Part 7: The Accumulation of Capital

The conversion of a sum of money into means of production and labour-power is the first step taken by the quantum of value that is going to function as capital. This conversion takes place in the market, within the sphere of circulation. The second step, the process of production, is complete so soon as the means of production have been converted into commodities whose value exceeds that of their component parts, and, therefore, contains the capital originally advanced, plus a surplus-value. These commodities must then be thrown into circulation. They must be sold, their value realised in money, this money afresh converted into capital, and so over and over again. This movement forms the circulation of capital.

Chapter Twenty-one: Simple Reproduction

A society can no more cease to produce than it can cease to consume. Therefore, every social process of production is, at the same time, a process of reproduction.

The conditions of production are also those of reproduction. If production be capitalistic in form, so, too, will be reproduction. Just as in the former the labour-process figures but as a means towards the self-expansion of capital, so in the latter it figures but as a means of reproducing as capital the value advanced. It is only because his money constantly functions as capital that the economical guise of a capitalist attaches to a man.

Simple reproduction is a mere repetition of the process of production on the old scale.

As a periodic increment of the capital advanced, or periodic fruit of capital in process, surplus-value acquires the form of a revenue flowing out of capital.

The value of the capital advanced divided by the surplus-value annually consumed, gives the number of years, or reproduction periods, at the expiration of which the capital originally advanced has been consumed by the capitalist and has disappeared. After the lapse of a certain number of years the capital value he then possesses is equal to the sum total of the surplus-value appropriated by him during those years, and the total value he has consumed is equal to that of his original capital.

The mere continuity of the process of production, in other words simple reproduction, sooner or later, and of necessity, converts every capital into accumulated capital, or capitalised surplus-value. If that capital was originally acquired by the personal labour of its employer, it sooner or later becomes value appropriated without an equivalent, the unpaid labour of others materialised either in money or in some other object.

That which at first was but a starting point, becomes, by the mere continuity of the process, by simple reproduction, the peculiar result, constantly renewed and perpetuated, of capitalist production. On the one hand, the process of production incessantly converts material wealth into capital, into means of creating more wealth and means of enjoyment for the capitalist. On the other hand the labourer, on quitting the process, is what he was on entering it, a source of wealth, but devoid of all means of making that wealth his own. The labourer constantly produces material, objective wealth, but in the form of capital, of an alien power that dominates and exploits him; and the capitalist as constantly produces labour-power, but in the form of a subjective source of wealth, separated from the objects in and by which it can alone be realised; in short he produces the labourer, but as a wage-labourer.

The labourer consumes in a twofold way. While producing he consumes by his labour the means of production, and converts them into products with a higher value than that of the capital advanced. This is his productive consumption. On the other hand, the labourer turns the money paid to him for his labour power, into means of subsistence: this is his individual consumption. Productive consumption and individual consumption are totally distinct. In the former, he acts as the motive power of capital, and belongs to the capitalist. In the latter, he belongs to himself, and performs his necessary vital functions outside the process of production. The result of the one is, that the capitalist lives; of the other, that the labourer lives.

By converting part of his capital into labour-power, the capitalist augments the value of his entire capital. He kills two birds with one stone. He profits, not only by what he receives from, but by what he gives to, the labourer. The capital is converted into necessaries, by the consumption of which the muscles, nerves, bones, and brains of existing labourers are reproduced, and new labourers are begotten.

The individual consumption of the working class is, therefore, the production and reproduction of that means of production so indispensable to the capitalist: the labourer himself. The maintenance and reproduction of the working class is, and must ever be, a necessary condition to the reproduction of capital. Hence the capitalist considers that part alone of the labourer's individual consumption to be productive, which is requisite for the perpetuation of the class; what the labourer consumes for his own pleasure beyond that part, is unproductive consumption. In reality, the individual consumption of the labourer is unproductive as regards himself, for it reproduces nothing but the needy individual; it is productive to the capitalist and the State, since it is the production of the power that creates their wealth.

From a social point of view, therefore, the working class, even when not directly engaged in the labour process, is just as much an appendage of capital as the ordinary instruments of labour. Even its individual consumption is, within certain limits, a mere factor in the process of production. The Roman slave was held by fetters: the wage-labourer is bound to his owner by invisible threads. The reproduction of the working class carries with it the accumulation of skill that is handed down from one generation to another.

