Class 11 Italian

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Class 11

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» SMITH: It seems to me that Chapter Ten begins

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to raise the question of the historical context and the historical specificity of capitalism,

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around the working-day in Chapter Ten, but in the context of machinery, in the context of labor

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in the context of the relation to nature and in many other ways.

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Until of course we get to

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the general theory of capital accumulation, where

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you couldn't have that argument without that historical

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contextualization, together with the analytical work that went into the early chapters.

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It seems to me that that chapter

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is the crucial chapter in Volume One.

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» HARVEY: Yeah, it's the culmination of the argument of Volume One,

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What you're saying is really

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interesting and important to grasp, which is the relationship in this book,

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between the theoretical logic and the historical circumstances,

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and there's a dialogue that goes on between the two.

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And sometimes you get a little bit confused as to
whether he's making a historical argument

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or a logical argument, sometimes he's making both together.

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So there's an interesting dialogue,
dialectic, if you like, between that.

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In the chapter on the working-day, what you see

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is a confrontation with actually existing circumstances,

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it's very historical.

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But you couldn't understand it unless you really understood the theoretical

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underpinning of it, which is: why is it

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that capitalists are so obsessed with other people's time?

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and what does it mean to be in a situation: I am a worker and have

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somebody else totally obsessed

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with commanding my time and commanding every second of it? So, at that point

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the two really merge together, both the theoretical and the historical.

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Now, when you get to

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the general law of capitalist accumulation, there are number of complicated things going on,

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there's the theoretical argument,

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which actually stretches right back to the beginning,

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where you have to remember that this book is about

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a critique of political economy.

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And what was it that the political economists were saying?

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The political economists were saying, in aggregate:

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let the free market do its work and
everything will be okay.

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They weren't all saying that but there
was a free market utopianism around

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in Marx's time, and Marx said: alright,
let's assume that you constructed your utopia

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- and it's interesting that that utopian vision of the market doing its work has been around

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us over the last 20-30 years,

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as we're told again and again and again: let the market do its work and everything will be okay-

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what Marx does in this chapter is to say,

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what will happen if we let the market do its work?

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The first thing is that you get more and more monopoly, which you're not supposed to have.

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The idea is that capitalism should be competitive, what Marx is showing is in the utopian kind

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of free market, what you get is in
the end the big ones dominate.

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Of course, one of the things that's interesting
to look at in our own history over the last

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30 years is the degree to which

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we've been preached a lot about free market,
but at the same time

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the incredible consolidation that's going on in terms of

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oligopolies, in terms of pharmaceuticals and energy and all the rest of it.

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So it's self-destructive, he says this is a self-destructive utopian vision. It's unstable and

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it's always going to end up in monopoly.
The second thing is:

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will it work to the benefit of the worker?
Because that's what we've been told,

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that if you let the free market do its work then, you, the worker will benefit. But what Marx

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shows is: no, that's not going to happen at all,

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what happens in a free market society, if you push it that way, is that the rich get incredibly

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richer and the poor get incredibly poorer.

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And of course what's happened over the last 30 years?

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The rich have gotten incredibly richer and the poor have gotten incredibly poorer.

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But what Marx does is to prove,
rigorously, that actually

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this is what the free-market capitalism will produce.

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More and more monopoly and more and more social inequality.

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And I think that these two propositions that came out of Chapter 25,

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were predictions of what would happen
if you went in that direction.

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Of course, in the 1950s-60 capitalism was not organized

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along this highly competitive rat race kind of line, since the 1970s it has.

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And so what we've seen is coming back closer and closer to Marx his prediction,

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and I think this is a crucial chapter

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to understand both the theoretical argument

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and relationship with that, and the practical argument.

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But the practical argument is contingent: it doesn't say

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capitalism is bound to end up this way, it says: capitalism will only end up this way

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if you believe that myth about the freedom of market being

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the gods to which we have bow down and to whom we have to pay obeisance.

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So, I think it's a brilliant chapter in that way, and right now, I think it's devastatingly

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right and it's so obviously true

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that this is what has happened and this is what's going on. So I always find

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that chapter a great moment in Capital, to say this is a culmination of his argument

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of Volume One

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and this is where you're going to
get to if you go this path,

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and wow! everybody gets it immediately,

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yeah, we can see how that's happened!

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What Marx does is to try to put together

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a synthetic model, if you like, of how a capitalist system works,

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and what its dynamics are like.

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In chapter 23,

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he looks at that from the standpoint of the reproduction of the class-

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relation between capital and labor.
And you notice

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Marx is much more interested in the question of social reproduction than he is

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in the question of the technical means by which it is done.

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Chapter 24 looks at

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the implications of capital accumulation from the standpoint of the capitalist,

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so for a fleeting moment in chapter 24
you feel sorry for the capitalists caught

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in this Faustian dilemma of having to
consume or having to reinvest.

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And you also see that,

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given the coercive laws of competition, that

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capitalists are not necessarily free to choose, as

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Milton Friedman would hope they would be,

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that they have to reinvest whether they like it or not,

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and that therefore there is accumulation for accumulation's sake, production for production's sake.

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The topic of chapter 25 is to look at

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what this all means from the standpoint of the labourer,

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and what it implies for the fate of the working class.

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Here you will notice

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that one of the assumptions we've started out with, that everything was traded at its value,

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still holds except in the case of labor-power.

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We're going to look at that now as
something which is a bit flexible

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and alike. As often happens with Marx, we've seen this in the chapter on the working-day,

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but also in the passages on machinery and large-scale industry,

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is that having derived a theoretical positionality,

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what Marx then wants to do is to go out and say: can you see this actually at work in

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the world around you?

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So the last part of this chapter, section five,

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is very much about 'yeah, here's the theory, now

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when we go out there what do we see?'

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The theory says that

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it's absolutely essential, for capitalism to function, that there be an industrial reserve army,

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a surplus of labor-power

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and that the surplus of labour-power would not be kept

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in a condition of great affluence but that

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it'd be in a position of relative impoverishment.

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So by looking at the conditions of labor power in

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cities but also more importantly in terms of rural areas of Britain,

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and then looking at the condition of the Irish in relationship to British industry,

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you get some explanation why those

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structures in the population, which can be identified historically at that time,

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existed.

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So the theory is connected to the historical realities

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in this chapter.

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I'm going to largely be concerned with the theory, but again I want to remind you

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that the theory that Marx is going to lay out here

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is not a theory devoid of assumptions.

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The assumptions he started out with, that

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there is no problem in the market,

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the way in which the surplus gets divided up between interested and rent,

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the profit of merchants capital,

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taxes and all the rest of it, have no relevance

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for the argument. In other words, we're just simply going to look at the relationship

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between the capitalist class totality, and the working class.

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And that is

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an assumption which is not really warranted, in terms of what actually goes on

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and what actually exists,

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but it nevertheless is one which will help

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us identify some of the basic dynamics with which Marx is concerned, as will

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the assumption that there is no problem in the market.

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Marx starts off, with introducing three concepts.

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We've encountered

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the concept of the organic composition of capital once before in Capital, but this is

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the first time that they're being laid out in general.

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And i have to say, actually you could

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construct this argument here

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without these three concepts if you really needed to.

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But they're crucial to Marx's thinking,

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particularly when it comes to Volume Three of Capital

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and they have been crucial

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in a lot of the argument that is going on as to how to understand

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Marx his general theory of dynamics of capitalism.

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So, we need to spend just a little bit of time on them.

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He starts off by saying:

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“The composition of capital is to be understood in a twofold sense.”

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The trouble is he then goes on immediately to identify it in a threefold sense.

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The twofold sense: “As value, it is

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determined by the proportion in which it is divided into constant capital,

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or the value of the means of production,

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and variable capital, or the value of labour-power, the sum total of wages.”

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He then goes on

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to talk about the physical composition of capital

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which he calls the “technical composition of capital”.

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And he insists, he says, “There is a close correlation between the two.

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To express this, I call the value-composition of capital,

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in so far as it is determined by its technical composition and mirrors the changes in the latter,

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the organic composition of capital.

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Wherever I refer to the composition of capital, without further qualification,

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its organic composition is always understood.”

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Now, what does this really amount to?

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We have, first of all,

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technical composition,

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the technical composition is
the physical productivity of labour.

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And it's typical measure would be

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the number of widgets produced per worker-hour,

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tons of steel produced per worker-hour,

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a very physical thing.

