points not to the limits of accumulation but to the limits of the class struggle within the capitalist system.
It was not only because the opacity of the market economy makes it impossible to follow the quantitative changes in the rate of surplus value and their empirical consequences for the process of accumulation that Marx developed his theory of accumulation on the assumption that the value of labor power is always determined by its costs of production and reproduction. While in reality the wage can lie above or below the value of labor power, it can never without calling capitalist society itself into question
depress the surplus value below the level required for capital accumulation. This limit of wage formation is not only determined by the supply and demand of labor power, and thus regulated by accumulation, but is also determined by the fact of capitalist control of the means of production. Thus the "numerous variations" in the formation of surplus value produced by the class struggle can be abstracted from in describing the accumulation process without the description thereby losing its realism.
To go into one more of the examples Mandel offers, "the rate of growth of the organic composition of capital" cannot, according to Mandel,
be regarded simply as a function of technological progress arising from competition. This technical progress does admittedly cause living labor to be replaced by dead labor in order to reduce costs.. .. But.. . constant capital is comprised of two parts: a fixed part . . . and a circulating part. . .. The rapid growth of fixed capital and the rapid increase in the social productivity of labor that results from it, still tell us nothing definite about the tendencies of the development of the organic composition of capital. For if the productivity of labor grows more rapidly in the sector that produces raw materials than in the sector producing consumer goods, then circulating constant capital will become relatively cheaper than variable capital, and this will ultimately lead to a situation in which the organic composition of capital despite accelerated technological progress and despite accelerated accumulation of surplus-value in fixed capital will grow more slowly and not more rapidly than before (p. 41, translation corrected).What, really, is Mandel saying here? "Constant capital" includes both fixed and circulating capital. The organic composition of capital, according to Marx, is "the value-composition of capital, in so far as it is determined by its technical composition and mirrors the changes in the latter." It is clear that the cheapening of the raw materials entering into constant capital, accomplished by an increase in the productivity of labor, can alter the value relation between constant and variable capital and thereby slow down the growth of the organic composition. This, however, does not make the organic composition a "partially autonomous variable" but only means that capital can accumulate with a more advantageous organic composition. Since this is the case in general whenever capital is accumulating, Mandrel in reality is saying nothing at all.
4
These meaningless exercises are necessary, according to Mandel, to deal adequately with the "third phase" of capitalist development, or "late capitalism." Only study of the "independent variations of the major variables of Marx's system" (p.42, translation corrected) will make it possible to understand the successive phases of the history of capitalism.
For Mandel "the capitalist world system is to a significant degree precisely a function of the universal validity of the law of unequal and combined development" (p.23). It is true, of course, that capitalism developed first in certain countries and that this subjected the world economy to an unequal development. The capitalist "international division of labor," together with the concentration and centralization of capital that accompany accumulation, have divided the world into capitalistically developed and underdeveloped countries. But to say this is only to say that the "law of unequal and combined development" signifies no more than the development of capitalism.
Following a survey of the earlier development of world capital, which was consecrated to the blocking of capitalist development in the dominated countries and to the satisfaction of the profit and accumulation needs of the imperialist countries, Mandel concludes that present-day capitalism has seen "a change in the forms of juxtaposition of development and underdevelopment," and that "new differential levels of capital accumulation, productivity and surplus extraction are emerging, which although not of the same nature, are still more pronounced than those of the 'classic imperialist epoch" (p.65). In late capitalism the share of the underdeveloped countries in world trade is declining, so that they are becoming poorer in comparison with the imperialist nations. As Mandel explains it, the imperialist countries depend on the raw materials of the underdeveloped countries and on the decline in their prices, which leads to a relative decline in the value of those raw materials. But since, according to Mandel, the share of the underdeveloped countries in world trade is diminishing, this must express imperialism's decreasing dependence on the raw materials of the poor nations, which leads to the drop in their prices. Mandel is however not satisfied with this observation; he wants to bring it into connection with the workings of the law of value on the world market, particularly because Marx "did not analyze it systematically in Capital" (p.71).