Capitalist production reproduces the separation between labour-power and the means of labour. It thereby reproduces and perpetuates the condition for exploiting. It incessantly forces him to sell his labour-power in order to live, and enables the capitalist to purchase labour power in order that he may enrich himself. It is no longer a mere accident, that capitalist and labourer confront each other in the market as buyer and seller. It is the process itself that incessantly hurls back the labourer on to the market as a vendor of his labour-power, and that incessantly converts his own product into a means by which another man can purchase him. In reality, the labourer belongs to capital before he has sold himself to capital. His economical bondage is both brought about and concealed by the periodic sale of himself, by his change of masters, and by the oscillations in the market price of labour-power.

Capitalist production, therefore, under its aspect of a continuous connected process, of a process of reproduction, produces not only commodities, not only surplus-value, but it also produces and reproduces the capitalist relation.

Chapter Twenty-two: Conversion of Surplus-Value into Capital

Employing surplus-value as capital, reconverting it into capital, is called accumulation of capital.

To accumulate, it is necessary to convert a portion of the surplus-product into capital. But we cannot, except by a miracle, convert into capital anything but such articles as can be employed in the labour-process (i.e., means of production), and means of subsistence. Consequently, a part of the annual surplus-labour must have been applied to the production of additional means of production and subsistence, over and above the quantity of these things required to replace the capital advanced. In one word, surplus-value is convertible into capital solely because the surplus-product, whose value it is, already comprises the material elements of new capital. In order to allow of these elements actually functioning, the capitalist class requires additional labour. If the exploitation of the labourers already employed should not increase, either extensively or intensively, then additional labour-power must be found. For this the mechanism of capitalist production provides beforehand, by converting the working class into a class dependent on wages, a class whose ordinary wages suffice, not only for its maintenance, but for its increase. It is only necessary for capital to incorporate this additional labour power, with the surplus means of production, and the conversion of surplus-value into capital is complete.

It is the old story: Abraham begat Isaac, Isaac begat Jacob, and so on. The original capital of £10,000 brings in a surplus-value of (£2,000, which is capitalised. The new capital of £2000 brings in a surplus-value of £400, and this, too, is capitalised, converted into a second additional capital, and, in its turn, produces a further surplus-value of £80. And so the ball rolls on.

At first the rights of property seemed to us to be based on a man's own labour. At least, some such assumption was necessary since only commodity owners with equal rights confronted each other, and the sole means by which a man could become possessed of the commodities of others, was by alienating his own commodities; and these could be replaced by labour alone. Now, however, property turns out to be the right, on the part of the capitalist, to appropriate the unpaid labour of others or its product and to be the impossibility, on the part of the labourer, of appropriating his own product. The separation of propertyfrom labour has become the necessary consequence of a law that apparently originated in their identity.

We have seen that even in the case of simple reproduction, all capital, whatever its original source, becomes converted into accumulated capital, capitalised surplus-value. But in the flood of production all the capital originally advanced becomes a vanishing quantity (magnitudo evanescens, in the mathematical sense), compared with the directly accumulated capital, i.e., with the surplus-value or surplus product that is reconverted into capital, whether it function in the hands of its accumulator, or in those of others. One portion is consumed by the capitalist as revenue, the other is employed as capital, is accumulated. Given the mass of surplus-value, then, the larger the one of these parts, the smaller is the other. The ratio of these parts determines the magnitude of the accumulation. But it is by the owner of the surplus-value, by the capitalist alone, that the division is made. It is his deliberate act. Except as personified capital, the capitalist has no historical value, and no right to existence.

Only as personified capital is the capitalist respectable. As such, he shares with the miser the passion for wealth as wealth. Fanatically bent on making value expand itself, he ruthlessly forces the human race to produce for production's sake; he thus forces the development of the productive powers of society, and creates those material conditions, which alone can form the real basis of a higher form of society. To accumulate is to conquer the world of social wealth, to increase the mass of human beings exploited by him, and thus to extend both the direct and the indirect sway of the capitalist.

At the historical dawn of capitalist production - and every capitalist upstart has personally to go through this historical stage - avarice, and desire to get rich, are the ruling passions. But the progress not only creates a world of delights; it lays open, in speculation and the credit system, a thousand sources of sudden enrichment. When a certain stage of development has been reached, a conventional degree of prodigality, which is also an exhibition of wealth, and consequently a source of credit, becomes a business necessity to the "unfortunate" capitalist. Luxury enters into capital's expenses of representation. Although, therefore, the prodigality of the capitalist never possesses the bona-fide character of the open-handed feudal lord's prodigality, but, on the contrary, has always lurking behind it the most sordid avarice and the most anxious calculation, yet his expenditure grows with his accumulation. Circumstances that, independently of the division of surplus-value into capital and revenue, determine the amount of accumulation are: degree of exploitation of labour-power; productivity of labour; growing difference in amount between capital employed and capital consumed; magnitude of capital advanced. By incorporating with itself the two primary creators of wealth, labour-power and the land, capital acquires a power of expansion that permits it to augment the elements of its accumulation beyond the limits apparently fixed by its own magnitude, or by the value and the mass of the means of production, already produced, in which it has its being.