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And obviously

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technological change alters these physical ratios,

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increasing productivity means that the number of widgets per hour increases,

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so it's a physical thing.

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The value composition,

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how much the capitalist lays out for means of production versus labor power.

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And the value of composition

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is really equivalent to 'C over V'.

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That is, if 'C' is the total amount of value, which you have to lay out in terms of

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gaining access to means of production,

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the raw materials, machinery and all the rest of it.

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And 'V' is the variable capital

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which you have to lay out, which depends on the value of labor power.

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The organic composition is this value composition

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insofar as it is affected by changes
in physical productivity.

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Now, let us

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indicate straight-out that there
are some problems with this idea.

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First:

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is this an internal measure, or an internal
effect within the firm?

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Within the firm,

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I change my productivity i.e. my technical composition,

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I therefore

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have to go out into the market and I have to buy more means of production and maybe

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less labour-power. So,

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as a particular entrepreneur in a particular industry,

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that ratio 'C over V'

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that I'm utilizing, may change for that reason.

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But then there are external measures, external effects,

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let's suppose that

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there's technological change going on

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in the production of intermediate inputs,

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production of means of production.

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That will mean

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that I have to lay out less in the way of 'C' because the value of 'C' is falling, because of

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the rising productivity in the industries that are producing

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cotton thread, for example.

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The industries that are producing cotton thread become much more productive, cotton

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thread becomes much cheaper,

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i have to lay out less in the way of 'C'.

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Similarly, remember what happens to 'V',

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as industries which are producing wage goods

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increase in productivity, 'V' goes down.

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So there are all kinds of interactive market effects

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which could also go on

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as a result of these technical changes,

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changing the technical composition of capital

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in a given industry

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which is producing means of production for another industry,

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these are going to affect the 'C over V' ratio.

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Now, it's not clear

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from Marx' presentation in this chapter
whether he's talking about

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internal measures only,

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that is, not including all of these interaction effects, or whether he's

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also including all of these interaction effects. In fact,

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he does

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at some point indicate

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he understands there may be interaction effects, but these interaction effects

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are in his view relatively muted, for reasons that we'll

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come back to.

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Now, there is a third possibility,

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that is the value composition of capital, 'C over V',

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is subject to all kinds of other influences.

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For example the discovery of a new set of resources (new oil wells),

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so that suddenly the cost of acquiring

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a raw material goes down,

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bad harvests over a series of years
in which case the value of

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cotton rises,

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the value of wheat is rising right now

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for those kinds of reasons.

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But we also saw in the chapter

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earlier where there are all sorts of other ways in which capitalists can gain surplus-

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value:

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Free goods,

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second-hand machinery, for example,

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or machinery which is out outdated but which you can continue

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to employ for free, so there's all sorts of other

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elements in here that can affect the value composition.

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So we can

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actually suggest that there is a good reason why Marx distinguished between value composition

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and organic composition.

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Because he wants to talk about the value composition

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in so far as it's affected by

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technical changes and organizational changes

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that affect physical productivity.
So the organic composition

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refers to -that-,

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the value composition

0:19:43.550,0:19:46.940
as it is affected by -this -.

0:19:46.940,0:19:48.750
But as I suggested

0:19:48.750,0:19:51.100
there's this ambiguity -here-

0:19:51.100,0:19:56.610
as to whether we should be concerned with

0:19:56.610,0:20:00.610
examining what happens in a given line of production or in a given firm,

0:20:00.610,0:20:03.000
or whether we're actually going to be looking at

0:20:03.000,0:20:06.530
the aggregate in the economy.

0:20:06.530,0:20:09.380
His view,

0:20:09.380,0:20:13.200
he says, is this:

0:20:13.200,0:20:18.080
“The many individual capitals invested in a particular branch of production

0:20:18.080,0:20:23.450
have compositions which differ from each other to a greater or lesser extent.”

0:20:23.450,0:20:26.559
Some lines of production are capital intensive,

0:20:26.559,0:20:30.030
or 'C' intensive, if you want to call it that,
others are labour intensive

0:20:30.030,0:20:32.410
or 'V' intensive.

0:20:32.410,0:20:36.130
“The average of their individual compositions gives us the composition of the total capital

0:20:36.130,0:20:40.470
in the branch of production under consideration.

0:20:40.470,0:20:45.160
Finally, the average of all the average compositions in all branches of production gives us

0:20:45.160,0:20:47.950
the composition of the total social capital of a country…”

0:20:47.950,0:20:52.110
-notice: this is a country, it's not over the world-

0:20:52.110,0:20:57.770
"…and it is with this alone that we are
concerned here in the final analysis.”

0:20:57.770,0:21:00.520
It seems like he's saying

0:21:00.520,0:21:07.520
both the internal and external after
they're all taken into account

0:21:08.940,0:21:10.440
run together,

0:21:10.440,0:21:13.140
that those should be

0:21:13.140,0:21:17.790
what I understand by organic composition.

0:21:17.790,0:21:23.030
At this point he just lays out these questions,

0:21:23.030,0:21:28.300
before he then goes on to talk through

0:21:28.300,0:21:31.080
what in effect is

0:21:31.080,0:21:39.460
a simple first model of accumulation dynamics.

0:21:39.460,0:21:41.390
And the argument goes like this:

0:21:41.390,0:21:44.960
the capitalist has

0:21:44.960,0:21:49.440
surplus-value at the end of the day,

0:21:49.440,0:21:56.370
some of this surplus-value is going to be re-accumulated.

0:21:56.370,0:22:00.080
For the moment we're going to
assume there's no technical change,

0:22:00.080,0:22:05.450
no change in productivity .

0:22:05.450,0:22:11.760
If part of that surplus-value is going to
be reinvested then you need more labour,

0:22:11.760,0:22:14.680
therefore, says Marx,

0:22:14.680,0:22:20.870
accumulation of capital means, as he says on page 764:

0:22:20.870,0:22:23.470
“multiplication of the proletariat.”

0:22:23.470,0:22:32.270
An increase in the number of the wage labourers.

0:22:33.060,0:22:37.429
Where does this labour surplus come from?

0:22:37.429,0:22:43.100
So he then goes through scurrilous
views of Mandeville and others,

0:22:43.100,0:22:45.730
and suggests that Mandeville was more
honest than some of the people

0:22:45.730,0:22:48.730
who came after him, in recognizing

0:22:48.730,0:22:55.250
that what is necessary for such a
system to work is that there be a pool

0:22:55.250,0:22:59.610
of impoverished non-workers

0:22:59.610,0:23:04.300
to be absorbed into it,

0:23:04.300,0:23:11.300
thus continuing the expansion of capital.

0:23:12.310,0:23:16.600
He says on page 765: “What Mandeville,
an honest man with a clear mind,

0:23:16.600,0:23:21.220
had not yet grasped was the fact that the mechanism of the accumulation process itself

0:23:21.220,0:23:25.690
not only increases the amount of capital but also the mass of the 'labouring poor'

0:23:25.690,0:23:27.750
i.e. the wage-labourers,

0:23:27.750,0:23:34.750
who turn their labour-power into a force for increasing the valorization of the growing capital…”

0:23:37.600,0:23:43.039
This then leads Marx into

0:23:43.039,0:23:45.710
the beginnings of a discussion of Malthus

0:23:45.710,0:23:48.810
and of course,

0:23:48.810,0:23:55.810
the long footnote six on p.766 is given over to

0:23:56.790,0:24:05.480
the superficial plagiarism of Malthus
and the like in terms of his theory

0:24:05.480,0:24:09.160
of population and how “the hour of
the Protestant parsons struck”.

0:24:14.080,0:24:16.760
He then comes back on p.768,

0:24:18.410,0:24:25.740
to say this: “Under the conditions of accumulation
we have assumed so far…"

0:24:25.740,0:24:28.350
-notice 'assumed '-

0:24:28.350,0:24:31.440
"…conditions which are the most favourable to the workers,

0:24:31.440,0:24:33.460
their relation of dependence on capital

0:24:33.460,0:24:40.190
takes on forms which are endurable or,
as Eden says, 'easy and liberal'.”

0:24:40.190,0:24:42.890
That it can, in fact,

0:24:42.890,0:24:47.059
as this accumulation process goes on at the time,

0:24:47.059,0:24:50.380
absorb the surplus labour and start lead to

0:24:50.380,0:24:56.650
conditions of rising wages, so on p.769 he says:

0:24:56.650,0:25:00.230
there can be “A rise in the price of labour,

0:25:00.230,0:25:04.080
as a consequence of the accumulation
of capital, only means in fact that

0:25:04.080,0:25:08.900
the length and weight of the golden chain the wage-labourer has already forged for himself

0:25:08.900,0:25:15.779
allow it to be loosened somewhat.”