On the basis of the logic of Marx's theory, as Mandel enlarges on it, "under the conditions of the capitalist relations of production, uniform prices of production (i.e., a wide-ranging equalisation of rates of profit) only emerge within national markets.. And "the law of value would only lead to uniform prices all over the world if there had been a general international equalisation of the rate of profit as a result of the complete international mobility of capital and the distribution of capital over all parts of the world . . ." (p.71). Now Marx's theoretical transformation of values into prices of production concerns not an actual market, whether national or international, but his abstract model of a closed capitalist economy. It represents his solution to the question of how the law of value operates despite the fact that goods are not exchanged in ratios determined by their values. Capitalists confront not values but cost prices, which refer to the unknown labor-time quantities contained in them. The price of production deviates from the value, since it is determined only by the paid labor, thus by the cost price, plus the socially average rate of profit. A further complication-the fact that the cost prices contain already realized profit, so that the price of production of one branch of industry enters into the cost price of another branch has the result that the determination of price by value is even more obscured. if we nevertheless want to prove that price is governed by value, this requires a mental experiment reducing the tangle of price relations to the division of total production into value and surplus value. For the analysis of social production as a whole, the different organic compositions, rates of surplus value, and profit rates of the individual capitals and branches of industry are irrelevant. Total production has a definite magnitude that is determined by the total labor time. It has reproduced the value it has consumed and has yielded a certain quantity of surplus value. The distribution of this surplus value among the different capitals can neither enlarge nor diminish it. The level of the rate of profit depends on the ratio of the total surplus value to the total capital and thus depends on the organic composition of the total capital. This in turn is equal to the average of the various organic compositions of the different capitals. If the organic composition of a particular capital is the same as the average composition of the total capital, its profit will be equivalent to its surplus value. Where this is not the case, profit and surplus value must differ from each other.
Since profit governs the movement of capital, capitalist competition effects the migration of capital from branches of industry poor in profit to those rich in profit (whence arises the tendency to the formation of an average rate of profit). This means in practice that some commodities are sold at prices over and others at prices under the value they contain. This in no way alters the determination of the value of every commodity by the labor time socially necessary for its production. But the distribution of the total value effected by the market mechanism, which produces the average profit rate, changes these labor-time values into prices of production. Without going more deeply into the complicated question of the formation of an average profit rate, it should nonetheless be said that in the real world the process depicted in
Marx's model "acts as the prevailing tendency only in a very complicated and approximate manner, as a never ascertainable average of ceaseless fluctuations."
The deviations from value expressed in the production price cancel each other, so that for the total capital the sum of the production prices equals the total value. The intermixture of prices of production with the cost prices can also not affect this equality of the aggregates. The conceptual separation of the cost prices from the prices of production that have entered into them yields the total cost price, which can then be compared with the total profit. While this is in practice impossible, it is a theoretical possibility, just because the prices of production are constituted of two distinct elements, the cost prices plus the average rate of profit. In any case, however the total surplus value produced by the total social capital may be divided up, it can be dissociated no more from the labor-time relations of surplus-value production than from the process of production governed by labor time in general.
Capital, in Marx's words,
is in and for itself indifferent to the particular nature of every sphere of production. where it is invested, how it is invested, and to what extent it is transferred from one sphere of production to another or redistributed among the various sphere of production-all this is determined only by the greater ease or difficulty of selling the commodities manufactured.Through these migrations the average rate of profit is formed behind the backs of the capitalists, as a function of the total production, of which they are ignorant, and of the total surplus value they have produced. Although the law of value does not operate directly on the level of individual commodities, it nevertheless continues to govern production and exchange, if in an indirect manner, through the social character of surplus-value production. Capital experiences its reality in the fall in the average rate of profit, when the social surplus value no longer meets the requirements of accumulation. It is manifested in the fall and rise in the general level of the prices of production due to the increasing or decreasing productivity of labor. It appears, furthermore, on the terrain of the market in the superficial form of the interplay of supply and demand, and capitalist reactions to these market phenomena must, however blindly, reduce this interplay to the value relations underlying it in order to have any effect on the world of appearance. Although Marx's model of the formation of the general rate of profit corresponds to reality, this is only because every capital must strive to increase its capital in order to maintain it; to this end it must seek to reach at least the average profit rate. The average rate of profit presupposes the existence of different rates of profit, which appear in practice as excess profits or as below-average profits. In the course of development the excess profits are lost through competition, and capitals that prove to be unprofitable disappear, only to leave the field to capitals with new differential rates of profit, which in turn succumb to the tendency to their equalization. There are also "pauses" during which the average profit rates stabilize, more or less, and appear to have definite magnitude.
