Prasanna K Choudhary




This gratuitous service of past labor, when seized and filled with a soul by living labor increases with the advancing stages of accumulation. Past labor always disguises itself as capital. ..Capital is not a fixed magnitude, but is a part of social wealth, elastic and constantly fluctuating with the division of fresh surplus-value into revenue and additional capital. ..Even with a given magnitude of functioning capital, the labor-power, the science, and the land (by which are to be understood, economically, all conditions of labor furnished by Nature independently of man), embodied in it, form elastic powers of capital, allowing it, within certain limits, a field of action independent of its magnitude. …Classical economy always loved to conceive social capital as a fixed magnitude of a fixed degree of efficiency. …

Accumulation of wealth at one pole is, therefore, at the same time accumulation of misery, agony of toil slavery, ignorance, brutality, mental degradation, at the opposite, i.e., on the side of the class that produces its own product in the form of capital. ..

The circulation of money as capital is an end in itself, for the expansion of value takes place only within this constantly renewed movement. The circulation of capital has therefore no limits. ..As the conscious representative of this movement, the possessor of money becomes a capitalist. ..Use-values must therefore never be looked upon as the real aim of the capitalist; neither must the profit of any single transaction. The restless, never-ending process of profit-making alone is what he aims at. ..”1

Thus, according to Marx, the basic cause of capital accumulation is inherent in the very definition of capital as ‘self-expanding value’. Unpaid labor is the ultimate source.


What happens when capital itself is traded as a commodity? “Its use-value then consists precisely in the profit it produces. ..In this capacity of potential capital, as a means of producing profit, it becomes a commodity, but a commodity sui generis. Or what amounts to the same, capital as capital becomes a commodity.”

“Capital manifests itself as capital through self-expansion. The degree of its self-expansion expresses the quantitative degree in which it realizes itself as capital. The surplus-value or profit produced by it – its rate or magnitude – is measurable only by comparison with the value of the advanced capital. The greater or lesser self-expansion of interest-bearing capital is, therefore, likewise only measurable by comparing the amount of interest, its share in the total profits, with the value of the advanced capital. If, therefore, price expresses the value of the commodity, then interest expresses the self-expansion of money-capital and thus appears as the price paid for it to the lender. ….

Capital appears as a commodity, inasmuch as it is offered on the market, and the use-value of money is actually alienated as capital. Its use-value, however, lies in producing profit. ..The product of capital is profit. ….

Furthermore, capital appears as a commodity inasmuch as the division of profit into interest and profit proper is regulated by supply and demand, that is, by competition, just as the market-prices of commodities. ..In any event the average rate of profit is to be regarded as the ultimate determinant of the maximum limit of interest. ..(Here we will not go into the fluctuations in the rate of interest during the cycles in which modern industry moves – state of inactivity, mounting revival, prosperity, over-production, crisis, stagnation, state of inactivity, etc., or due to other reasons.)”2

“As a nation advances in the career of wealth, a class of men springs up and increases, more and more, who by the labors of their ancestors find themselves in the possession of funds sufficiently ample to afford a handsome maintenance from the interest alone. Very many also who during youth and middle age were actively engaged in business, retire in their latter days to live quietly on the interest of the sums they have themselves accumulated. This class, as well as the former, has a tendency to increase with the increasing riches of the country, for those who begin with a tolerable stock are likely to make an independence sooner than they who commence with little. Thus it comes to pass, that in old and rich countries, the amount of national capital belonging to those who are unwilling to take the trouble of employing it themselves, bears a larger proportion to the whole productive stock of the society, than in newly settled and poorer districts. How much more numerous in proportion to the population is the class of rentiers ..in England! As the class of rentiers increases, so also does that of lenders of capital, for they are one and the same.”3

Cover of Marx's Capital

“Moreover, as concerns the perpetually fluctuating market rate of interest, however, it exists at any moment as a fixed magnitude, just as the market-price of commodities, because in the money-market all loanable capital continually faces functioning capital as an aggregate mass, so that the relation between the supply of loanable capital on one side, and the demand for it on the other, decides the market level of interest at any given time. This is all the more so, the more the development, and the attendant concentration, of the credit system (ever-growing control over the money-savings of all classes of society that is effected through the bankers, and the progressive concentration of these savings in amounts which can serve as money-capital) gives to loanable capital a general social character and throws it all at once on the money-market. On the other hand, the general rate of profit is never anything more than a tendency, a movement to equalize specific rates of profit. The competition between capitalists – which is itself this movement toward equilibrium – consists here of their gradually withdrawing capital from spheres in which profit is for an appreciable length of time below average, and gradually investing capital into spheres in which profit is above average. Or it may also consist in additional capital distributing itself gradually and in varying proportions among these spheres. It is continual variation in supply and withdrawal of capital in regard to these different spheres, and never a simultaneous mass effect, as in the determination of the rate of interest. ….

