is tied to the private ownership of the means of production, which allows private appropriation of produced commodities, thus private appropriation of surplus-value, and thus private accumulation of capital. It is surely not accidental that the 'rights of private property' are thus at the bottom of the whole constitutional and juridical superstructure which centuries of law-making have erected upon the basis of commodity production.
But what we confront when we examine the social relations which lie behind these juridical forms is, of course, something which is not simply formal private property; otherwise the analysis would be reduced to simple tautology. When Marx states that commodity production is only possible because social labour has been fragmented into private labours conducted independently from each other, he refers to a socioeconomic and not a juridical reality; the latter is only a reflection - and sometimes a very imperfect onel - of the former. What capitalism is about, then, is a specific relation between wage-labour and capital, a social organization in which social labour is fragmented into firms independent of each other, which take independent decisions about investment, prices and forms of financing growth, which compete with each other for shares of markets and profits (of the total surplus-value produced by productive labour in its totality), and which therefore buy and exploit wage-labour under specific economic conditions, compulsions and consents. It is not simply a general relationship between 'producers' and 'accumulators' or 'producers' and 'administrators', for such a relationship is in the last analysis characteristic of all class societies and not specific to capitalism at all.
The content of the economic institution of private capital is therefore the independent firm (whether a small manufacturer or a giant multi-national corporation). Whether the juridicial form strictly conforms to that content or not is irrelevant, and often poses complex legal problems. Are stockholders only owners of income titles, or are they owners of fractions of the firm's 'assets' or 'property'?
The bankruptcy laws - which differ in different capitalist countries - can go into the most sophisticated nuances imaginab1e on this subject. But the vital economic decisions (key investment decisions, for example) are taken by all those firms which are really independent and not subordinate companies. The basic fact of life of the capitalist economy is the fact that these vital decisions are not taken by society as a whole or by the 'associated producers'..
Again, the content of this economic institution of private property (fragmented social labour) should not be confused with the question of the precise agents who take the independent firms' decisions. Whether those who take the decisions are individual owners, or representatives of stockholders, or so-called managers, does not in the least change the fact that they are working under the same previously analysed economic compulsion. Some economists today, such as Galbraith and even some Marxists, contend that the contemporary giant corporation has largely freed itself from these contradictions. This is an illusion, born of an extrapolation from conditions prevailing during a rather lengthy boom. In fact, the idea that any giant corporation, whatever its dimensions or power, could emancipate itself definitively from the compulsion of (monopolistic) competition, that is, could have a guaranteed specific demand for its products, independently of the trade cycle and from technological innovation, could make sense only if it were insulated both from economic fluctuations and from economic uncertainty, that is if the very nature of its output as commodity production was denied. Experience does not confirm such a contention.
The basic distinction which Galbraith, following Baumol, Kaysen and others, introduces between compulsion to profit maximization (true for yesterday's firms) and compulsion to growth maximization (true for today's corporations), becomes devoid of practical long-term significance once we understand that growth remains essentially a function of profit, that capital accumulation can result in the last analysis only from surplus value production and realization.
The only kernel of truth which remains, then, is the difference between short-term and long-term profit maximization, which is indeed one of the basic differences between competitive capitalism and monopoly capitalism.
The debate on the nature of capital has received a new and significant impetus with the 'internal' critique of the theory of the marginal productivity capital by Piero Sraffa and the Cambridge school. The latter have demonstrated convincingly that the measurement of capital inputs in the neoclassical 'production function' is based upon circular reasoning. For if the effect of marginal increases or decreases of capital inputs upon output has to be measured, this can only be done in money terms, given the heterogeneous nature of so-called 'capital goods'. 'But this process of pricing or valuation old capital inputs presupposes a rate of return on the plant and equipment in question, of which the latter value is the capitalization'; that is 'one has to assume a rate of interest in order to demonstrate how this equilibrium rate of return is determined', The way out, obviously, is to look for a common substance in all the 'capital goods' independent of money, that is to return to socially necessary labour as the measurable substance of the value of all commodities. - Ernest Mandel, introduction to Capital Volume 1, 1976.
THE TWO FACTORS OF A COMMODITY: USE-VALUE AND VALUE
(THE SUBSTANCE OF VALUE AND THE MAGNITUDE OF VALUE)
The wealth of those societies in which the capitalist mode of production prevails, presents itself as “an immense accumulation of commodities,” its unit being a single commodity. Our investigation must therefore begin with the analysis of a commodity.
A commodity is, in the first place, an object outside us, a thing that by its properties satisfies human wants of some sort or another. The nature of such wants, whether, for instance, they spring from the stomach or from fancy, makes no difference. Neither are we here concerned to know how the object satisfies these wants, whether directly as means of subsistence, or indirectly as means of production.
Every useful thing, as iron, paper, &c., may be looked at from the two points of view of quality and quantity. It is an assemblage of many properties, and may therefore be of use in various ways. To discover the various uses of things is the work of history. So also is the establishment of socially-recognized standards of measure for the quantities of these useful objects. The diversity of these measures has its origin partly in the diverse nature of the objects to be measured, partly in convention.
The utility of a thing makes it a use value. But this utility is not a thing of air. Being limited by the physical properties of the commodity, it has no existence apart from that commodity. A commodity, such as iron, corn, or a diamond, is therefore, so far as it is a material thing, a use value, something useful. This property of a commodity is independent of the amount of labour required to appropriate its useful qualities. When treating of u
se value, we always assume to be dealing with definite quantities, such as dozens of watches, yards of linen, or tons of iron. The use values of commodities furnish the material for a special study, that of the commercial knowledge of commodities. Use values become a reality only by use or consumption: they also constitute the substance of all wealth, whatever may be the social form of that wealth. In the form of society we are about to consider, they are, in addition, the material depositories of exchange value.
Exchange value, at first sight, presents itself as a quantitative relation, as the proportion in which values in use of one sort are exchanged for those of another sort, a relation constantly changing with time and place. Hence exchange value appears to be something accidental and purely relative, and consequently an intrinsic value, i.e., an exchange value that is inseparably connected with, inherent in commodities, seems a contradiction in terms. Let us consider the matter a little more closely.
Reading Marx’s Capital with David Harvey
A close reading of the text of Karl Marx’s Capital, Volume I.