in the first place the share of colonial surplus profits has undergone a decline relative to the transfer of value via "unequal exchange;" in the second place, the international division of labor is slowly moving towards the exchange of light industrial goods for machines, equipment, and vehicles, in addition to the "classical" unequal exchange of food. stuffs and raw materials for industrial consumer goods (p.368).But since the transfer of value is not tied to a particular form of material production, "but to a difference in the respective levels of capital accumulation, labor productivity, and the rate of surplus-value," only the form of underdevelopment is changing and not its content, and "the sources of metropolitan imperialist exploitation of the semi-colonies today flow more abundantly than ever" (p.368). This change of form means that many "Third World" countries are beginning to industrialize, to produce additional surplus value, and to have more to exchange than just foodstuffs and raw material-, if also less of the latter. Since this changes the compositions of their capitals, their condition comes somewhat closer to that of the developed countries. To the extent that this happens, however, it influences the transfer of value to the imperialist countries, since a growing part of the surplus value must be capitalized, which had not previously been the case. Through the simultaneous diminution of the production of raw materials and foodstuffs, the "unequal exchange" is reduced by way of price formation under conditions of international competition and leads the developed countries to export capital to the underdeveloped countries in order to share in their surplus value. That this directly invested surplus value is still of relatively little importance can be seen in the fact that the great mass of capital exports still goes to the capitalistically developed countries.
5
We can agree with Mandel on one thing; it is certainly true that capital exploits the world and nevertheless has no future.
However, according to Mandel, the abolition of the capitalist system cannot be deduced from the capitalist relations of production alone,for there is also the problem of the realization of surplus value to consider. In this way Mandel adheres to two distinct theories of crisis at once: the overaccumulation theory, which is based on the relations of production, and the overproduction theory, which is based on the difficulties of realizing surplus value due to an insufficient demand for consumer goods. Now, the over-accumulation theory includes the overproduction theory, since the difficulties of realization arise directly from an insufficient accumulation of capital. The realization-problem theory, in contrast, cannot include the overaccumulation approach, as it implies a barrier to the appearance of this state of affairs.
The disproportionality between production and consumption is a constant feature of the system, being no more or less than sur-plus-value production itself while overaccumulation, as a discrepancy between exploitation and the organic composition of capital, appears only from time to time. The rising organic composition of capital presupposes a growing disproportionality between social production and consumption, and by itself that is to say, by accumulation overcomes the realization problem. This problem only arises again with the suspension of accumulation, appearing then as insufficient demand, including the demand for consumer goods. "We mean by the concept of overaccumulation," writes Mandel,"a situation in which a portion of the accumulated capital can only be invested at an inadequate rate of profit. . ." (p.109, translation corrected). Since it is not invested under these circumstances, the interruption of accumulation appears on the market as a lack of demand for producer goods and thus for consumer goods, in other words, as a crisis of overproduction. This is how it appears to Mandel, too, but he would nevertheless like to adhere "in the long-run" to the idea of overaccumulation in order to prove the necessary decline of capitalism. However, he does not want to do this in so "mechanical" a way as, for instance, Grossmann did; overaccumulation is to be shown to follow not from the assumption of a constantly rising organic composition of capital but from the continuous automatization of production and the displacement of living labor. Against Grossmann Mandel argues that the
rise in the organic composition of capital can always be counteracted by equivalent depreciation of capital. It does not occur to him that by the same logic, automatization could also be halted as soon as it affects profits. He is also not aware that he is only repeating Grossmann, although in different words. Continuous automatization is of course identical with a continuous growth of the organic composition of capital. But hardly has Mandel the "dialectician" pronounced his withering judgement on Grossmann the "mechanist" than he immediately takes it back, with the further insight that capital cannot automate for long without destroying itself.
Slippery as eels, the contradictions in Mandel's writing cannot easily be turned against him, since he calls attention to them himself, perhaps hoping in this way to disarm all possible adversaries. Thus he readily concedes "that the difficulty of simultaneously realizing surplus-value and raising the rate of surplus-value, is anchored in the capitalist mode of production as such. . .