0:25:15.779,0:25:21.700
At the bottom he makes this other point:
“it is clear that at the best of times

0:25:21.700,0:25:26.670
an increase in wages means only a quantitative reduction in the amount of unpaid labour

0:25:26.670,0:25:29.110
the worker has to supply.

0:25:29.110,0:25:37.140
This reduction can never go so far
as to threaten the system itself.”

0:25:37.140,0:25:38.430
Then he mentions

0:25:38.430,0:25:41.040
“Apart from violent conflicts…” and so on.

0:25:41.040,0:25:42.470
And he says this,

0:25:42.470,0:25:47.230
on p.770: “Either the price of labour
keeps on rising, because its rise

0:25:47.230,0:25:53.680
does not interfere with the progress of accumulation.”

0:25:53.680,0:25:54.620
About ten lines down:

0:25:54.620,0:25:59.210
“Or, the other alternative, accumulation
slackens as a result of the rise

0:25:59.210,0:26:02.950
in the price of labour, because
the stimulus of gain is blunted.

0:26:02.950,0:26:06.320
The rate of accumulation lessens;
but this means that

0:26:06.320,0:26:10.220
the primary cause of that
lessening itself vanishes,

0:26:10.220,0:26:13.820
i.e. the disproportion between capital
and exploitable labour-power.

0:26:13.820,0:26:17.160
The mechanism of the capitalist production process

0:26:17.160,0:26:21.830
removes the very obstacles it temporarily creates.

0:26:21.830,0:26:24.630
The price of labour falls again to a level

0:26:24.630,0:26:29.830
corresponding with capital's requirements for self-valorization,…”

0:26:35.270,0:26:37.470
We can diagram this

0:26:37.470,0:26:41.170
in this way:

0:26:41.170,0:26:48.170
there's a certain accumulation of capital,

0:26:52.310,0:26:56.240
accumulation of surplus-value,

0:26:56.240,0:27:13.429
part of that surplus-value is capitalized, that is, it's converted back into capital.

0:27:19.110,0:27:38.029
This generates an increase in the
demand for labour for labour-power.

0:27:38.029,0:27:45.029
Where is that increased demand going to come from? It's going to come from surplus population.

0:27:57.220,0:28:02.430
Over time, what will happen is there will be

0:28:02.430,0:28:08.610
an absorption

0:28:08.610,0:28:11.779
of this surplus population

0:28:11.779,0:28:17.420
and as the surplus population is increasingly absorbed,

0:28:17.420,0:28:26.930
so we will get rising wages,

0:28:28.090,0:28:31.059
which either does not interfere at all

0:28:31.059,0:28:38.059
with the accumulation process, or if it does,

0:28:38.230,0:28:50.850
means less surplus-value for the capitalist.

0:28:50.850,0:28:51.919
Which means

0:28:51.919,0:28:56.070
less surplus-value gets accumulated,
which means there's less surplus-value

0:28:56.070,0:28:58.570
for reinvestment and capitalization.

0:28:58.570,0:29:00.610
To say nothing of the fact that,

0:29:00.610,0:29:05.230
capitalists looking at a situation of this kind will say: What's the point of me

0:29:05.230,0:29:08.830
going back into the market, paying all of that for labour? I'm not going to get much profit out

0:29:08.830,0:29:12.570
of it or surplus-value out of it so i'm not going to even bother. So the stimulus

0:29:12.570,0:29:20.270
to gain is blunted by the fact that wages have risen so high.

0:29:20.270,0:29:23.540
How could a situation of rising wages

0:29:23.540,0:29:31.470
not interfere with the accumulation of capital?

0:29:31.470,0:29:33.159
Can you remember

0:29:33.159,0:29:37.360
a situation where we discussed

0:29:37.360,0:29:43.070
that could happen?

0:29:43.070,0:29:49.170
In the theory of relative surplus-value,

0:29:49.170,0:29:54.750
where we argued, in a situation of increasing productivity gains

0:29:54.750,0:30:00.430
some of the productivity gains can to the worker in terms of an increased

0:30:00.430,0:30:03.000
standard of living.

0:30:03.000,0:30:06.529
So that you can get an increasing standard of living for the worker,

0:30:06.529,0:30:09.370
i.e. an increase in the value of labour-power

0:30:09.370,0:30:13.020
which is consistent with

0:30:13.020,0:30:18.820
an increasing rate of exploitation of labour.

0:30:18.820,0:30:20.809
So if there is

0:30:20.809,0:30:25.260
rising productivity going around this system then,

0:30:25.260,0:30:28.950
alright, wages can rise a little bit
but we've still got plenty of (…)

0:30:28.950,0:30:32.210
in other words you don't get less surplus-value, you get more surplus-value

0:30:32.210,0:30:35.049
even though wages are rising.

0:30:35.049,0:30:38.260
But notice what this does,

0:30:38.260,0:30:42.170
it basically says that

0:30:42.170,0:30:47.460
inherent in capitalism is a kind of homeostatic adjustment mechanism

0:30:47.460,0:30:54.570
of the rate of accumulation and the wage rate.

0:30:54.570,0:30:59.330
That, if we looked at it

0:30:59.330,0:31:00.640
like this,

0:31:00.640,0:31:04.289
the wage rate is doing something like this, it's rising,

0:31:04.289,0:31:07.100
then,

0:31:07.100,0:31:10.960
as the rate of accumulation is falling so reinvestment diminishes

0:31:10.960,0:31:12.660
and so the demand for labour slackens and so

0:31:12.660,0:31:15.150
wage rates come down,

0:31:15.150,0:31:21.940
this goes up. And you could imagine a situation of this kind,

0:31:21.940,0:31:24.800
that they just simply oscillate

0:31:24.800,0:31:30.419
in this kind of fashion, a homeostatic adjustment mechanism,

0:31:30.419,0:31:33.680
wages rise, rate of accumulation slackens,

0:31:33.680,0:31:37.050
demand for labour falls off,

0:31:37.050,0:31:38.920
the labour surplus reappears.

0:31:38.920,0:31:40.680
Now, clearly,

0:31:40.680,0:31:46.480
this surplus population depends upon

0:31:46.480,0:31:49.120
the rate of population growth,

0:31:49.120,0:31:51.169
where the population is

0:31:51.169,0:31:55.630
relative to all of this.

0:31:55.630,0:31:58.120
So where the surplus population is

0:31:58.120,0:32:03.610
also matters. So what Marx does here is to say:

0:32:03.610,0:32:07.200
you might notice

0:32:07.200,0:32:09.430
historical situations in which wage rates and

0:32:09.430,0:32:15.100
and profit rates will be going opposite to each other.

0:32:15.100,0:32:19.680
And what would a bourgeois economist read into this?

0:32:19.680,0:32:24.610
they're going to look at it and say 'it's greedy workers',

0:32:24.610,0:32:29.460
greedy unions or something like that, they're always wanting
more wages and the wage rate goes up and

0:32:29.460,0:32:34.130
if the wage rate goes up then, sorry, you're going to get stagnation.

0:32:34.130,0:32:36.210
I'm sure you've heard that argument, right?

0:32:36.210,0:32:41.280
If you push the wage rate too high,
then you're just gonna get stagnation.

0:32:41.280,0:32:42.769
So, if we get a crisis it's not our fault it's

0:32:42.769,0:32:44.720
the labourer's fault.

0:32:44.720,0:32:49.080
So if you get a crisis it's not our fault, it's the labourers' fault,

0:32:49.080,0:32:52.230
they push the wage rate too high.

0:32:52.230,0:32:53.739
What Marx does is to

0:32:53.739,0:32:55.610
point out that in this system,

0:32:55.610,0:33:01.090
he says the bottom of p.770:

0:33:03.210,0:33:08.810
“To put it mathematically: the rate of accumulation is the independent,

0:33:08.810,0:33:11.390
not the dependent variable;

0:33:11.390,0:33:15.899
the rate of wages is the dependent, not the
independent variable.” In other words

0:33:15.899,0:33:19.490
what Marx is insisting is that it is capital

0:33:19.490,0:33:24.040
and capital accumulation that is driving this,

0:33:24.040,0:33:29.380
its capitalists who are making the decisions, it's capitalists who are pushing the system.

