Can Capital survive the abolition of the State?
I recently came across this excerpt from a short paper by the Marxist writer, Raya Dunayevskaya. The argument is a very dense consideration of a fundamental point of Marx’s theory. If it appears obscure and incomprehensible, that is okay; I offer it only as a reference for those familiar with the more arcane points of Marx’s theory. For everyone else, you can skip below, where I will address it directly in a way that makes its import both obvious and rather astounding:
Let me state right here that we have greatly underestimated Volume III of CAPITAL, which deals with these transformations. It is true that we caught its ESSENCE when from the start we put our finger on the spot and said the DECLINE in the rate of profit is crucial; the average rate of profit is completely secondary. Look at the mess we would have been in if we had not seen THAT and suddenly found ourselves, as did the Fourth [International], tailending the Stalinists’ sudden “discovery” (which had been precisely the PERVERSION with which the Second International PLANNERS had long ago tried to corrupt Marxism) that it was the AVERAGE rate of profit which was the “law of capitalism.”
Good, we saw the essence, but that is insufficient, and because that is completely insufficient, we were incapable of being sharp enough even here. For it is insufficient merely to state that the decline [in the] rate of profit, not the average, is crucial for understanding VOLUME III. The full truth is: JUST AS MARX’S THEORY OF VALUE IS HIS THEORY OF SURPLUS VALUE, SO HIS THEORY OF SURPLUS VALUE IS IN REALITY THE THEORY OF THE DECLINING RATE OF PROFIT.
Why couldn’t we state it this simply before? It is because we have been too busy showing that profit is only a disguise which surplus value wears and must be removed, again to see “the real essence”: exploitation of labor. Because the opponents we were facing were Workers Party underconsumptionists, we had to overemphasize this EVIDENT truth. But to overemphasize the obvious means to stand on the ground the opponents have chosen. Freed from these opponents and faced with PLANNERS WHO ARE NOT UNDERCONSUMPTIONISTS the greater truth of what Marx was saying suddenly hits us in the eyes with such force that now we can say: How could we have not seen what Marx was saying? It is all so clear: Since the realization of surplus value IS the decline in the rate of profit, the poor capitalist MUST search for profits.
The argument Dunayevskaya is making here is simple: Marx proposed that capitalism would be increasingly hamstrung by a decline in the rate of profit. This decline was not an accident or aberration, since it rested on a fundamental feature of the economy: On the one hand, the capitalist was always seeking to maximize his profits by reducing labor costs. This drive leads businesses to produce more output with fewer workers. On the other hand, the source of profits were the unpaid labor time of the employed workers. Thus, even as the capitalist tried to maximize profit by reducing its work force, its success at reducing its work force reduced the pool of unpaid labor time that was the source of its profits.
So far, not much of interest, right? Just another cat fight among the followers of Marx over interpretation of his theory; and Marxists are, if anything, more prone to cat fights than a bag of wet cats. But, then Raya does something jarring: she throws in that sentence at the end and changes the entire nature of the argument:
Since the realization of surplus value IS the decline in the rate of profit, the poor capitalist MUST search for profits.
Let me perform an intellectual shortcut here: Although it may not be obvious what she has just done, Raya has just stated that Marx is setting the reader up, not for an explanation why prices of goods reflect the values of those goods, but why they can never reflect the values of those goods. On a micro-level, Marx is explaining why that $600 iPad you got for Christmas probably cost no more than $3 to manufacture in China.
To put this another way: Marx was describing why the actual labor time expended in a capitalist economy must always and increasingly be greater than what is socially necessary. The tendency built into a capitalist economy toward a secular decline in the rate of profit produces its opposite: a mad scramble on the part of each capital, and all of them together, to find every avenue to maintain profitability in the face of this tendency; and this tendency can only be countered by effort to extend the social work day beyond what is actually required by society. As we have argued elsewhere, if Marx is correct in his analysis, there is a vast pool of superfluous labor within existing society that can be abolished without touching on the material living standard of society.
To put it bluntly, Marx’s law of the tendency toward a fall in the rate of profit predicts that if total debt, total consumption and total hours of labor don’t constantly increase capitalism will collapse. The social relation is not only incapable of achieving equilibrium, but it becomes increasingly self-disequilibrating as the productivity of labor increases. Assuming Raya was saying what I understand her to be saying, I think this self-induced, self-reinforcing, disequilibrium results in, at least, the following 5 symptoms:
- The Market for output must constantly expand.
- Total employment must always rise more quickly than productive employment. And, total hours of labor must always increase more quickly than productive hours of labor.
- Because of the above, total consumption must always increase more rapidly than necessary consumption (i.e., production). Which is to say, waste and unnecessary consumption becomes a matter of life or death for the economy.
- Since waste becomes a permanent feature of the economy and the rising cost of wasted effort must be borne by society, total prices must always increase more rapidly than total value.
- Since, wasted effort itself produces no new value, exchange itself is increasingly founded on debt; hence, the financial sector must always increase more rapidly than the industrial sector, and debt more rapidly than equity — leverage, which is, at root, only the relation between the sum total of social labor to the sum total of productively employed labor, must always increase.
Assuming I am correct about Raya’s comments about Marx’s third volume of Capital, and, that she is correct in her reading of the volume — two very big ifs, I admit — in his third volume of Capital, Marx is setting us up to understand how the State becomes an absolutely critical and absolutely necessary feature of capitalist society — a matter of life and death for capital. Each of the five symptoms of modern society I cited above are no more than functions taken on by the State to manage capitalist society through its increasingly devastating cycles of booms and busts.
Marx’s law of the tendency toward a decline in the rate of profit is, in reality, a theory of the State. To extend Raya’s statement: Marx’s theory of value is the foundation for his theory of surplus value; his theory of surplus value is the foundation for his theory of the decline in the rate of profit; and, finally, his theory of a decline in the rate of profit is the foundation for his theory of the modern State.
Powerful support for my interpretation of Raya’s argument can be found simply by looking at the title of the paper from which the above quote was drawn: “The despotic plan of capital vs. freely associated labor”. In this paper, Raya counterposes the modern State to the free association of individuals, explicitly arguing that planning arrived at by free association is completely incompatible with the various forms of State management of the economy with which we are familiar: everything from the centralized planning of the Soviet type to the fiscal and monetary levers of neoliberal political-economy. In 1950, with the ink still drying on National Security Council Report 68, Raya was making the argument that, in her words, “If the order of the factory were also in the market, you’d have complete totalitarianism.”
Effort by the State to manage the economy, as envisioned by the Truman administration, had to lead to an increasingly totalitarian reorganization of society. This, apart even from consideration of the aim of that management — which, for Truman, was a means of accruing the resources for a long-term conflict with the Soviet Union — implies the subjugation of the whole of social relationships to the despotism of capital.
Marxists and progressives who see in the increasing entanglement of the State in the economy — as borrower, lender, consumer and employer of last resort — some realization of the possibility for a humane society are not only wrong, but dangerously misguided in their approach to every social issue from the present intractable unemployment, to poverty, to every form of inequality, the environment and global relations. They are trying to use as a solution the very instrument of society which maintains those evils and makes their continuation possible.