(p.272). But anchors can be raised and the voyage can continue as soon as one of the variables declares its independence. On the one hand, capital accumulates, according to Mandel, at the expense of the underdeveloped countries; on the other, in the course of this process "capital itself creates an insuperable limit to its own extension" (p.85). Since meanwhile the problem of surplus profits, national and international,
can be reduced to the question of the transfer of value or of surplus-value, there is no limit whatsoever in purely economic terms to this process of the growth of capital accumulation at the expense of other capitals, the extension of capital through the combination of accumula-lion and devaluation of capitals, through the dialectical unity and contradiction of competition and concentration. Limits to the process of capitalist growth are-from a purely economic point of view-in this sense always merely temporary, because while they proceed out of the very conditions of a difference in the level of productivity, they can reverse these conditions (p.104, translation corrected).In short, it is like this but also different; it depends entirely on with whomever Mandel is arguing at the moment. It would take a new book to trace Mandel's inanities in detail if one wanted to show that his work represents not dialectics but ordinary inconsistencies. Perceptive readers of his book Will see this for themselves. We therefore prefer to turn after a look at Mandel's apologetic renovation of Lenin's theory of imperialism to his analysis of "late capitalism." But since according to Man-del the current phase of capitalism must be explained not only theoretically but also in terms of history, we must take another look at the past.
It establishes monopoly in certain spheres and thereby requires state interference. It reproduces a new financial aristocracy, a new variety of parasites in the shape of promoters, speculators, and purely nominal directors; a whole system of swindling and cheating by means of corporation promotion, stock issuance, and stock speculation.Marx was clearly not concerned here with the question later raised by Engels, whether there was not also a positive side to the creation of joint-stock companies, since they can be seen also as a sort of "reaction of the productive forces, in their mighty growth, against their character as capital."Marx viewed the stock companies rather as one more sign of the contradictions developing within capitalism, which engender both its rise and its decline. The material forces of production that can develop in capitalism are governed and limited by its accumulation; they cannot become independent of it and turn against their character as capital. The only force of production that can do this is the working class. It is therefore nonsense to suppose that capital is attempting to break through the barriers of the nation-state and private property for the further development of the productive forces. On the contrary, its "internationalism" exclusively serves the national capitals and private property, with or without private control.
in the long run an arms economy is functional for the accumulation of capital only if it absorbs surplus capitals without also deflecting into the armaments industry capitals needed for the extended reproduction of Departments I and II [of the reproduction schemas]. An arms and war economy carried beyond this point increasingly annihilates the material conditions for extended reproduction and thus in the long term hampers the accumulation of capital instead of promoting it (p.168).In other words, armaments are good for accumulation but bad when overdone. If the rate of accumulation falls despite the arms industry, this does not contradict Mandel's theory, for it only indicates that arms production has been pushed too far. To demonstrate his theory Mandel offers a reproduction schema of his own, with three departments, including one for the arms industry (along with those for producer and consumer goods) whose production does not enter into the material process of reproduction but nevertheless, as a part of total production, promotes accumulation. We can easily ignore these little games, as they only say in numbers what has already been said in words. All three departments in Mandel's schema produce commodities and therefore surplus value. Armaments are financed out of surplus value, "which serves neither for the maintenance of the capitalist class nor for that of the working class, and in which capital finds new opportunities for creating and realizing surplus-value" (p.282, translation amended). It is necessary at this point to examine Mandel's conception of the law of value. For him "it has the function of regulating, through the exchange of medium-term equivalent quantities of labor, the distribution of the economic resources at the disposal of society into the various spheres of production, according to the fluctuations of socially effective demand, i.e., according to the structure of consumption" (p.70). It is thus an equilibrium mechanism, which brings production and consumption into harmony. Accordingly, Mandel maintains, following Rosdolsky and citing Marx, that "the production of constant capital never occurs for its own sake but only because more of it is needed in the spheres of production whose products enter individual consumption" (p.279 n.). Since the rising organic composition of capital means that always relatively fewer workers are newly hired, social consumption cannot increase sufficiently to absorb all the commodities produced for consumption. Thus the growing organic composition of capital engenders the realization problem, although it is not easy to see how the law of value, which is supposedly adjusting production to consumption, can permit such a growth of the organic composition of capital. When the constant capital can only grow provided that it is invested in the spheres of production serving consumption, then not the valorization of capital but social consumption is governing production. Still, there is the quotation from Marx only it has been incorrectly understood.