0:33:29.380,0:33:34.280
So if you do see fluctuations of this kind it's because that's the way

0:33:34.280,0:33:41.280
capitalism is pushing it.

0:33:46.520,0:33:51.910
This then leads Marx into a consideration

0:33:51.910,0:33:53.950
of what he calls

0:33:53.950,0:33:58.780
the so-called “natural law of population”.
You can tell this is coming

0:33:58.780,0:34:06.610
given his stuff about Malthus.

0:34:06.610,0:34:11.000
He really describes exactly what we've just gone through very succinctly, in the middle

0:34:11.000,0:34:13.710
of p.771:

0:34:13.710,0:34:17.859
“If the quantity of unpaid labour supplied by the working class

0:34:17.859,0:34:20.359
and accumulated by the capitalist class

0:34:20.359,0:34:22.119
increases so rapidly

0:34:22.119,0:34:26.690
that its transformation into capital requires an extraordinary addition of paid labour,

0:34:26.690,0:34:30.179
then wages rise and, all other circumstances remaining equal,

0:34:30.179,0:34:34.139
the unpaid labour diminishes in proportion.

0:34:34.139,0:34:37.730
But as soon as this diminution touches the point at which the surplus labour that nourishes capital

0:34:37.730,0:34:43.289
is no longer supplied in normal quantity, a reaction sets in:

0:34:43.289,0:34:47.419
a smaller part of revenue is capitalized, accumulation slows down,

0:34:47.419,0:34:51.849
and the rising movement of wages comes up against an obstacle.

0:34:51.849,0:34:56.049
The rise of wages is therefore confined within limits that not only leave intact the foundations

0:34:56.049,0:34:59.430
of the capitalist system, but also secure its reproduction

0:34:59.430,0:35:04.389
on an increasing scale.”

0:35:04.389,0:35:05.739
So, this is if you like

0:35:05.739,0:35:18.629
the description of a simple model of the dynamics of accumulation.

0:35:18.629,0:35:22.299
Which takes us into part two.

0:35:22.299,0:35:26.809
p.772

0:35:26.809,0:35:29.159
What Marx wants to do here is to say, well

0:35:29.159,0:35:32.279
this argument we just made

0:35:32.279,0:35:34.669
pays absolutely not mind

0:35:34.669,0:35:37.239
to technological change. That is,

0:35:37.239,0:35:42.019
you're assuming the technology remains constant

0:35:42.019,0:35:46.249
in this first version.

0:35:46.249,0:35:50.499
He says: “So far, we have considered only one special phase of this process, that in which

0:35:50.499,0:35:52.859
the increase of capital occurs

0:35:52.859,0:35:58.419
while the technical composition of capital remains constant.”

0:35:58.419,0:36:02.109
But we know it does not remain constant from

0:36:02.109,0:36:07.369
the theory of relative surplus-value.

0:36:07.369,0:36:11.390
He then goes on: “Given the general basis of the capitalist system, a point is reached

0:36:11.390,0:36:13.519
in the course of accumulation

0:36:13.519,0:36:18.189
at which the development of the productivity of social labour

0:36:18.189,0:36:25.189
becomes the most powerful lever of accumulation.”

0:36:26.769,0:36:32.209
So, we're now going to look at

0:36:32.209,0:36:35.299
this model when we introduce into it

0:36:35.299,0:36:40.579
the dynamics of relative surplus-value

0:36:40.579,0:36:48.170
seeking, and technological and organizational change.

0:36:48.170,0:36:52.109
He starts off by going a little bit over the technical

0:36:52.109,0:36:54.339
composition of capital, going back over

0:36:54.339,0:36:57.369
-this- argument and we're going to see this

0:36:57.369,0:37:02.699
developed even further now in this section.

0:37:02.699,0:37:08.939
As far as the technical conditions are concerned, there are both causes and consequences,

0:37:08.939,0:37:15.640
he says, of changing value-composition.

0:37:15.640,0:37:33.269
Causes, those which arise out of the need to buy new machinery,

0:37:33.269,0:37:40.239
new means of production. So he talks about buildings and furnaces and means of transport etc.

0:37:41.249,0:37:48.509
The consequence is that you need more means of production;

0:37:48.509,0:37:54.609
so, sorry, it's not a cause, its a condition

0:37:54.609,0:37:58.759
of this, you buy a new machine,

0:37:58.759,0:38:00.269
more 'C'

0:38:00.269,0:38:01.609
in the form of the machine.

0:38:01.609,0:38:03.789
But then the machine also

0:38:03.789,0:38:06.789
has a consequence, which is that you now need more

0:38:06.789,0:38:12.679
raw materials.

0:38:12.679,0:38:19.450
Bottom of p.773 he says: “This change in the technical composition of capital,

0:38:19.450,0:38:22.799
this growth in the mass of the means of production,

0:38:22.799,0:38:26.099
as compared with the mass of the labour-power that vivifies them, is reflected

0:38:26.099,0:38:30.339
in its value-composition by the increase of the constant constituent of capital

0:38:30.339,0:38:36.839
at the expense of its variable constituent.”

0:38:36.839,0:38:40.130
He then uses the phrase which

0:38:40.130,0:38:43.519
created quite a lot of problems:

0:38:43.519,0:38:48.009
“This law of the progressive growth of the constant part of capital

0:38:48.009,0:38:49.539
in comparison with the variable part

0:38:49.539,0:38:52.069
is confirmed at every step (as already shown)

0:38:52.069,0:38:55.160
by the comparative analysis of the prices of commodities,

0:38:55.160,0:38:57.160
whether we compare different economic epochs

0:38:57.160,0:38:58.369
or different nations in the

0:38:58.369,0:39:03.579
same epoch.”

0:39:03.579,0:39:07.569
There is, he says,

0:39:07.569,0:39:09.049
a tendency for

0:39:09.049,0:39:21.339
the organic composition of capital to increase over time.

0:39:33.449,0:39:37.549
He's proposing that we think in terms of the law

0:39:37.549,0:39:41.949
of the increase of the 'C over V' ratio,

0:39:41.949,0:39:43.959
that is,

0:39:43.959,0:39:47.609
you need to buy less and less labour

0:39:47.609,0:39:54.609
and you need to buy more more means of production.

0:39:55.539,0:40:02.209
Interestingly

0:40:02.209,0:40:05.579
he then introduces on the middle of p.774

0:40:05.579,0:40:10.139
the possibility that

0:40:10.139,0:40:11.759
'C' could also diminish

0:40:11.759,0:40:17.400
through technological change.

0:40:17.400,0:40:21.989
But he simply treats it here

0:40:21.989,0:40:25.309
as something that restraints what would otherwise be

0:40:25.309,0:40:28.599
a very rapid increase

0:40:28.599,0:40:33.499
in the 'C over V' ratio, in the organic
composition of capital.

0:40:33.499,0:40:37.059
Here he's saying

0:40:37.059,0:40:41.079
middle of p.774: “The reason is simple: with the increasing productivity of labour,

0:40:41.079,0:40:46.109
the mass of the means of production consumed by labour increases,

0:40:46.109,0:40:50.489
but their value in comparison with their mass diminishes.

0:40:50.489,0:40:54.890
Their value therefore rises absolutely,
but not in proportion to the increase

0:40:54.890,0:40:57.619
in their mass.

0:40:57.619,0:41:01.670
The increase of the difference between constant and variable capital is therefore much less than

0:41:01.670,0:41:06.619
that of the difference between the mass of the means of production into which the constant capital,

0:41:06.619,0:41:10.619
and the mass of the labour-power into which the variable capital, is converted.

0:41:10.619,0:41:17.489
The former difference increases with
the latter, but in a smaller degree.”

0:41:17.489,0:41:20.029
In other words,

0:41:20.029,0:41:25.769
yes, you can get constant capital saving innovations

0:41:25.769,0:41:29.989
which reduce the value of constant capital, but this simply

0:41:29.989,0:41:35.299
holds down what Marx sees as an inexorable law

0:41:35.299,0:41:43.989
of the rising organic composition of capital.

0:41:43.989,0:41:45.589
That, in short,

0:41:45.589,0:41:47.789
capitalism is going to become

0:41:47.789,0:41:55.809
increasingly capital-intensive over time

0:41:55.809,0:42:00.059
as opposed to labour-intensive.

0:42:00.059,0:42:08.430
He then uses some examples.

