Izielen Agbon
In the last article in this series, we examined the predisposition and possibilities of crisis during the first stage of the circulation of capital when the capitalist appears as buyer in the labour and commodity markets. This time, we will examine the predisposition and possibilities of Crisis during the second stage. The second stage of the circulation of capital is represented by (…P…). In this stage, P represents productive capital, whose functions are performed in a production process where labour power (LP) is productively consumed by the capitalist.
P implies that capital value enters productive consumption. The productive consumption of LP transforms component parts of P into commodities of higher value. The surplus labour of the LP is not paid for by the capitalist and ends up as surplus value. Thus, the commodity produced contains the value of LP and the means of production (MP) consumed in the production sphere plus the surplus value created during the production process. The production process brings together LP and MP to produce both the means of subsistence [C(ms)] and MP. Marx grouped industries producing MP in “Department I” and those producing C(ms), in “Department II”.
The right proportions of LP and MP must be brought together in each department to produce enough means of subsistence for all the workers in both departments to be able to reproduce themselves and enough MP for all the capitalists in both departments to productively consume all their purchased LP. This is essential to the accumulation of capital.
There are many possibilities for Crisis in the Sphere of Production. Even if capital successfully completes the first stage, there is still the possibility that the production process does not start, or it is interrupted, because the workers refuse to work. It is one thing to hire workers, but it is quite another to make them work. Furthermore, even if the workers work, conflicts over how much work they do and under what conditions make the production process a terrain of protracted struggle. Work stoppages, slowdowns, strikes, sabotage and absenteeism can all disrupt the capitalist’s plans. Even in the absence of such overt resistance, the workers might fail to produce surplus value because of their tendency to work no more than is necessary to still get paid. On the other hand, the MP might breakdown, leading to temporary work stoppage.
The predisposition to crisis in the production process includes, first, a tendency for bitter class conflict to arise over the enforcement of contracts. This is because the capitalist usually wants more work done while the workers struggle for less. Secondly, class struggle at the point of production, either for higher wages, better working conditions, results in a tendency for constant capital (C) to be increased, leading to an increase in the technical composition of capital (MP/LP), in the organic composition of capital (C/V) and a fall in the rate of profit (S/C+V) where V is the variable capital and S is the surplus value. The technical composition of capital is equal to the value composition of capital when it is measured in value terms. (C/V) is equal to the organic composition of capital when the organic composition reflects its technical composition. The organic composition of capital can only change if the technical composition of capital changes while the value composition of capital can change without a change in the technical composition of capital. The increase in constant capital (especially in Department II) leads to a decrease in the value of the means of subsistence. Variable capital (V) hence falls and (C/V) increases. The increase in constant capital also increases productivity, with the result that the rate of exploitation (S/V) and surplus value increase. This is essentially a transfer of value from workers to capital. However, the increase in surplus value (S) is limited by the number of workers, the length of the working day and the limits to human endurance. Thus, (S/V) tends towards infinity as variable capital tends towards zero. The rate of profit (S/C+V), under these conditions, tends towards (S/C).
The tendency of the organic composition of capital to rise (due to the increase in constant capital and the limitation on the increase in S results in a tendency of the rate of profit to fall and hence in a predisposition to economic crisis. However, there are offsetting circumstances such as the increased intensity of exploitation, depression of the wage below the value of LP, cheapening of the elements of constant capital, relative over-population, foreign trade and the increase in the stock of capital which mitigate the tendency of the rate of profit to fall.
The predominance of these offsetting circumstances presupposes the containment of the workers’ struggles at the point of production. Therefore, the rate of profit should not be regarded simply as a monetary measure but as a representation of the development of the balance of class power under capitalist production. The introduction of new technology and machinery or the increase in the organic composition of capital is, first and foremost, capital’s response to workers’ struggles at the points of production and reproduction. This response results in a decrease in the number of workers, the imposition of new divisions of labour and a reduction of the power of the workers. The increase in the organic composition of capital is based on the development of science and acts as a measure of capitalist development within a specific historical period. The increase in the organic composition of capital and the tendency for the rate of profit to fall involve great advances in the development of the productive forces, driving them into conflict with the limitation of the social relations as time passes. Thus, in the long run , there is a predisposition to crisis in the sphere of production. Next time, we will examine the predisposition and possibilities of crisis in the sphere of realization (third stage) during the circular movement of capital.
The previous article in this series is available from:
A more detailed introduction to the economic workings of capitalism can also be found in this booklet:
https://ivavalleybooks.com/2024/04/30/unravelling-capitalism-joseph-choonara
