Absolute over-accumulation of capital
The bigger the mass of resulting surplus-value is, after a capital rotation process, the bigger the part of this available additional capital will be for investing in the following rotation period. Therefore, in principle, capital expansion depends on the mass of available additional capital. In fact, from a bigger amount of invested capital always results an increase in the mass of the obtained surplus-value. But the continuity of the process of capital accumulation, the decision to continue the investment process by the capitalists does not depend on the increase in the absolute mass of surplus-value. What determines this decision is not the fact of gaining more, but that the increase in the obtained surplus-value balances the increased mass of invested capital. And this is determined by the evolution of the OCC and the profit rate. In this sense, it is a law that the continuity of the accumulation process is interrupted when the mass of surplus-value of an increased capital turns out to be the same or smaller than the previous period. For example, when the mass of accumulated capital goes from 1000 to 1150 monetary units and the profit rate from 15% to 9%, it means that having invested 1000 at 15% they got 150, while with these 1150 at a rate of 9% they would only get 103. In such conditions, the new surplus-value investment of 150 does not materialize, because now, to obtain again a little more than these 150 of surplus-value, the capitalist would have to invest a bigger capital than the 1150 available. Exactly 525 more (1000 + 150+ 525 = 1675 * 9% = 150.75) and this means a net loss of capital. Not only because it does not compensate them, but because they do not have this additional mass of value, so they need to take a loan. So their profit would not be of 9% but less, the equivalent to the difference with the interest rate that they have to pay for the loan. Marx calls this phenomenon “Absolute over-accumulation of capital”. Such is the cause and origin of the crises. The cause is the decrease in the profit rate. The origin is the over-accumulation of capital, but not of commodities of final consumption.
To talk about absolute over-accumulation of capital is to talk of a value mass under the form of money that runs away from the sphere of surplus-value production, that stops producing surplus-value because there is no investment and therefore no demand of additional labour. Such is the active principle that explains the phenomenon of capital excess with an excess in population or growing unemployment. This takes place because the exploited workers’ population has become too small in relation with the invested capital. But at the same time this capital turns out to be too small in relation with the exploitable workers’ population.
But this doesn’t mean that this pile of idle money in the hands of the different capitalists –that throws a mass of wage-earners to unemployment determined by the proportional magnitude of capital for salaries that have been taken out of the sphere of production- leaves its search for profit, if so it would stop being capital. This tendency creates the typical speculative markets as the stock market, where what one gains isn’t what another stops gaining but what it loses. By not producing surplus-value, what is in dispute and at risk in these markets is not a profit -product of salaried labour- but the surplus capital of those who take part in it, which in this way passes from one hand to the other.
In this dispute, the pressure of the demand of the spare money capital on the stocks provokes the prices to increase with no sense in relation to the real value that they represent, which finally ends in the inevitable crash or settling of scores of the value over the prices.
We mentioned above, that the crises are like the bloodletting to which the arterial hypertension sick people are exposed. In this case it is not a fall in the blood flow of the sick but of a decrease in the mass of excessively accumulated value. In fact, the rate of profit tendency to fall indicates that the mass of capital in functions is getting excessive in relation to the increase of surplus-value obtained in each rotation period. This process inexorably follows to the point where the increase in the produced surplus-value stops compensating the capital already accumulated. This is the moment and the conditions that allow us to talk about a crisis. Immediately, the subsequent disinvesting provokes as much an excess of offer in the market of goods of production as in the labour market. The machinery and raw materials prices Cc fall below their value, while the unemployment pressurizes the workers to accept working more time for less money, so Vc also decreases. This is the moment of the depression. Only now, in this phase of the cycle, , because of the fall in the workers’ living and working conditions the over-saturation of consumption goods takes place, with all the catastrophic human consequences that this involves. In this way, the blood-letting of value in the elements of constant capital Cc is combined with the fall of the salaries Vc and the consequent increase in surplus-value Sv for the profit rate to increase again to the percentage that enables the burgesses to go through another cycle with a new re-launching of the accumulation.
Where + = increase in value and - = decrease in value
Well then, during the depression that follows the crisis, the inter-capitalist competition intensifies, because each company tries to reduce its participation in the general loss fighting to transfer it to the others. From this follows stagnation, halting and in a lot of cases the bankruptcy of countless companies, including many small and medium. But at the same time, the crises enables some small and medium capitals to survive and momentarily take part. Leading in this cycle phase the technical progress, momentarily abandoned by the big companies. In fact, on the contrary of what is commonly thought, on one hand, the level of the profit rate -that in its falling course gets to the point where the big capitals stop expanding their production because the surplus-value mass does not compensate the capital already accumulated - does not impede however the existence and progression of small and medium capitals, which existence is not determined by the average profit rate, but they survive amid the crisis even producing with a remuneration equivalent to a medium salary in normal times.
