Where art thou surplus value?

Rent, interest and profit (and taxes) are the parts of the value added by labour that go to the owners of capital (and to government). They are deducted from the wealth produced, not added. The question is how do the owners of capital transform their rent, interest and profit into new capital that can be accumulated? Rent and interest are levied in monetary form, and profit is part of the monetary value obtained on the market for goods and services. Capital appropriates wealth as money, and can transform that money into more capital. All would be fine, except for the fact that capital is getting more money out of the market than it is putting in, and that extra money has to come from somewhere. Capital pays for investments and labour, and gets that value back plus something more, the surplus value that pays rent, interest and profit.

Taking up Marx’s model with two departments, one (I) comprising goods and services that become investments, and the other (II) comprising goods and services that will be consumed, Rosa Luxemburg reasoned that either department I grows abnormally and department II stagnates, or consumption must be transformed into investments abroad, or consumers must get ever deeper in debt. Writing in 1912 she did not know what would happen in the USSR, and colonial plunder still paid for military consumption. And, though mass consumer credit did not exist, lending to foreign governments to pay for imports from the lender was already common practice. Things have changed since then, but the accumulation of capital still drains value from outside itself, from the non-capitalist world or from competing capitalisms, by guile or by force. And capital still grants credit for the sale of its surplus value. This means imperial dominion, belligerence and unmanageable debts.

Rosa Luxemburg’s analysis of how private capital accumulates shows up an unsustainable process (1). As it is totally dependent on expansion, its predation will always bring it into conflict with other similar predators (2). As public and private consumers lack the wherewithal to consume, it will lend and lend until debts smother everything (3). Whereas, without expansion and debts, department I grows in disproportion to department II (4). There is a faint glimmer of hope, however. Between the two models represented by the USA and the USSR, Rosa Luxemburg briefly suggested a possible third way (5). There is an alternative, even if its realisation is improbable. Doomsday is a choice, not a fatality. It is all about who does the choosing. Is it a bunch of hubris driven billionaires surrounded by subservient yes-persons, or is it humanity trying to make planet Earth a safe and pleasant place to live? So far the billionaires have kept the upper-hand, but that surely cannot be the end of the story. Two million years of evolution, five thousand years of history and three centuries of research and development just to culminate with Donald Trump and his buddies, is both comic and tragic. That an overweight, orange coloured, blethering buffoon, born with a diamond spoon, will soon command the planet’s military and financial super power is a joke on those who still believe that America is the Great Beacon lighting up the world. But it is the promise of continuing misery for the countless already suffering, and a threat for those who have yet to feel the sting. The tyranny of wealth and power seems to favour the ruthless novus homo rather than the virtuous patrician, and floundering capitalism grabs what it can. Trump’s election is the sign of a rough ride into the unknown for everyone.

1. https://www.marxists.org/archive/luxemburg/1913/accumulation-capital/index.htm

The page numbers are from the Routledge 2003 edition

2. Ch. 26 p. 338:

From the very beginning, the forms and laws of capitalist production aim to comprise the entire globe as a store of productive forces. Capital, impelled to appropriate productive forces for purposes of exploitation, ransacks the whole world. It procures its means of production from all corners of the earth, seizing them, if necessary by force, from all levels of civilisation and from all forms of society. The problem of the material elements of capitalist accumulation, far from being solved by the material form of the surplus value that has been produced, takes on quite a different aspect. It becomes necessary for capital progressively to dispose ever more fully of the whole globe, to acquire an unlimited choice of means of production, with regard to both quality and quantity, so as to find productive employment for the surplus value it has realised.

3. Ch. 30 p. 414

In 1874, a further attempt was made to raise a national loan of £m.50 at an annual charge of 9 per cent., but it yielded no more than £m. 3.4. Egyptian securities were quoted at 54 per cent of their face value. Within the thirteen years after Said Pasha’s death, Egypt’s total public debt had grown from £m. 3.293 to £m. 94.110, and collapse was imminent.

These operations of capital, at first sight, seem to reach the height of madness. One loan followed hard on the other, the interest on old loans was defrayed by new loans, and capital borrowed from the British and French paid for the large orders placed with British and French industrial capital.

While the whole of Europe sighed and shrugged its shoulders at Ismail’s crazy economy, European capital was in fact doing business in Egypt on a unique and fantastic scale – an incredible modern version of the biblical legend about the fat kine which remains unparalleled in capitalist history.

p. 417:

An opportune pretext for the final blow was provided by a mutiny in the Egyptian army, starved under European financial control while European officials were drawing excellent salaries, and by a revolt engineered among the Alexandrian masses who had been bled white. The British military occupied Egypt in 1882, as a result of twenty years’ operations of Big Business, never to leave again. This was the ultimate and final step in the process of liquidating peasant economy in Egypt by and for European capital.

4. Ch. 7 p.94:

Department I retains the initiative all the time, Department II being merely a passive follower. Thus the capitalists of Department II are only allowed to accumulate just as much as, and are made to consume no less than, is needed for the accumulation of Department I.

Ch. 25 p. 315:

These capitalists are thus fanatical supporters of an expansion of production for production’s sake. They see to it that ever more machines are built for the sake of building – with their help – ever more new machines. Yet the upshot of all this is not accumulation of capital but an increasing production of producer goods to no purpose whatever.

p. 319:

It goes without saying that if the capitalists of Department I relatively restrict their consumption for purposes of accumulation, there will be a proportionately greater unsalable residue of consumer goods in Department II; and thus it becomes more and more impossible to enlarge the constant capital even on its previous technological basis. If the capitalists in Department I relatively restrict their consumption, the capitalists of Department II must relatively expand their personal consumption in proportion. The assumption of accelerated accumulation in Department I would then have to be supplemented by that of retarded accumulation in Department II, technical progress in one department by regression in the other.

5. Ch. 7 p. 101/2:

Let us imagine for a moment that, instead of a capitalist method of production, we have a socialist, i.e. a planned society in which the social division of labour has come to replace exchange. […] from the figures previously assumed, we should get the following diagram for a regulated production:

I. 4,000c + 1,000v + 1,000s = 6,000 means of production

II. 2,000c + 500v + 500s = 3,000 means of consumption

Here c stands for the material means of production that have been used, expressed in terms of social labour time; v stands for the social labour time necessary to maintain the workers themselves and s for that needed to maintain those who do not work and to build up the reserves.

If we check up on the proportions of this diagram, we obtain the following result: there is neither commodity production nor exchange, but in truth a social division of labour. The products of Department I are assigned to the workers of Department II in the requisite quantities, and the products of Department II are apportioned to everyone, worker or no, in both departments, and also to the reserve-fund; all this being the outcome not of an exchange of equivalents but of a social organisation that plans and directs the process as a whole – because existing demands must be satisfied and production knows no other end but to satisfy the demands of society.