An important factor in the accumulation of capital is the degree of productivity of social labour. The development of the productive power of labour reacts also on the original capital already engaged in the process of production. The old capital is reproduced in a more productive form. Every introduction of improved methods works almost simultaneously on the new capital and on that already in action. Every advance in Chemistry not only multiplies the number of useful materials and the useful applications of those already known, thus extending with the growth of capital its sphere of investment. It teaches at the same time how to throw the excrements of the processes of production and consumption back again into the circle of the process of reproduction, and thus, without anyprevious outlay of capital, creates new matter for capital. Like the increased exploitation of natural wealth by the mere increase in the tension of labour-power, science and technology give capital a power of expansion independent of the given magnitude of the capital actually functioning. They react at the same time on that part of the original capital which has entered upon its stage of renewal. This, in passing into its new shape, incorporates gratis the social advance made while its old shape was being used up. Hence, with the increase in efficacy, extent and value of its means of production, labour keeps up and eternises an always increasing capital-value in a form ever new. This natural power of labour talkes the appearance of an intrinsic property of capital.

Chapter Twenty-Three: The General Law of Capitalist Accumulation

The composition of capital is to be understood in a twofold sense. On the side of value, it is determined by the proportion in which it is divided into constant and variable capital. On the side of material, as it functions in the process of production, all capital is divided into means of production and living labour-power. I call the former the value-composition, the latter the technical composition of capital. Between the two there is a strict correlation. I call the value-composition of capital, in so far as it is determined by its technical composition and mirrors the changes of the latter, the organic composition of capital.

The many individual capitals invested in a particular branch of production have, one with another, more or less different compositions. The average of their individual compositions gives the composition of the total capital in this branch of production. Lastly, the average of these averages, in all branches of production, gives the composition of the total social capital of a country, and with this alone are we concerned in the following investigation. Growth of capital involves growth of its variable constituent. A part of the surplus-value turned into additional capital must always be retransformed into variable capital, or additional labour-fund. If we suppose that a definite mass of means of production constantly needs the same mass of labour-power then the demand for labour and the subsistence-fund of the labourers clearly increase in the same proportion as the capital, and the more rapidly, the more rapidly the capital increases. The requirements of accumulating capital may exceed the increase of labour-power or of the number of labourers; the demand for labourers may exceed the supply and, therefore, wages may rise.

As simple reproduction constantly reproduces the capital-relation itself, i.e., the relation of capitalists on the one hand, and wage-workers on the other, so reproduction on a progressive scale, i.e., accumulation, reproduces the capital-relation on a progressive scale, more capitalists or larger capitalists at this pole, more wage workers at that. The reproduction of a mass of labour power, which must incessantly re-incorporate itself with capital for that capital's self-expansion; which cannot get free from capital, and whose enslavement to capital is only concealed by the variety of individual capitalists to whom it sells itself, this reproduction of labour-power forms, in fact, an essential of the reproduction of capital itself. Accumulation of capital is, therefore, increase of the proletariat.

Under the conditions of accumulation, which conditions are those most favourable to the labourers, their relation of dependence upon capital takes on a form endurable. A larger part of their own surplus-product, always increasing and continually transformed into additional capital, comes back to them in the shape of means of payment, so that they can extend the circle of their enjoyments; can make some additions to their consumption-fund of clothes, furniture, &c., and can lay by small reserve-funds of money. But just as little as better clothing, food, and treatment, and a larger peculium, do away with the exploitation of the slave, so little do theyset aside that of the wage-worker. A rise in the price of labour, as a consequence of accumulation of capital, only means, in fact, that the length and weight of the golden chain the wage-worker has already forged for himself, allow of a relaxation of the tension of it.

With the use of machinery, a greater mass of raw material and auxiliary substances enter into the labour process. That is the consequence of the increasing productivity of labour. On the other hand, the mass of machinery, beasts of burden, mineral manures, drainpipes, &c., is a condition of the increasing productivity of labour. So also is it with the means of production concentrated in buildings, furnaces, means of transport, &c. But whether condition or consequence, the growing extent of the means of production, as compared with the labour-power incorporated with them, is an expression of the growing productiveness of labour. The increase of the latter appears in the diminution of the mass of labour in proportion to the mass of mean; of production moved by it, or in the diminution of the subjective factor of the labour process as compared with the objective factor.

