A CRITIQUE OF THOMAS PIKETTY’S ‘CAPITAL IN THE TWENTY-FIRST CENTURY’ – 5

 

CONTAINING CAPITAL – 5

 

Prasanna K Choudhary

Karl Marx

            Karl Marx

3. CAPITAL SOCIAL AND SELF-EXPANDING (Continued) – 3

FETISH CAPITAL

“The relations of capital assume their most externalized and most fetish-like form in interest-bearing capital. We have here M → M′, money creating more money, self-expanding value, without the process that effectuates these two extremes. ….

It is a relationship of magnitudes, a relationship of the principal sum as a given value to itself as a self-expanding value, as a principal sum which has produced a surplus value. And capital as such, as we have seen, assumes this form of a directly self-expanding value for all active capitalists, whether they operate on their own or borrowed capital.

M → M′. We have here the original starting point of capital, money in the formula M → C → M′ reduced to its two extremes M → M′, in which M′ = M + ∆M, money creating more money. It is the primary and general formula of capital reduced to a meaningless condensation. ..Capital appears as a mysterious self-creating source of interest – the source of its own increase. ..In interest-bearing capital, therefore, this automatic fetish, self-expanding value, money generating money, is brought out in their pure state and in this form it no longer bears the birthmarks of its origin. ..Thus we get the fetish form of capital and the conception of fetish capital. In M → M′ we have the meaningless form of capital, the perversion and objectification of production relations in their highest degree, the interest-bearing form, the simple form of capital, in which it antecedes its own process of reproduction. It is the capacity of money, or of a commodity, to expand its own value independently of reproduction – which is a mystification of capital in its most flagrant form. For vulgar political economy, which seeks to represent capital as an independent source of value, of value creation, this form is naturally a veritable find, a form in which the source of profit is no longer discernible, and in which the result of the capitalist process of production divorced from the process – acquires an independent existence. ..As the growing process is to trees, so generating money appears innate in capital in its form of money-capital. ..Money is now pregnant. ..Interest on it grows, no matter whether it is awake or asleep, is at home or abroad, by day or by night. ..In its capacity of interest-bearing capital, capital claims the ownership of all wealth which can ever be produced, and everything it has received so far is but an installment for its all-engrossing appetite. By its innate laws, all surplus-labor which the human race can ever perform belongs to it. Moloch. ..”1

capital_marx_web

The product of past labor, the past labor itself, is here pregnant in itself with a portion of present or future living surplus-value. “We know, however, that in reality the preservation, and to that extent also the reproduction of the value of products of past labor is only the result of their contact with living labor over living surplus-labor lasts only as long as the relations of capital, which rest on those particular social relations in which past labor independently and overwhelmingly dominates over living labor. …

The formula capital → interest, as third to land → rent and labor → wages, is much more consistent than capital → profit, since in profit there still remains a recollection of its origin, which is not only extinguished in interest, but is also placed in a form thoroughly antithetical to this origin. ..”2

While unraveling inequality inherent in the very nature of social capital, Piketty gets trapped in the conception of fetish capital (representing capital as an independent source of value-creation). This is the second major inconsistency of the book. Big data methodology can lead Piketty only to this fetish of capital. In that case, he can, at best, only think of containing capital. He desists from imagining other forms of organization or mode of production, and hides that option in bracket (Chapter One/Income and Output/The Capital-Labor Split in the Long Run: Not So Stable).

BASIC CONTRADICTION OF CAPITALISM

Piketty’s formulation of the basic contradiction of capitalism as r (rate of return on capital) > g (rate of growth) is a natural corollary to his capital fetishism. This matter of fact statement (supported by data spread over two centuries) hardly guides us to explore the inner world of capitalist production, and offers nothing new by way of propositions and explanations.

For Marx, “The real barrier of capitalist production is capital itself. It is that capital and its self-expansion appear as the starting and the closing point, the motive and purpose of production; that production is only production for capital and not vice-versa, the means of production are not mere means for a constant expansion of the living process of the society of producers. The limits within which the preservation and self-expansion of the value of capital resting on the expropriation and pauperization of the great mass of producers can alone move – these limits come continually into conflict with the methods of production employed by capital for its purposes, which drive towards unlimited extension of production, towards production as an end in itself, towards unconditional development of the social productivity of labor. The means – unconditional development of the productive forces of society – comes continually into conflict with the limited purpose, the self-expansion of the existing capital. ..Things are produced only so long as they can be produced with a profit .. having an eye solely for the development  of the productive forces, whatever the cost in human beings and capital-values.”3

History-of-Paris-Industrial-Revolution

WITH ADEQUATE PROFIT, CAPITAL IS VERY BOLD. A CERTAIN 10% WILL ENSURE ITS EMPLOYMENT ANYWHERE; 20% CERTAIN WILL PRODUCE EAGERNESS; 50%, POSITIVE AUDACITY; 100% WILL MAKE IT READY TO TRAMPLE ON ALL HUMAN LAWS; 300%, AND THERE IS NOT A CRIME AT WHICH IT WILL SCRUPLE, NOR A RISK IT WILL NOT RUN, EVEN TO THE CHANCE OF ITS OWNER BEING HANGED. IF TURBULENCE AND STRIFE WILL BRING A PROFIT, IT WILL FREELY ENCOURAGE BOTH. SMUGGLING AND THE SLAVE TRADE HAVE AMPLY PROVED, ALL THAT IS HERE STATED. T J Dunning (1799-1873), “Trades’ Unions and Strikes: Their Philosophy and Intention”, London, 1860. 4

“The growing discordance between the productive development of society and the relations of production hitherto characteristic of it, is expressed in acute contradictions, crises, convulsions. The violent destruction of capital as the condition for its self-preservation, and not because of external circumstances, is the most striking form in which it is ADVISED TO BE GONE AND TO GIVE ROOM TO A HIGHER STATE OF SOCIAL PRODUCTION. ..

THESE CONTRADICTIONS LEAD TO EXPLOSIONS, CATACLYSMS, CRISES, IN WHICH BY MOMENTANEOUS SUSPENSION OF LABOR AND ANNIHILATION OF A GREAT PORTION OF CAPITAL THE LATTER IS VIOLENTLY REDUCED TO THE POINT WHERE IT CAN GO ON FULLY EMPLOYING ITS PRODUCTIVE POWERS WITHOUT COMMITTING SUICIDE. YET, THESE REGULARLY RECURRING CATASTROPHES LEAD TO THEIR REPETITION ON A HIGHER SCALE, AND FINALLY TO ITS VIOLENT OVERTHROW.”5

Mr Piketty can here well remember the period 1914 – 1950.

 

NOTES

  1. Marx, Karl; ‘Capital’, Volume III, Progress Publishers, Moscow, 1977. Moloch: the god of sun, fire and war in Carthage and Phoenicia, whose worship was accompanied by human sacrifices.
  2. Ibid.
  3. Ibid.
  4. Quoted in Marx’s ‘Capital’, Volume I, Progress Publishers, Moscow, 1977.
  5. Marx, Karl and Engels, Frederick; Collected Works, Volume 29, Progress Publishers, Moscow, 1987.

 

[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.]

 

CONTINUED.

NEXT: 3. CAPITAL SOCIAL AND SELF-EXPANDING (Continued) – 4

 

 

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