6
To produce capital the capitalist must have commodities produced that have exchange value for him and use value for others. The use value is realized in consumption. Just as the capitalist productively consumes the use value of labor power, the resulting commodities enter in one form or another into social consumption and there disappear. What does not disappear is the part of the surplus value, or surplus product, which serves as constant capital in the expanded reproduction of the relations of exploitation.
For capital to be accumulated, use values must be produced and find a corresponding demand on the part of those whom Man-del calls the "final consumers." It should not be concluded from this however, that the "final consumer" actually determines_the movement of capital. In other words, the "final consumer" has nothing to do with the "too slowly growing sum of wages for consumer goods," as Mandel imagines. For each capitalist, regardless of the kind of goods he produces, the exchange value of his workers is a cost price that he attempts to keep as far as possible below its use value. But for the capitalists producing consumer goods, all workers are also consumers to whose demand they are responding. The higher the wages paid to other capitalists' workers, and the lower those he pays his own employees, the better can his profit be realized on the market. But as this holds for every capitalist, the workers as a class receive only their exchange value, which is the equivalent of a smaller or greater quantity of commodities, while the capitalists receive the share of production, also represented in products, that corresponds to surplus value, which certainly also requires a "final consumer" but cannot find him in the working class. The realization of surplus value thus has nothing to do with working-class consumers but must be accomplished by capital itself.
If the workers produced no surplus value, there would be no capitalist economy; if the capitalists ate up the entire surplus value, we would indeed have capitalist production, but not the production of capital. The latter presupposes the accumulation of a portion of the surplus value. This portion must from the start have the form of new means of production, even if they are used in turn to produce commodities entering into consumption. Capital produces in principle neither means of production for the production of means of production nor means of production for the production of consumer goods. Both are only means to the end of transforming a given capital into a larger one. Since the production of consumer goods is tied to that of producer goods and vice versa, the demand for either depends on the general movement of capital. With accelerating accumulation the demand for means of production will increase relative to that for consumer goods, since the mass of surplus value at any given moment has a fixed magnitude. What is accumulated cannot be consumed, although accumulation, through the growth and improvement of the means of production, throws more consumer goods into circulation. The process of accumulation must therefore be at the same time a process extending the capitalist mode of production; the world market is from the start the condition of capitalist expansion. The growth of the means of production through accumulation and the higher productivity of labor leads to the production of a constantly growing mass of commodities, and the accumulation of capital proceeds via the realization of this mass of commodities.
The increase in labor productivity has in itself nothing to do with capitalism. Productivity grew in precapitalist times, although very slowly, and will also grow after the abolition of capitalism. The whole development of society is based on the increasing productivity of labor. This general process is accomplished under the capitalist relations of production in the specific form of capitalist competition. It is however not competition that engenders the development of the productive forces but the development of the productive forces that leads to capitalist competition. Once this process has begun, capitalist competition enormously stimulates the growth of the productivity of labor. Every capital, if it is to remain a capital, must increase its productivity and thus accumulate capital. This requires an increasing share of the surplus value and leaves a relatively diminishing share for capitalist consumption. Although the quantity of consumer goods to be realized increases and allows the capitalist an ever more luxurious existence, an increasing part of the surplus value, its quantity determined by the previous level of accumulation, is capitalized. More means of production and fewer articles of consumption are required. The production of commodities shifts in response to the changed demand. With respect to the realization of surplus value-and from the standpoint of the total capital the realization problem concerns only the surplus value-this is accomplished through capitalists' consumption and the accumulation of capital.
Supply and demand adapt themselves to the accumulation needsof capital.It is of course true that in the final analysis, the increased means of production are used to produce consumer goods and that these must find a market if they are to be transformed back again into capital. But this market arises from the dynamic of capital, from its continuing and broadening accumulation in the course of which a growing quantity of surplus value is invested in means of production. Capital thus creates its own market and realizes its profit in accumulation and in growing capitalist consumption. This process is only possible because the workers are excluded from the realization process of capital.If the realization of surplus value were to hinge on its increasing consumption, this would mean a corresponding loss of profit for capital and would therefore be accompanied by a lower rate of accumulation and decreased capitalist consumption. But the value character of labor
power excludes this possibility and reserves the surplus value for capital as its "final consumer."
