- Capitalism and Alternatives -

My understanding

Posted by: Barry Stoller on October 14, 1999 at 16:05:58:

In Reply to: merchants' capital posted by Chuck on October 13, 1999 at 15:51:49:

I'm glad we have the same edition of Capital.

: : Surplus value is not a capitalist invention. It existed then.

: Right. But wasn't this really surplus produce extraction (e.g. rent, taxes, interest, etc.)? I always thought surplus value extraction was peculiar to the predominance of wage labor and generalized commodity production.

Capital has not invented surplus labor... It is, however, clear that in any given economic foundation of society, where not the exchange-value but the use-value of the product predominates, surplus will be limited by a given set of wants which may be greater or less, and that here no boundless thirst for surplus-labor arises from the nature of the production itself.
(vol. 1, p. 235.)

My understanding is that while surplus has always been extracted---from labor---it used to be minimal (however brutally its extraction was achieved) until the capitalist mode of production increased productivity (hence surplus) exponentially. Therefore capital makes more surplus to be extracted---which is extracted in a different way than it once was. At least, that's my understanding.

: : The value is always in the production. It cannot be in the circulation. See Marx's refutation of 'Say's Law.'

: Right again. And yet Marx says in Capital (Vol. III, p.329): "Since the movement of merchant's capital is M-C-M', the merchant's profit is made, first, in acts which occur only within the circulation process, hence in the two acts of buying and selling; and, secondly, it is realized in the last act, the sale."

Yes. But he profits from the surplus that the production process engendered---in a roundabout manner.

Merchant's capital is simply capital functioning in the sphere of circulation. The process of circulation is a phase of the total process of reproduction. But no value is produced in the process of circulation, and, therefore no surplus value. In fact, nothing occurs there outside the metamorphosis of commodities, and this has nothing to do as such either with the creation or changes in values. If a surplus value is realized in the sale of produced commodities, then this is only because it already existed in them.
(vol. 3, p. 279)

So far, so good. Then he finishes (the chapter) by emphasizing the circulation sphere's role in hastening the final sale, reducing turnover time, and therefore raising the rate of surplus value.

Now consider:

Aside from the fact that [merchant's capital] exploits the difference between the prices of production of various countries (and in this respect it tends to level and fix the values of commodities), those modes of production bring it about that merchant's capital appropriates an overwhelming portion of the surplus-product partly as a mediator between communities which still substantially produce for use-value, and for whose economic organization the sale of the portion of their product entering circulation, or for that matter any sale of products at their value, is of secondary importance...
(vol. 3, pp. 330-31)

Now, as I understand it, the merchant of old was able to benefit from differences between producing and consuming countries, especially when the producing countries were less developed and required more socially necessary labor time to produce a commodity. They had to surrender more labor time because they competed with the higher productivity of the more developed country. They also required less labor (expressed as value) in return because their standard of living required less. The profit existed largely for the merchant because the undeveloped countries, when offering commodities up for sale, possessed less productivity and had to compensate by producing more surplus---which the merchant pocketed before reselling. And vice versa, with the developed nation trading less for more to the undeveloped nation---a shell game of constant vs. variable expenses if you will.

For a further explanation of the above transaction, see the section on foreign trade, especially page 238.

Which still claims that the surplus was produced during the production process!

Now, a caveat.

This is my understanding. It's been a few years since I first read Capital and I'm probably due to hit all three volumes again soon.

I'd be interested in SDF's take on this matter.

: Needless to say, old Charlie's got me on the ropes again.

That only means you're paying attention!

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