In emphasizing this difference between the rate of interest and the rate of profit, we still omit the following two points, which favor consolidation of the rate of interest: i. the historical pre-existence of interest-bearing capital and the existence of a traditional general rate of interest; ii. The far greater direct influence exerted by the world-market on establishing the rate of interest, irrespective of the economic conditions of a country, as compared with its influence on the rate of profit. ..

In the money-market only lenders and borrowers face one another. The commodity has the same form – money. All specific forms of capital in accordance with its investment in particular spheres of production or circulation are here obliterated. It exists in the undifferentiated homogenous form of independent value – money. The competition of individual spheres does not affect it. They are all thrown together as borrowers of money, and capital confronts them all in a form, in which it is as yet indifferent to the prospective manner of investment. It obtains most emphatically in the supply and demand of capital as essentially the common capital of a class – something industrial capital does only in the movement and competition of capital between the various individual spheres. On the other hand, money-capital in the money-market actually possesses the form, in which, indifferent to its specific employment, it is divided as a common element among the various spheres, among the capitalist class, as the requirements of production in each individual spheres may dictate. Moreover, with the development of large-scale industry money-capital, so far as it appears on the market, is not represented by some individual capitalist, not the owner of one or another fraction of capital in the market, but also assumes the nature of a concentrated, organized mass, which, quite different from actual production, is subject to the control of bankers, i.e., the representatives of social capital. So that, as concerns the form of demand, loanable capital is confronted by the class as a whole, whereas in the province of supply it is loanable capital which obtains en masse.”4

These are some of the reasons why the general rate of profit appears blurred and hazy alongside the definite interest rate, which may fluctuate in magnitude, but always confronts borrowers as given and fixed because it varies uniformly for all of them. Just as variations in the value of money do not prevent it from having the same value vis-à-vis all commodities, just as the daily fluctuations in market-prices of commodities do not prevent them from being daily reported in the papers, so the rate of interest is regularly reported as the ‘price of money’. It is so, because capital itself is being offered here in the form of money as a commodity. The fixation of its price is thus a fixation of its market-price, as with all other commodities. The rate of interest, therefore, always appears as the general rate of interest, as so much money for so much money, as a definite quantity. The rate of profit, on the other hand, may vary even within the same sphere of commodities with the same price, depending on different conditions under which different capitals produce the same commodity, because the rate of profit of an individual capital is not determined by the market-price of a commodity, but rather by the difference between market-price and cost-price. And these different rates of profit can strike a balance – first within the same sphere and then between different spheres – only through continual fluctuations.”5

For the productive capitalist who works on borrowed capital, the gross profit falls into two parts – the interest, which he is to pay the lender, and the surplus over and above the interest, which makes up his own share of the profit. If the general rate of profit is given, this latter portion is determined by the rate of interest; and if the rate of interest is given, then by the general rate of profit. ….And, indeed, regardless of whether the capital employed by the active capitalist is borrowed or not, and whether the capital belonging to the money-capitalist is employed by himself or not, the profit of every capital, and consequently also the average profit established by the equalization of capitals, splits, or is separated, into two qualitatively different, mutually independent and separately individualized parts, to witinterest and profit of enterprise – both of which are determined by separate laws. The capitalist operating on his own capital, like the one operating on borrowed capital, divides the gross profit into interest due to himself as owner, as his own lender, and into profit of enterprise due to him as to an active capitalist performing his function. ..The employer of capital, even when working with his own capital, splits into two personalities – the owner of capital and the employer of capital; with reference to the categories of profit which it yields, his capital also splits into capital-property, capital outside the production process, and yielding interest of itself, and capital in the production process which yields a profit of enterprise through its function. ….6


“Since the specific social attribute of capital under capitalist production – that of being property commanding the labor-power of another – becomes fixed, so that interest appears as a part of surplus value produced by capital in this inter-relation, the other part of surplus value – profit of enterprise – must necessarily appear as coming not from capital as such, but from the process of production, separated from its specific social attribute, whose distinct mode of existence is already expressed by the term interest on capital. But the process of production, separated from capital, is simply a labor-process. Therefore, the industrial capitalist, as distinct from the owner of capital, does not appear as operating capital, but rather as a functionary irrespective of capital, or as a simple agent of the labor-process in general, as a laborer, and indeed as a wage laborer.