The idea that capital could be unable to use its surplus value and so realize it is hard to understand. Even aside from the compulsion to accumulate, the desire to accumulate is generally unlimited. No capitalist ever finds himself "too rich," and his wealth represents capital for him. Accumulation brings him a larger mass of profit, which makes possible his continued accumulation. The use of additional labor power, his own increased consumption, and the extension of the world market make it possible for the capitalist to transform the unconsumed portion of surplus value directly into additional capital in the expectation of further expansion and irrespective of the actual market situation. Since production must precede consumption in any case, the production of means of production is not limited by the current market demand for consumer goods.So long as the rate of surplus value keeps step with accumulation or exceeds it, the accumulation of capital means no more than the extension of the capitalist mode of production itself: capital's conquest of the world. It continuously creates new prerequisites for capitalist production, long before the old ones have completed the metamorphosis from the commodity form of capital into the capital form, so that the accumulation of capital always outstrips consumption and determines its extent.
Capital would have had a different history if its accumulation had really depended on the realization of surplus value by those whom Mandel calls the "final consumers." In reality accumulation has always proceeded at the cost of consumption, which, while growing, lagged behind the expansion of capital.While the production of constant capital must ultimately lead to the production of consumer goods, this does not mean that it is only employed when there is a corresponding demand for consumer goods. "Since the aim of capital is not to minister to certain wants, but to produce
profit, and since it accomplishes this purpose by methods which adapt the mass of production to the scale of production, not vice versa, a rift must continually ensue between the limited dimensions of production under capitalism and a production which forever tends to exceed this immanent barrier. " Thus, according to Marx, actually
too many means of labor and necessities of life are produced at times to permit of their serving as means for the exploitation of laborers at a certain rate of profit. Too many commodities are produced to permit of a realization and conversion into new capital of the value and surplus value contained in them under the conditions of distribution and consumption peculiar to capitalist production, i.e., too many to permit of the consummation of this process without constantly recurring explosionsBut these contradictions and the explosions fuelled by them are always the consequence of a successful period of accumulation during which the same contradictions have provided an impetus for accumulation. The limit of the capitalist mode of production is, according to Marx, to be seen in the fact that
the development of the productivity of labor creates in the falling rate of profit a law which at a certain point comes into antagonistic conflict with this development and must be overcome constantly through crises ...[and] that the expansion or contraction of production are determined by the appropriation of unpaid labor and the proportion of this unpaid labor to materialized labor in general, or, to speak the language of capital, by profit and the proportion of this profit to the employed capital, thus by a definite rate of profit...Only at the point where the organic composition of capital, rising as a result of accumulation, lowers the rate of profit is this over-accumulation accompanied by the overproduction of commodities, the discrepancy between production and consumption, and the realization problem. These difficulties are always immanent in capitalist production, without thereby being an obstacle to accumulation, until the latter itself becomes an obstacle.
7
According to Mandel, it makes no difference with respect to the creation of value whether a commodity is produced for the consumption of the workers, the capitalists, or the state. "For Marx," Mandel explains, "it is abstract labor that creates value, i.e., labor which as a part of the total social labor capacity, produces a commodity which, irrespective of its use-value, finds its equivalent on the market because it fulfils a social need" (p.292, translation corrected). Thus the domain of value production is the same as that of commodity production, so that the rate of profit depends on the mass of surplus labor "set in motion in the production of commodities by social capital, irrespective of the sector" including, e.g., the armaments sector-"in which this occurs" (p.292).
We can ignore Mandel's reflections on whether the arms sector, as the third department of his reproduction schema, has a higher or lower organic composition of capital and on the positive or negative influence of this on the average rate of profit. For in reality the arms industry does not represent a particular sector but exists within capitalist production in general. What is important to us are the questions of whether the armaments industry is really a case of commodity production, whether these commodities are exchanged for others, and whether their putative value enters into the total value.