0:42:08.430,0:42:11.499
What this means,

0:42:11.499,0:42:17.559
is that the mass of surplus-value

0:42:17.559,0:42:21.339
that the capitalist can gain diminishes,

0:42:21.339,0:42:30.069
unless you can raise the rate of exploitation.

0:42:30.069,0:42:33.660
This is a problem.

0:42:33.660,0:42:41.859
And in the third volume of Capital, he'll argue

0:42:41.859,0:42:46.939
roughly in the following way:

0:42:46.939,0:42:49.739
The rate of profit (P)

0:42:49.739,0:42:57.359
is equivalent to 'S over (C + V)',

0:42:57.359,0:43:03.189
The surplus over the total capital advanced.

0:43:03.189,0:43:07.209
Now, by a little bit of algebraic manipulation,

0:43:07.209,0:43:09.390
you could turn this into…

0:43:09.390,0:43:14.459
that this is equivalent to the rate of exploitation

0:43:14.459,0:43:23.140
over (1 + the organic composition of capital).

0:43:23.140,0:43:27.259
From which you would see immediately that,

0:43:27.259,0:43:31.170
if the rate of exploitation remains constant,

0:43:31.170,0:43:39.169
then the law of the rising organic composition of capital gives you

0:43:39.169,0:43:46.169
a falling rate a profit.

0:43:48.709,0:43:53.519
-this- quantity becomes larger and larger and larger,

0:43:53.519,0:43:57.309
-this- remains constant,

0:43:57.309,0:44:01.880
therefore the profit rate must fall.

0:44:01.880,0:44:08.859
This is the simplest version

0:44:08.859,0:44:16.559
of Marx his falling profit-rate argument.

0:44:16.559,0:44:19.389
In order to sustain that however,

0:44:19.389,0:44:22.149
you have to do two things,

0:44:22.149,0:44:27.630
one is, you have to keep the rate of exploitation constant

0:44:27.630,0:44:31.039
and the second is, you have to assume

0:44:31.039,0:44:36.479
that all of -these- interactions which are going on in the economy

0:44:36.479,0:44:47.779
are actually leading to an increasing organic composition of capital.

0:44:47.779,0:44:51.859
There are lots of reasons why,

0:44:51.859,0:44:59.109
as subsequent theorists have shown, this is not necessarily so.

0:44:59.109,0:45:04.880
Situations can arise in which it actually goes in the other way,

0:45:04.880,0:45:08.879
that you get a falling organic composition of capital

0:45:08.879,0:45:11.699
simply because of the nature of the interaction effects.

0:45:11.699,0:45:19.249
Whether there's a falling or a rising, really depends.

0:45:19.249,0:45:21.829
On the other hand, if you

0:45:21.829,0:45:25.969
dare to gain say, in certain circles,

0:45:25.969,0:45:29.119
the theory of the falling rate a profit,

0:45:29.119,0:45:35.329
Marxists come down on you like a ton of bricks,

0:45:35.329,0:45:39.899
because, as I think Marx

0:45:39.899,0:45:45.249
himself suggested, this is one of the main ways in which you can see how

0:45:45.249,0:45:50.079
technological innovations i.e. the search for relative surplus-value,

0:45:50.079,0:45:53.489
creates a contradiction

0:45:53.489,0:45:57.419
because you're displacing labour out of production,

0:45:57.419,0:46:10.569
and as you displace labour out of production, you're displacing the source of surplus-value.

0:46:10.569,0:46:13.339
My own view of it, for what it's worth, is that

0:46:13.339,0:46:15.689
technological dynamism is indeed

0:46:15.689,0:46:21.169
a potent source of contradictions within this system,

0:46:21.169,0:46:28.979
but you cannot assume that there is a law of rising organic composition,

0:46:28.979,0:46:32.809
that it's always going to be there,

0:46:32.809,0:46:36.609
nor can you necessarily assume that there is

0:46:36.609,0:46:42.529
a law of falling rates of profit.
Situations arise in which, yes indeed

0:46:42.529,0:46:49.319
rising organic composition gets turned into falling profit rates.

0:46:49.319,0:46:51.880
But it's perfectly possible

0:46:51.880,0:46:54.379
for other patterns of innovation to

0:46:54.379,0:47:03.859
enter into the picture which reverse that process.

0:47:05.949,0:47:11.099
This is the reason these concepts are important and why you have to think about them,

0:47:11.099,0:47:14.779
because they're foundational for what happens

0:47:14.779,0:47:21.279
in Volume three of Capital and parts of Marx his argument there.

0:47:21.279,0:47:27.329
But what is brilliant about the argument is that

0:47:27.329,0:47:34.949
most of the classical political-economists, including Ricardo,

0:47:34.949,0:47:41.019
believed in a falling rate of profit.

0:47:41.019,0:47:46.219
Many of them thought in terms of

0:47:46.219,0:47:48.809
capitalism in the end winding down.

0:47:48.809,0:47:51.769
Ricardo, for example, talks about

0:47:51.769,0:47:55.640
the inevitable demise of a capitalist
system because it will not be able to

0:47:55.640,0:47:59.769
sustain itself.

0:47:59.769,0:48:07.099
But all of them actually appealed to Malthus

0:48:07.099,0:48:11.279
and the idea of resource constraints,

0:48:11.279,0:48:16.899
and what is known as diminishing returns in agriculture.

0:48:16.899,0:48:23.899
That there would be an inherent barrier to increasing productivity in agriculture,

0:48:24.899,0:48:29.899
and that therefore the end of capitalism was essentially

0:48:29.899,0:48:36.400
legislated in terms of its relation to nature.

0:48:36.400,0:48:38.499
What Marx says

0:48:38.499,0:48:44.179
is: No, there is a way you can talk about a falling rate of profit

0:48:44.179,0:48:47.759
which has nothing to do with nature.

0:48:47.759,0:48:54.759
It has to do with the internal contradictions of capitalism.

0:48:54.799,0:48:58.019
As he says of Ricardo,

0:48:58.019,0:49:05.859
he says, Ricardo when faced with the idea of a crisis took refuge in organic chemistry.

0:49:05.859,0:49:07.949
Marx says you can't do that,

0:49:07.949,0:49:11.849
if there is going to be a crisis of capitalism, it's going to be a crisis which is generated

0:49:11.849,0:49:14.519
by its own internal contradictions.

0:49:14.519,0:49:19.239
And I think his intuitions are absolutely correct.

0:49:19.239,0:49:25.949
That one of the centerpieces of those contradictions lies in the dynamic and trajectory

0:49:25.949,0:49:30.640
of technological and organizational changes,

0:49:30.640,0:49:35.049
and that these technological and organizational changes are highly disruptive,

0:49:35.049,0:49:41.269
in some instances, of the capacity to gain surplus-value.

0:49:41.269,0:49:46.889
The trouble is here is he has put it in this law form.

0:49:46.889,0:49:57.179
And the law form is where we hit some of the problems.

0:49:59.630,0:50:02.039
This then leads him to say that,

0:50:04.929,0:50:08.719
this rising organic composition of capital doesn't mean

0:50:08.719,0:50:14.509
less surplus-value for the capitalist, provided

0:50:14.509,0:50:22.089
that you actually expand your labour force dramatically.

0:50:22.089,0:50:27.660
That is, by increasing production you accelerate accumulation.

0:50:27.660,0:50:35.759
As he says on p.774:

0:50:35.759,0:50:40.709
“The progress of accumulation lessens the relative magnitude of the variable part of capital,

0:50:40.709,0:50:47.709
but this by no means thereby excludes the possibility of a rise in its absolute magnitude.”

0:50:48.149,0:50:50.069
Then he goes through this example:

0:50:50.069,0:50:54.189
let's suppose the 'C over V' ratio rises,

0:50:54.189,0:50:59.449
but “If, in the meantime, the original capital, say £6,000, has increased to £18,000,

0:50:59.449,0:51:04.079
its variable constituent has also increased, in fact by 20 percent.

0:51:04.079,0:51:08.579
It was £3,000, it is now £3,600.”

0:51:08.579,0:51:12.579
Out of eighteen-thousand.

0:51:12.579,0:51:16.149
“But whereas formerly an increase of capital by 20 percent would have sufficed to raise the demand

0:51:16.149,0:51:20.279
for labour by 20 percent, now the original capital needs to be tripled

0:51:20.279,0:51:27.680
to secure an increase of 20 percent in the demand for labour. ”

0:51:27.680,0:51:30.569
This then immediately raises the question:

0:51:30.569,0:51:36.869
where is the surplus capital gonna come from to increase from 6,000 to 18,000?