This change in the technical composition of capital this growth in the mass of means of production, as compared with the mass of the labour-power that vivifies them, is reflected again in its value-composition, by the increase of the constant constituent of capital at the expense of its variable constituent. This law of the progressive increase in constant capital, in proportion to the variable, is confirmed at every step by the comparative analysis of the prices of commodities, whether we compare different economic epochs or different nation in the same epoch. The relative magnitude of the element of price, which represents the value of the mean of production only, or the constant part of capital consumed, is in direct, the relative magnitude of the other element of price that pays labour (the variable part of capital) is in inverse proportion to the advance of accumulation.

This diminution in the variable part of capital as compared with the constant, or the altered value composition of the capital, however, only shows approximately the change in the composition of its material constituents. With the increasing productivity of labour, not only does the mass of the means of production consumed by it increase, but their value compared with their mass diminishes. Their value therefore rises absolutely, but not in proportion to their mass. The increase of the difference between constant and variable capital is, therefore, much less than that of the difference between the mass of the means of production into which the constant, and the mass of the labour-power into which the variable, capital is converted. The former difference increases with the latter, but in a smaller degree. But, if the progress of accumulation lessens the relative magnitude of the variable part of capital, it by no means, in doing this, excludes the possibility of a rise in its absolute magnitude.

Every individual capital is a larger or smaller concentration of means of production, with a corresponding command over a larger or smaller labour-army. Every accumulation becomes the means of new accumulation. Accumulation increases the concentration of that wealth in the hands of individual capitalists, and thereby widens the basis of production on a large scale and of the specific methods of capitalist production. The growth of social capital is effected by the growth of many individual capitals. All other circumstances remaining the same, individual capitals, and with them the concentration of the means of production, increases in such proportion as they form aliquot parts of the total social capital.

Accumulation, therefore, presents itself on the one hand as increasing concentration of the means of production, and of the command over labour; on the other, as repulsion of many individual capitals one from another. This splitting-up of the total social capital into many individual capitals or the repulsion of its fractions one from another, is counteracted by their attraction. This last does not mean simple concentration, which is identical with accumulation. It is concentration of capitals already formed, destruction of their individual independence, expropriation of capitalist by capitalist, transformation of many small into few large capitals. This process differs from the former in this, that it only presupposes a change in the distribution of capital already to hand, and functioning; its field of action is therefore not limited by the absolute growth of social wealth, by the absolute limits of accumulation. Capital grows in one place to a huge mass in a single hand, because it has in another place been lost by many. This is centralisation proper, as distinct from accumulation and concentration.

Centralisation supplements the work of accumulation, by enabling the industrial capitalists to expand the scale of their operations. Whether centralisation is accomplished by the violent means of annexation, or whether it proceeds by the smoother road of forming stock companies, the economic result remains the same: progressive transformation of isolated processes of production carried on in accustomed ways into socially combined and scientifically managed processes of production.

The masses of capital amalgamated over night by centralisation reproduce and augment themselves like the others, only faster, and thus become new and powerful levers of social accumulation. The additional capitals serve mainly as vehicles for the exploitation of new inventions and discoveries, or of industrial improvements in general. However, the old capital likewise arrives in due time at the moment when it must renew its head and limbs, when it casts off its old skin and is likewise born again in its perfected industrial form, in which a smaller quantity of labour suffices to set in motion a larger quantity of machinery and raw materials. The absolute decrease of the demand for labour necessarily following therefrom will naturally be so much greater, the more these capitals going through the process of rejuvenation have become accumulated in masses by means of the movement of centralisation.

The labouring population produces, along with the accumulation of capital, the means by which itself is made relatively superfluous; and it does this to an always increasing extent. This is a law of population peculiar to the capitalist mode of production.

But if a surplus labouring population is a necessary product of accumulation or of the development of wealth on a capitalist basis, this surplus population becomes, conversely, the lever of capitalistic accumulation, nay, a condition of existence of the capitalist mode of production. It forms a disposable industrial reserve army, that belongs to capital quite as absolutely as if the latter had bred it at its own cost. Independently of the limits of the actual increase of population, it creates for the changing needs of the self-expansion of capital, a mass of human material always ready for exploitation.

The course characteristic of modern industry, viz., a decennial cycle (interrupted by smaller oscillations), of periods of average activity, production at high pressure, crisis and stagnation, depends on the constant formation, the greater or less absorption, and the reformation of the industrial reserve army of surplus population. In their turn, the varying phases of the industrial cycle recruit the surplus population, and become one of the most energetic agents of its reproduction. The whole form of the movement of modern industry depends upon the constant transformation of a part of the labouring population into unemployed or half-employed hands.