Mandel answers these questions in the affirmative, but with the qualification that this holds only under certain conditions, from which it actually would follow that the arms industry is not an ordinary case of commodity trafficking at all. The qualification asserts that Mandel's answer holds only "so long as there are unused reserves available in the economy," and since "this is the starting point of the 'permanent arms industry' no particular problems are created by the specific use-value of the additional production . . ." (p. 294, translation corrected). Then follows a further qualification, namely that the acceleration of capital accumulation made possible by arms production is only successful when the entire surplus capital (the unused reserves) is switched into weapons production "gradually rather than suddenly" (p.295). When this is the case, previously idle capital can be valorized by the arms industry.
The concept of "abstract labor" refers to the total social labor time, into which all particular labor times enter and in which they are dissolved. It does not refer to the distribution of value or surplus value, which depends on the concrete relations of capitalist production, determined by the use values of the commodities. Under the assumption that all labor produces value, the total labor time equals the total value, which is divided into value and surplus value. Since the value of a commodity must be realized on the market, every commodity must find a buyer, so that in constantly changing foms-labor-time quantities can exchange against labor-time quantities. The "commodities" produced in the arms industry, however, are exchanged neither against the labor-time values of the working class nor against the surplus value of the capitalists. Apart from the insignificant portion of weapons production that enters into private consumption, the state is the buyer of these commodities. Of course, the state cannot exchange its own "abstract labor" for the "abstract labor" contained in armaments because it produces nothing at all. Its income is derived from taxation of the social income yielded by the production of value and surplus value.
Even Mandel knows that state spending (including the purchase of weaponry) represents a deduction from wages and profits for which there is no value counterpart, and that it thus diminishes wages and profits and therefore cannot change the total value. But in his eyes this is true only in the case of full employment and the utilization of all productive resources. So long as some of them are
idle, value and surplus value will be enlarged and accumulation encouraged by the additional production for military purposes. The additional "commodity value" will be realized by state purchases. But then as before the state has only taxes and borrowed funds at its disposal, which gives rise to a growing national debt, which in turn can be financed and paid off only through taxes.Although production is increased by military spending the total "newly created value" must be counted as a deduction from the proceeds of capitalist commodity production as there is no market for the products of the armaments industry In opposition to this Mandel speaks of "the growing significance of the arms traffic in world trade-a business which, incidentally, shows how nonsensical it is not to treat the production of weapons as commodity production and not to see the investments in this sector as accumulation of capital" (p.308). It escapes him that this alters nothing in the case: in international trade too it is governments who buy the weapons, paying for them out of taxes, so that here too for capital as a whole arms production is not matched by revenue created in production.
Mandel imagines that production, just because it is carried on in capitalism, must be capitalist production and the production of surplus value. It is certainly true that the arms industry makes profits and accumulates capital and appears in no way different from other businesses. But its profits and new investments derive not from commodity circulation but from state expenditures, which are drawn from a part of the realized value and surplus value of other capitals.Tis is not so obvious a larger part of weapons production is financed by loans rather than directly by taxation, so that the burden on private capital is spread over a long period of time. Capital gives the government credit which can indeed enlarge production but can yield no additional surplus value since the goods of the arms industry must be paid for out of the surplus value of the creditors
If, according to Mandel the arms industry means a deduction from wages and profits under conditions of full employment and the full utilization of productive resources, this is only to say that it produces no value and surplus value of its own and so cannot be described as commodity production. This cannot change just because a portion of capital is idle. Just as the capitalist valorization and realization problem cannot be overcome by the increase in consumption, it can also not be vanquished by means of the arms industry, whose products, exactly as in the case of increased consumption, are not transformed into new capital but simply disappear. The arms industry, like all other state expenditures that are not covered by the state's own production, falls, from the social point of view, exclusively into the sphere of consumption and not into that of accumulation.
Notwithstanding the "value and surplus-value-producing" character of the armaments industry as "one of the most important levers for the solution of the problem of surplus capital," Mandel comes most amazingly to the conclusion that "the more the development of the arms economy threatens to reduce the gross profit of the major corporations (in other words, the higher the tax rate it determines) the stronger will be the resistance of these companies to any further extension of it" (p.303). Now it is no longer true that it is all the same from the viewpoint of value formation which kind of commodity is produced, that arms production involves "abstract labor" which creates value and accumulates capital. If it were so, then it would be all the same to capital how far the arms business developed, since this would be equivalent to the development of value production. But we can conclude discussion of this theme here, since Mandel, as is proper for a revolutionary, explains after all that the arms industry, like capitalism in general, has objective social limits.