0:51:36.869,0:51:40.539
How are you going to get that?

0:51:40.539,0:51:45.949
That leads him immediately to the idea

0:51:45.949,0:51:52.329
that there is an original accumulation which goes on,

0:51:52.329,0:51:54.619
and he introduces

0:51:54.619,0:51:59.319
this idea of primitive accumulation on p.775.

0:51:59.319,0:52:03.859
The capitalists go out and they rob people,

0:52:03.859,0:52:11.949
to get the extra 12 thousand pounds they need.

0:52:11.949,0:52:17.179
Somehow or other they accumulate it. He says we're going to look at this historically in part 8,

0:52:17.179,0:52:24.429
so we'll do that next week.

0:52:24.429,0:52:27.769
Then, on p.776-777

0:52:27.769,0:52:32.569
he says, maybe there's another way in which capitalists can do this,

0:52:32.569,0:52:40.849
and he introduces the distinction between concentration and centralization.

0:52:40.849,0:52:45.479
Concentration of capital arises in -this- model in the following way:

0:52:45.479,0:52:49.859
each time you increase the amount of capital that's circulating,

0:52:49.859,0:52:52.099
so you go around this system again,

0:52:52.099,0:52:57.439
and you get more capital … more capital,
so concentration means: over time,

0:52:57.439,0:53:02.029
bit by bit, increment by increment, you're increasing your capital, so capital is becoming

0:53:02.029,0:53:09.029
concentrated.

0:53:09.190,0:53:13.430
He then introduces something which I think is always important, because sometimes people

0:53:13.430,0:53:20.430
talk about the law of increasing concentration and centralization.

0:53:22.269,0:53:26.319
He suggests that at the bottom of p.776 that not only are you going to get concentration

0:53:26.319,0:53:31.279
of capital, but you could also get something else going on

0:53:31.279,0:53:40.019
right at the bottom of p.776 he says, concentration that accompanies accumulation,

0:53:40.019,0:53:44.319
is not only “scattered over many points, but the increase of each functioning capital is thwarted

0:53:44.319,0:53:48.089
by the formation of new capitals and the subdivision of old.

0:53:48.089,0:53:51.019
Accumulation, therefore, presents itself on the one hand

0:53:51.019,0:53:53.849
as increasing concentration of the means of production,

0:53:53.849,0:53:55.880
and of the command over labour;

0:53:55.880,0:54:00.399
and on the other hand as repulsion of many individual capitals from one another.”

0:54:00.399,0:54:04.859
Then he talks about the fragmentation of the total social capital.

0:54:04.859,0:54:08.150
What in effect is going on here is this:

0:54:08.150,0:54:12.689
Why would you put your surplus-value back into the same production system?

0:54:12.689,0:54:19.129
What happens if I took a part of my surplus-value and spawned it off into a new line of production?

0:54:19.129,0:54:24.029
And I opened up a small factory making something else?

0:54:24.029,0:54:26.519
So, capitalism

0:54:26.519,0:54:32.019
is not only about increasing concentration,
it's also about increasing diversification,

0:54:32.019,0:54:33.689
increasing fragmentation.

0:54:33.689,0:54:38.899
And what he's suggesting here is that there is some sort of relationship between concentration

0:54:38.899,0:54:42.199
and dispersal,

0:54:42.199,0:54:45.749
concentration and fragmentation.

0:54:45.749,0:54:47.509
And that therefore

0:54:47.509,0:54:55.899
you cannot necessarily look to concentration of capital,

0:54:55.899,0:54:59.509
to do what you wanted to do in terms of increasing

0:54:59.509,0:55:03.279
the amount of 'V' which is available to you

0:55:03.279,0:55:10.279
at a given rate of exploitation.

0:55:10.479,0:55:12.859
So there is something else,

0:55:12.859,0:55:17.869
he introduces centralization of capital.

0:55:17.869,0:55:24.419
Centralization is effectively taking people over,

0:55:24.419,0:55:37.799
takeovers, merges, driving people out of competition, taking over their businesses,

0:55:37.799,0:55:43.369
hostile takeovers, and the like.

0:55:43.369,0:55:46.179
And what he's pointing to here is

0:55:46.179,0:55:51.309
a very important process which goes on in capitalism,

0:55:51.309,0:55:54.090
which is about centralization. And we

0:55:54.090,0:55:58.299
start to see how it works, and he introduces at the bottom of p.777

0:55:58.299,0:56:00.849
a very important idea which he's not going to take up,

0:56:00.849,0:56:05.449
which is the role of the credit system in doing this.

0:56:05.449,0:56:11.809
He talks about various mechanisms whereby larger capitals could take over smaller,

0:56:11.809,0:56:16.219
through competition and alike, but then he says: “Apart from this, an altogether new force

0:56:16.219,0:56:21.679
comes into existence with the development of capitalist production: the credit system.

0:56:21.679,0:56:24.089
In its first stages, this system

0:56:24.089,0:56:29.469
furtively creeps in as the humble assistant of accumulation,

0:56:29.469,0:56:33.019
drawing into the hands of individual or associated capitalists by invisible threads

0:56:33.019,0:56:34.619
the money resources,

0:56:34.619,0:56:38.769
which lie scattered in larger or smaller amounts over the surface of society;

0:56:38.769,0:56:42.439
but it soon becomes a new and terrible weapon in the battle of competition

0:56:42.439,0:56:52.249
and is finally transformed into an enormous social mechanism for the centralization of capitals.”

0:56:52.249,0:56:58.549
One of the main businesses of Wall Street these days is asset merger activity,

0:56:58.549,0:57:02.879
the centralization of capital that's been going on under neo-liberalism

0:57:02.879,0:57:06.889
has been absolutely astonishing.

0:57:06.889,0:57:13.549
Oil companies, pharmaceutical companies, telecommunications companies,

0:57:13.549,0:57:18.869
are constantly merging into each other, asset merger activities is

0:57:18.869,0:57:23.390
one of the big businesses of Wall Street, and of course this is about precisely the centralization

0:57:23.390,0:57:25.599
of capital.

0:57:25.599,0:57:30.179
And what does the centralization of capital do to the workers?

0:57:30.179,0:57:33.799
Well, it doesn't do them any good that's for sure.

0:57:33.799,0:57:35.529
It usually destroys

0:57:35.529,0:57:39.729
worker organization and worker contracts,

0:57:39.729,0:57:44.909
increases the rate of exploitation and the like.

0:57:44.909,0:57:50.079
So, what Marx is onto here is the beginnings of

0:57:50.079,0:57:53.920
a centralization process in which the credit system starts to play

0:57:53.920,0:57:57.630
a central role. And we would argue,
I think, today that this is of course

0:57:57.630,0:58:01.769
one of the huge drivers of the economy.

0:58:01.769,0:58:04.169
and Marx is seeing its potential here,

0:58:04.169,0:58:06.009
but having said that

0:58:06.009,0:58:08.739
all he does then is to say

0:58:08.739,0:58:14.709
that these levers of centralization,
which are competition and credit,

0:58:14.709,0:58:19.209
draw together individual capitals and
deals with this problem of how to get the

0:58:19.209,0:58:27.929
extra 12,000 pounds: you get it through centralization.

0:58:27.929,0:58:33.099
As he says at the bottom of p.779:

0:58:34.829,0:58:38.849
“Capital can grow into powerful masses in a single hand in one place…

0:58:38.849,0:58:43.589
…In any given branch of industry centralization would reach its extreme limit if all

0:58:43.589,0:58:48.229
the individual capitals invested there
were fused into a single capital.”

0:58:48.229,0:58:50.559
i.e. monopoly.

0:58:50.559,0:58:54.660
“In a given society this limit would be reached only when the entire social capital was united in

0:58:54.660,0:59:01.539
the hands of either a single capitalist or a single capitalist company.

0:59:01.539,0:59:06.019
Centralization supplements the work of accumulation by enabling industrial capitalists to extend

0:59:06.019,0:59:08.049
the scale of their operations.”

0:59:08.049,0:59:14.559
Increasing scale of organization.