The setting free of labourers goes on yet more rapidly than the technical revolution of the process of production that accompanies, and is accelerated by, the advances of accumulation; and more rapidly than the corresponding diminution of the variable part of capital as compared with the constant. If the means of production, as they increase in extent and effective power, become to a less extent means of employment of labourers, this state of things is again modified by the fact that in proportion as the productiveness of labour increases, capital increases its supply of labour more quickly than its demand for labourers. The over-work of the employed part of the working class swells the ranks of the reserve, whilst conversely the greater pressure that the latter by its competition exerts on the former, forces these to submit to over-work and to subjugation under the dictates of capital. The condemnation of one part of the working class to enforced idleness by the over-work of the other part, and the converse, becomes a means of enriching the individual capitalists, and accelerates at the same time the production of the industrial reserve army on a scale corresponding with the advance of social accumulation.

Taking them as a whole, the general movements of wages are exclusively regulated by the expansion and contraction of the industrial reserve army, and these again correspond to the periodic changes of the industrial cycle. They are, therefore, not determined by the variations of the absolute number of the working population, but by the varying proportions in which the working class is divided into active and reserve army, by the increase and diminution in the relative amount of the surplus-population, by the extent to which it is now absorbed, now set free.

The industrial reserve army, during the periods of stagnation and average prosperity, weighs down the active labour-army; during the periods of over-production and paroxysm, it holds its pretensions in check. Relative surplus-population is therefore the pivot upon which the law of demand and supply of labour works. It confines the field of action of this law within the limits absolutely convenient to the activity of exploitation and to the domination of capital, and completes the despotism of capital.

The relative surplus population exists in every possible form. Every labourer belongs to it during the time when he is only partially employed or wholly unemployed. Not taking into account the great periodically recurring forms that the changing phases of the industrial cycle impress on it, now an acute form during the crisis, then again a chronic form during dull times - it has always three forms, the floating, the latent, the stagnant.

The consumption of labour-power by capital is, besides, so rapid that the labourer half-way through his life, has already more or less completely lived himself out. It is precisely among the workpeople of modern industry that we meet with the shortest duration of life. Hence, rapid renewal of the generations of labourers.

Not only the number of births and deaths, but the absolute size of the families stand in inverse proportion to the height of wages, and therefore to the amount of means of subsistence of which the different categories of labourers dispose. This law of capitalistic society would sound absurd to savages. It calls to mind the boundless reproduction of animals individually weak and constantly hunted down. As soon as capitalist production takes possession of agriculture, and in proportion to the extent to which it does so, the demand for an agricultural labouring population falls absolutely, while the accumulation of the capital employed in agriculture advances, without this repulsion being, as in non-agricultural industries, compensated by a greater attraction. Part of the agricultural population is therefore constantly on the point of passing over into an urban or manufacturing proletariat This source of relative surplus-population is constantly flowing. But the constant flow towards the towns presupposes, in the country itself, a constant latent surplus population. The agricultural labourer is therefore reduced to the minimum of wages, and always stands with one foot already in the swamp of pauperism.

The lowest sediment of the relative surplus-population finally dwells in the sphere of pauperism. Exclusive of vagabonds, criminals, prostitutes, in a word, the "dangerous" classes, this layer of society consists of three categories. First, those able to work. Second, orphans and pauper children. Third, the demoralised and ragged, those unable to work, the mutilated, the sickly, the widows, &c. Pauperism is the hospital of the active labour-army and the dead weight of the industrial reserve-army.

The greater the social wealth, the functioning capital, the extent and energy of its growth, and, therefore, also the absolute mass of the proletariat and the productiveness of its labour, the greater is the industrial reserve-army. The same causes which develop the expansive power of capital, develops also the labour power at its disposal. The relative mass of the industrial reserve-army increases therefore with the potential energy of wealth. But the greater this reserve-army in proportion to the active labour-army, the greater is the mass of a consolidated surplus-population, whose misery is in inverse ratio to its torment of labour. The more extensive, finally, the lazarus-layers of the working class, and the industrial reserve-army, the greater is official pauperism. This is the absolute general law of capitalist accumulation.

It follows therefore that in proportion as capital accumulates, the lot of the labourer, be his payment high or low, must grow worse. The law, finally, that always equilibrates the relative surplus-population, or industrial reserve army, to the extent and energy of accumulation, this law rivets the labourer to capital more firmly than the wedges of Vulcan did Prometheus to the rock. It establishes an accumulation of misery, corresponding with accumulation of capital. 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 pole.