8
And since according to Mandel the long period of prosperity, for which the arms industry is partly responsible is nearing an end, the problem can in any case be left aside as a matter of the past. What is important today is the crisis cycle, which must work itself out in "late capitalism," as at any previous time. In his earlier book, Marxist Economic Theory, Mandel was still strongly under the influence of Keynes's theory of capitalist economic management and under the spell of the long postwar period of prosperity.
It seemed to him then that capital had succeeded, in comparison with the past, in bridging the great contradiction between surplus capital and effective demand in such a way as to stabilize the system. In his new book this holds only for the recent past but not for its future development. But a Marxist explanation of the unexpectedly long phase of prosperity must nonetheless be furnished, and Mandel believes that he has found it in the theory of "long waves."
As for everybody else so also for Mandel the industrial cycle represents "the successive acceleration and deceleration of accumulation" (p. 109). He asks, however, whether there is "a peculiar inner dynamic to the succession of industrial cycles over longer periods of time" (p. 110). According to Marx, Mandel explains, the "renewal of fixed capital explains not only the length of the business cycle but also the decisive moment underlying extended reproduction as a whole, the upswing and acceleration of capital accumulation" (p. 110). Now it is true that Marx attempted to bring the business cycle into connection with the turnover time of capital, which, just like the cycle, had an average span of ten years. Of course, the lifetime of capital can lengthen or shorten. However, according to Marx, what is important is not a particular number of years. This seemed evident to him;
the cycles of interconnected turnovers embracing a number of years, in which capital is held fast by its fixed constituent part, furnish a material basis for the periodic crises. During this cycle business undergoes successive periods of depression, medium activity, precipitancy, crisis. True, periods in which capital is invested differ greatly and far from coincide in time. But a crisis always forms the starting point of large new investments. Therefore, from the point of view of society as a whole, more or less, a new material basis for the next turnover cycle.Marx never followed up this vague hypothesis, if only because the lifetimes of different capitals are different, and because they are renewed not at the same time but according to their individual starting points, while the business cycle is a matter affecting the whole society at one particular moment. Certainly crisis leads to a concentration of new investments at one time and thus to a sort of "material basis for the next turnover cycle." And doubtless capital finds itself "under the spell of its fixed component," since the latter, in accordance with its reproduction Time, must be renewed in order to be a basis for new investments. The shorter the turnover time, the sooner the renewals and new investments participate in the improved productivity due to the "perpetual revolutionizing of the means of production," and the lower are the costs of the "moral depreciation" that precedes the physical end of capital. But in the final analysis all of this only means that "the crisis always forms the starting point of large new investments," i.e., that the productivity of capital is sufficiently improved to recommence the process of accumulation.
by no means "purely" the product of economic development, proof of the alleged vitality of the capitalist mode of production or a justification for its existence. All it proved was that in the imperialist countries, given existing technology and forces of production, there are no "absolutely hopeless situations" in a purely economic sense for capital, and that the long-term failure to accomplish a socialist revolution can ultimately give the capitalist mode of production a new lease on life, which the latter will then exploit in accordance with its inherent logic...(p.221).Thus capital succeeded once more in enlarging the productive forces. But the "third technological revolution" indicates also the historical limits of capital, for "who is supposed to buy a doubled volume of durable consumer goods if, with a constant selling price, the nominal income of the population is reduced by half?" (p.205). Here we have arrived with Mandel "at the absolute inner limit of the capitalist mode of production. . . . It lies in the fact that the mass of surplus-value itself necessarily diminishes as a result of the elimination of living labor from the production process in the course of' the final stage of' mechanization-automation" (p.207).
are wholly financed by taxation, then once again there will be no change in global demand. . . . Only if these investments at least to some extent result in a direct nominal increase in purchasing power-i.e., bring additional means of payment into circulation will they have a stimulating effect of the economy. . .. But since such investments do not increase the quantity of commodities in circulation to the same extent as they create additional means of payment, they inevitably contain an inflationary bias (p.552).The state's creation of credit by way of deficit financing is here a means to induce an additional production not achieved through the private credit mechanism. It becomes a necessity just because the expansion of private credit does not increase demand, and thus production, sufficiently to keep unemployment and overcapacity in socially manageable proportions.