0:59:14.559,0:59:21.559
And centralization, he says, is much more dramatic, as he says on p.780:

0:59:22.149,0:59:25.819
"accumulation, the gradual increase of capital by reproduction as it passes from the circular

0:59:25.819,0:59:31.339
to the spiral form, is clearly a very slow procedure compared with centralization…”

0:59:31.339,0:59:35.880
Centralization is much faster.

0:59:35.880,0:59:38.419
Then he goes on to point out: “The world would still be without railways

0:59:38.419,0:59:41.419
if it had had to wait until accumulation had got

0:59:41.419,0:59:46.189
a few individual capitals far enough to be adequate for the construction of a railway.”

0:59:46.189,0:59:55.839
So, it's consortia, business consortia and things like that, that start to move into the picture.

0:59:55.839,1:00:01.359
He then says: “centralization … thereby becomes the new and powerful lever

1:00:01.359,1:00:04.359
of social accumulation.

1:00:04.359,1:00:08.389
Therefore, when we speak of the progress of social accumulation, we tacitly include —

1:00:08.389,1:00:15.389
these days — the effects of centralization.”

1:00:16.799,1:00:23.799
But this doesn't necessarily solve the problem of less and less labour being employed,

1:00:24.659,1:00:28.079
as he says right at the end: “On the one hand, therefore, the additional capital formed in

1:00:28.079,1:00:32.309
the course of further accumulation attracts fewer and fewer workers in proportion to its magnitude.

1:00:32.309,1:00:36.549
On the other hand, the old capital periodically reproduced with a new composition

1:00:36.549,1:00:43.549
repels more and more of the workers formerly employed by it.”

1:00:43.569,1:00:46.839
So what's coming out here is,

1:00:46.839,1:00:51.579
these processes of transformation,

1:00:51.579,1:00:57.409
both in organizational form of capital but also in technological

1:00:57.409,1:01:00.509
forms, are diminishing the demand

1:01:00.509,1:01:05.039
for labour-power in the labour market.

1:01:05.039,1:01:08.819
The consequences for that are taken up in the next section, but we should probably

1:01:08.819,1:01:15.069
break here five minutes and than do the next two sections.

1:01:15.069,1:01:19.769
The next section, what we get is

1:01:19.769,1:01:27.379
another version of this model but with technological change

1:01:27.379,1:01:32.489
incorporated. This system really

1:01:32.489,1:01:36.929
looks something like this:

1:01:36.929,1:01:43.929
You start with accumulation,

1:01:46.630,1:01:53.099
but in this instance, we're gonna talk about reinvestment

1:01:53.099,1:02:00.099
of capitalized surplus-value,

1:02:07.650,1:02:17.709
which in this instance is invested in new technologies,

1:02:22.499,1:02:36.789
which reduces the demand for labour;

1:02:44.579,1:02:54.499
produces a surplus population

1:03:02.839,1:03:15.129
which gives you a high rate of exploitation, which gives you more accumulation.

1:03:30.699,1:03:34.759
So, he starts off by again

1:03:34.759,1:03:48.779
assuming a rising organic composition of capital,

1:03:49.339,1:03:58.869
but now we're looking at this dynamic

1:03:58.869,1:04:05.869
in which technological change is becoming central.

1:04:06.239,1:04:08.439
The demand for labour, he says at the bottom of p.781:

1:04:11.519,1:04:16.619
“is determined not by the extent of the total capital but by its variable constituent alone,

1:04:16.619,1:04:21.629
that demand falls progressively with
the growth of the total capital…

1:04:21.629,1:04:25.630
…and at an accelerated rate, as this magnitude, increases.”

1:04:25.630,1:04:32.059
So the variable capital becomes a constantly diminishing proportion.

1:04:32.059,1:04:37.259
The consequence is, on p.782 in the middle, he says:

1:04:37.259,1:04:41.609
“in fact, it is capitalist accumulation itself

1:04:41.609,1:04:45.959
that constantly produces, and produces indeed in direct relation with its own energy and extent,

1:04:45.959,1:04:49.569
a relatively redundant working population,

1:04:49.569,1:04:53.499
i.e. a population which is superfluous to capital's average requirements for

1:04:53.499,1:05:00.499
its own valorization, and is therefore a surplus population.”

1:05:03.309,1:05:12.819
Then he talks, p.782-3, on what we now colloquially call downsizing.

1:05:17.639,1:05:21.069
The consequence, as he points out on p.783 at the bottom:

1:05:21.069,1:05:25.489
“The working population therefore produces both the accumulation of capital

1:05:25.489,1:05:30.679
and the means by which it is itself made relatively superfluous;

1:05:30.679,1:05:35.859
and it does this to an extent which is always increasing.”

1:05:35.859,1:05:41.079
There's a lot of discussion these days about disposable labour

1:05:41.079,1:05:45.329
and the idea of disposable labour-forces.

1:05:45.329,1:05:50.699
This is exactly what Marx is talking about, how do we get to a point

1:05:50.699,1:05:57.489
where we can talk about massive disposal working populations?

1:05:57.489,1:06:04.489
and how does that dynamic work?

1:06:04.609,1:06:09.910
This leads Marx then to point out,

1:06:09.910,1:06:14.199
at the bottom of p.783: “The working population therefore produces both the accumulation…”

1:06:14.199,1:06:15.529
…I've just read that…

1:06:15.529,1:06:20.209
“This is a law of population peculiar to the capitalist mode of production;

1:06:20.209,1:06:24.659
and in fact every particular historical mode of production has its own special laws of population,

1:06:24.659,1:06:28.729
which are historically valid within that particular sphere.

1:06:28.729,1:06:33.599
An abstract law of population exists only for plants and animals, and even then only in the absence

1:06:33.599,1:06:39.189
of any historical intervention by man.”

1:06:39.189,1:06:41.529
What he's saying here is that

1:06:41.529,1:06:46.629
Malthus had this law of population that explained poverty,

1:06:46.629,1:06:52.669
again, because of these two forces of

1:06:52.669,1:07:00.459
the tendency to increase the population,
on the part of the labouring classes,

1:07:00.459,1:07:05.549
in relationship to scarcities in nature.

1:07:05.549,1:07:08.200
So, the problem of poverty

1:07:08.200,1:07:11.989
for Malthus had everything to do with

1:07:11.989,1:07:16.779
natural proclivities of the working class to reproduce

1:07:16.779,1:07:23.049
too fast, versus scarcity in nature,

1:07:23.049,1:07:27.249
therefore: poverty is natural.

1:07:27.249,1:07:29.739
Marx is saying: that's nonsense!

1:07:29.739,1:07:33.019
Poverty is actually produced,

1:07:33.019,1:07:36.430
this is his point,

1:07:36.430,1:07:40.539
going back to the 'Fable of the bees' and Mandeville,

1:07:40.539,1:07:48.189
Poverty is actually produced by the capitalist dynamic,

1:07:48.189,1:07:52.229
and he says in next paragraph:

1:07:52.229,1:07:56.679
“But if a surplus population of workers is a necessary product of accumulation

1:07:56.679,1:07:59.019
or of the development of wealth on a capitalist basis,

1:07:59.019,1:08:04.339
this surplus population also becomes, conversely, the lever of capitalist accumulation,

1:08:04.339,1:08:08.489
indeed it becomes a condition for the existence of the capitalist mode of production.

1:08:08.489,1:08:13.489
It forms a disposable industrial reserve army, which belongs to capital just as absolutely

1:08:13.489,1:08:19.129
as if the latter had bred it at its own cost.

1:08:19.129,1:08:25.830
Independently of the limits of the actual increase of population, it creates a mass of human material

1:08:25.830,1:08:30.079
always ready for exploitation by capital in the interests of capital's own changing

1:08:30.079,1:08:35.079
valorization requirements.”

1:08:38.819,1:08:41.769
Then he talks about the varying phases of

1:08:41.769,1:08:45.169
re-absorption of some of this surplus that is thrown out of work,

1:08:45.169,1:08:52.679
and then throwing them out of work by another round of technological change.

1:08:52.679,1:08:54.529
And as he says,

1:08:54.529,1:09:01.529
this sophisticated system was not really possible in capitalism's infancy.

1:09:02.259,1:09:09.960
Again he comes back to the irony, on p.786, when he says:

1:09:09.960,1:09:17.620
“This increase [of the surplus population] is effected by the simple process that constantly

1:09:17.620,1:09:21.750
'sets free' a part of the working class…”

1:09:21.750,1:09:25.069
It 'sets them free' by

1:09:25.069,1:09:31.489
engaging technologically induced unemployment.