" …a fall in the rate of profit connected with accumulation necessarily calls forth a competitive struggle. Compensation of a fall in the rate of profit by a rise in the mass of profit applies only to the total social capital and to the big, firmly placed capitalists. The new additional capital operating independently does not enjoy any such compensating conditions. It must still win them, and so it is that a fall in the rate of profit calls forth a competitive struggle among capitalists, not vice versa."(K. Marx The Capital. Book III. Chapter XV. What’s underlined is ours).
On the other hand, the provisional economic stagnation that affects the big capitalist conglomerates, diminishes the scale of production. This fact, combined with the price fall of Cc and Vc below their value, causes a decrease in the minimum necessary or requirable capital not to be excluded of the general sharing of surplus-value. Such conditions open the market doors to companies which in another moment of the cycle wouldn’t resist the pressure of big capital. The person, who following Marx, most clearly explained this phenomenon, , was R. Luxemburg in the book "Reform or revolution":
"According to Marxist theory, small capitalists play in the general course of capitalist development the role of pioneers of technical change. They possess that role in a double sense. They initiate new methods of production in well-established branches of industry; they are instrumental in the creation of new branches of production not yet exploited by the big capitalist(…)The middle capitalist layers find themselves, just like the workers, under the influence of two antagonistic tendencies, one ascendant, the other descendant. In this case, the descendent tendency is the continued rise of the scale of production, which overflows periodically the dimensions of the average size parcels of capital and removes them repeatedly from the terrain of world competition(…)The ascendant tendency is, first, the periodic depreciation of the existing capital, which lowers again, for a certain time, the scale of production in proportion to the value of the necessary minimum amount of capital. It is represented, besides, by the penetration of capitalist production into new spheres(…)If one admits that small capitalists are pioneers of technical progress, and if it true that the latter is the vital pulse of the capitalist economy, then it is manifest that small capitalists are an integral part of capitalist development, which can only disappear together with it [capitalist development].".(R. Luxemburg. Reform or Revolution. Chapter 2)
In this way, global capital goes again through the same vicious cycle in its phases of reanimation, expansion and boom in direction to a new crisis, but on a bigger technical base, Means of Production /Labour Power, on a bigger development of the social productive forces. Looking at the chart for the USA of the correlated curves for the real salary and productivity, we can observe that in this light recovery induced by the expansive policy of the Reagan government from 1981, the use of new technologies becomes general(4). If we now go back to the developed formula which describes each period in the process of capital accumulation:
D -- M ( Fp, Mp) -- P--M'-- D'
It may be inferred without much effort that, as it advances in the historical process of accumulation, every time that capital surpasses the obstacles that it sets itself during the crisis, the progressive development of the productive forces resulting from each cycle, accelerates capital’s metabolism. Thus each time shortening the necessary time which it takes to go through the three phases of each rotation, and so, the number of necessary rotations to arrive to the absolute over-accumulation that leads to the dramatic outcome of new crises and depressions each time deeper in shorter periods of time. The human consequences of these crises are each time more catastrophic because of the bigger mass of capital successively implicated in them.
We said at the beginning that the development of the social productive forces of labour expresses itself in the capacity of living human labour L to put in motion more and better means of production MP as a result of the technologic innovations. This from a general technical-economic point of view. But from the social-economic point of view, from the point of view of the implication of this technical progress in the life of the direct producers, the development of the productive forces of labour has to express itself in an increased participation by the workers of the profits of this technical-economic progress. If not, the social way of working, the way of production, is called into political question. It is paramount, therefore, that together with the increase in the Means of Production MP, the totality of the Labour Power L be also reproduced, that is to say, that the real salary increases at the same rate as work productivity. However, as we have seen, in the moment of absolute over-accumulation, when within the relation between capital and Labour Power Cc/Vc value appreciation fails, capital begins to reduce the level of real salaries, that is, the price of the Labour Force L below its value. But by doing so, it impedes the reproduction of the Labour Force L in its totality. This is what the relation between the two curves in the mentioned chart dramatically expresses. If as a consequence of these the most powerful and important productive force, the human labour force ,is excluded from the fruits of civilization in constant development, then, it is shown at the same time, that we are each time closer to that situation glimpsed by Marx and Engels in the Communist Manifesto:
"The bourgeoisie is unfit to rule because it is incompetent to assure an existence to its slave even within their slavery"(5).
This is the frame and the inevitable objective dynamics in which the workers are irresistibly dragged to revolutionize the system of salaried slavery, this reason lead Marx to conclude already in 1843 that:
"The proletariat will have to make the revolution, whether they want it or not".
(4) The surface filled by the distance between the two curves with an index equal to 100 in 1980 shows the increased mass of surplus-value obtained by the USA bourgeoisie in 17 years. Equivalent to the relative surplus-value expressed by the productivity curve, plus the absolute surplus-value determined by the fall in real salaries during the period considered.goback
(5)Take into account, as it is obvious, that the unemployed are not reflected in any of the two curves of the chart, because capitalism throw them out of the system, although in reality they remain within it while they look for work. Therefore, they still form part of the working class and Marx and Engels refer to them in that passage of the Manifesto, above all to them.to go back
October 1998
http://www.nodo50.org/gpm
e-mail: gpm@nodo50.org