Interest as such expresses precisely the existence of the conditions of labor as capital, in their social anti-thesis to labor, and in their transformation into personal power vis-à-vis and over labor. It represents the ownership of capital as a means of appropriating the products of the labor of others. But it represents this characteristic of capital as something which belongs to it outside the production process and by no means is the result of the specifically capitalist attribute of this production process itself. Interest represents this characteristic not as directly counter-posed to labor, but rather as unrelated to labor, and simply as a relationship of one capitalist to another; hence, as an attribute outside of irrelevant to the relation of capital to labor. In interest, therefore, in that specific form of profit in which the antithetical character of capital assumes an independent form, this is done in such a way that the antithesis is completely obliterated and abstracted. Interest is a relationship between two capitalist not between capitalist and laborer.

On the other hand, this form of interest lends the other portion of profit the qualitative form of profit of enterprise, and further of wages of superintendence. The specific functions, which the capitalist as such has to perform, and which fall to him as distinct from and opposed to the laborer are presented as mere functions of labor. He creates surplus-value not because he works as a capitalist, but because he also works, regardless of his capacity of capitalist. This portion of surplus-value is thus no longer surplus-value, but its opposite, an equivalent for labor performed. Due to the alienated character of capital, its antithesis to labor, being relegated to a place outside the actual process of exploitation, namely to the interest-bearing capital, this process of exploitation itself appears as a simple labor-process in which the functioning capitalist merely performs a different kind of labor than the laborer. ….

The conception of profit of enterprise as the wages of supervising labor, arising from the antithesis of profit of enterprise to interest, is further strengthened by the fact that a portion of profit may, indeed, be separated, and is separated in reality, as wages, or rather the reverse, that a portion of wages appears under capitalist production as integral part of profit. This portion, as Adam Smith correctly deduced, presents itself in pure form, independently and wholly separated from profit (as the sum of interest and profit of enterprise), on the one hand, and on the other, from that portion of profit which remains, after interest is deduced, as profit of enterprise in the salary of management of those branches of business whose size, etc., permits of a sufficient division of labor to justify a special salary for a manager. ….

Stock companies in general – developed with the credit system have an increasing tendency to separate this work of management as a function from the ownership of capital, be it self-owned or borrowed. ….

Since, on the one hand, the mere owner of capital, the money-capitalist, has to face the functioning capitalist, while money-capital itself assumes a social character with the advance of credit, being concentrated in banks and loaned out of them instead of its original owners, and since, on the other hand, the mere manager who has no title whatever to the capital, whether through borrowing it or otherwise, performs all the real functions pertaining to the functioning capitalist as such, only the functionary remains and the capitalist disappears as superfluous from the production process. ….

On the basis of capitalist production a new swindle develops in stock enterprises with respect to wages of management, in that boards of numerous managers or directors are placed above the actual director, for whom supervision and management serve only as a pretext to plunder the stockholders and amass wealth.”7

Piketty includes entrepreneurial and top managerial work in the category of labor.


  1. Marx, Karl; ‘Capital’, Volume I, Progress Publishers, Moscow, 1977.
  2. Marx, Karl; ‘Capital’, Volume III, Progress Publishers, Moscow, 1977. Quotations are from different chapters of the book.
  3. Ibid.
  4. Ibid.
  5. Ibid.
  6. Ibid.
  7. Ibid.

[This critique is divided in eight parts, tentatively titled as: i. Apocalypse and Exuberance; ii. Data and Dialectics; iii. Capital Social and Self-Expanding; iv. Wealth Inherited and Created; v. Century Twentieth and Twenty-First; vi. Yes Marx No Marx; vii. London Chicago Paris; and viii. Thank You Mr Piketty.]



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