1:09:31.489,1:09:37.529
Some kind of freedom that is!

1:09:37.529,1:09:42.869
He says, again and again,

1:09:42.869,1:09:49.869
that the existence of a surplus population is absolutely crucial.

1:09:52.059,1:09:53.130
p.788:

1:09:53.130,1:09:59.909
“Capitalist production can by no means content itself with the quantity of disposable labour-power

1:09:59.909,1:10:01.959
which the natural increase of population yields.

1:10:01.959,1:10:05.849
It requires for its unrestricted activity an industrial reserve army

1:10:05.849,1:10:08.349
which is independent of these natural limits.”

1:10:08.349,1:10:08.869
In other words:

1:10:08.869,1:10:14.489
it wouldn't matter what the rate of population increase was,

1:10:14.489,1:10:17.969
you'd still have poverty,

1:10:17.969,1:10:20.940
even if Malthus was all wrong

1:10:20.940,1:10:27.940
about working-class reproducing, and being too fecund and all of that.

1:10:28.040,1:10:30.589
It wouldn't matter because capitalism would simply

1:10:30.589,1:10:37.380
go ahead and produces its surplus population in this kind of way.

1:10:37.380,1:10:42.749
And this has a number of effects,

1:10:42.749,1:10:46.840
one is: it allows the capitalist to

1:10:46.840,1:10:49.499
discipline the labour-force.

1:10:49.499,1:10:51.779
In other words, it's a constant threat

1:10:51.779,1:10:53.460
which the capitalist has of

1:10:53.460,1:10:58.719
forcing unemployment upon the working-class.

1:10:58.719,1:11:04.349
And one of those threats to be exercised

1:11:05.779,1:11:10.459
with the purpose of deskilling, as he says on p.788 at the bottom,

1:11:10.459,1:11:20.969
the displacement of more skilled labour-power by inferior labour-power.

1:11:22.039,1:11:33.139
It also allows, as he says on the next page:

1:11:33.559,1:11:37.460
“If the means of production, as they increase in extent

1:11:37.460,1:11:39.439
and effective power, become to a lesser extent means for employing workers,

1:11:39.439,1:11:43.439
this relation is itself in turn modified by the fact

1:11:43.439,1:11:48.120
that in proportion as the productivity of labour increases, capital increases its supply of labour

1:11:48.120,1:11:50.619
more quickly than its demand for workers.

1:11:50.619,1:11:57.619
The over-work of the employed part of the working class swells the ranks of its reserve…

1:11:57.800,1:12:02.010
The condemnation of one part of the working class to enforced idleness by the over-work

1:12:02.010,1:12:06.469
of the other part, and vice versa, becomes a means of enriching the individual capitalists,

1:12:06.469,1:12:09.479
and accelerates at the same time the production of the industrial reserve army on a

1:12:09.479,1:12:13.339
scale corresponding with the progress of social accumulation.”

1:12:13.339,1:12:19.570
Now, there's a very interesting thing that's been going on over the last 30 years,

1:12:19.570,1:12:23.739
which is we've seen extensive structural unemployment,

1:12:23.739,1:12:28.849
at the same time as the existing employed working class,

1:12:28.849,1:12:35.849
in many instances has been forced to do over-time,

1:12:36.119,1:12:40.929
has been forced by the threat of unemployment

1:12:40.929,1:12:44.300
to intensify their efforts.

1:12:44.300,1:12:46.659
So in other words,

1:12:46.659,1:12:51.909
this mechanism of capital is not simply about

1:12:51.909,1:12:54.780
unemploying people,

1:12:54.780,1:13:03.170
it's also about exercising a political power over the workers.

1:13:10.039,1:13:18.599
The result, he says (p.790), is that the general movement of wages in turn

1:13:18.599,1:13:22.969
“are exclusively regulated by the expansion and contraction of the industrial reserve army,

1:13:22.969,1:13:32.309
and this in turn corresponds to the periodic alternations of the industrial cycle.”

1:13:32.309,1:13:36.619
On p.792 in the middle:

1:13:36.619,1:13:40.719
“The industrial reserve army, during the periods of stagnation and average prosperity, weighs down

1:13:40.719,1:13:44.370
the active army of workers;

1:13:44.370,1:13:49.599
during the periods of over-production and feverish activity, it puts a curb on their pretensions.

1:13:49.599,1:13:53.510
The relative surplus population is therefore the background against which the law of the demand

1:13:53.510,1:13:55.719
and supply of labour does its work.

1:13:55.719,1:14:00.829
It confines the field of action of this law to the limits absolutely convenient to capital's drive

1:14:00.829,1:14:04.489
to exploit and dominate the workers.”

1:14:04.489,1:14:06.259
Here we're taking up

1:14:06.259,1:14:09.930
the idea of technological change,

1:14:09.930,1:14:12.749
organizational changes, as a weapon of class struggle

1:14:12.749,1:14:14.110
with a vengeance.

1:14:14.110,1:14:16.269
You've come across it

1:14:16.269,1:14:21.229
in the chapter on machinery.

1:14:21.229,1:14:25.399
and the oddity of this, he then remarks on p.793,

1:14:25.399,1:14:29.889
is that “The demand for labour is not identical with increase of capital,

1:14:29.889,1:14:32.979
nor is supply of labour identical with increase of the working class.

1:14:32.979,1:14:37.460
It is not a case of two independent forces working on each other.

1:14:37.460,1:14:40.760
Capital acts on both sides at once.”

1:14:40.760,1:14:44.719
Capital, in fact, controls the demand for labour,

1:14:44.719,1:14:48.469
at the same time as it also controls the supply

1:14:48.469,1:14:51.530
of a surplus population,

1:14:51.530,1:14:58.530
a relative surplus population, an industrial reserve army.

1:14:58.929,1:15:02.780
He then goes on to say: "If its accumulation on the one hand increases the demand for labour,

1:15:02.780,1:15:03.949
it increases on the other hand

1:15:03.949,1:15:07.849
the supply of workers by 'setting them free',

1:15:07.849,1:15:10.549
while at the same time the pressure of the unemployed compels those

1:15:10.549,1:15:12.949
who are employed to furnish more labour,

1:15:12.949,1:15:19.949
and therefore makes the supply of labour to a certain extent independent of the supply of workers.

1:15:21.440,1:15:24.320
The movement of the law of supply and demand of labour on this basis completes

1:15:25.320,1:15:27.219
the despotism of capital.”

1:15:29.219,1:15:32.010
Capital works on both sides,

1:15:32.010,1:15:37.610
it has control of both sides.

1:15:37.610,1:15:39.119
The answer, of course,

1:15:39.119,1:15:42.140
is for workers to organize, so Marx here,

1:15:42.140,1:15:45.889
for the first time introduces the idea

1:15:45.889,1:15:49.969
of trade-unions and labour organization.

1:15:49.969,1:15:53.780
“as soon as the workers learn the secret of why it happens that the more they work,

1:15:53.780,1:15:55.979
the more alien wealth they produce,

1:15:55.979,1:16:00.249
and that the more the productivity of their labour increases, the more does their very function

1:16:00.249,1:16:04.059
as a means for the valorization of capital become precarious…

1:16:04.059,1:16:08.949
…as soon as, by setting up trade unions, etc., they try to organize planned co-operation

1:16:08.949,1:16:11.369
between the employed and the unemployed

1:16:11.369,1:16:15.579
in order to obviate or to weaken the ruinous effects of this natural law of capitalist production

1:16:15.579,1:16:16.579
on their class,

1:16:16.579,1:16:20.630
so soon does capital and its sycophant, political economy, cry out

1:16:20.630,1:16:25.400
at the infringement of the 'eternal' and so to speak 'sacred' law of supply and demand.

1:16:27.630,1:16:34.059
Every combination between employed and unemployed disturbs the 'pure' action of this law.”

1:16:34.059,1:16:40.460
Then Marx introduces the idea of colonies and so on,

1:16:40.460,1:16:49.110
"…will prevent the creation of an industrial reserve army…”

1:16:50.340,1:16:52.459
So the point here is that,

1:16:52.459,1:16:55.679
in this model of accumulation,

1:16:55.679,1:17:01.639
what we see is the utilization of capital's command over

1:17:01.639,1:17:04.860
organizational forms and technologies,

1:17:04.860,1:17:06.679
centralization,

1:17:06.679,1:17:08.940
new technological forms,

1:17:08.940,1:17:10.339
organizational forms,

1:17:10.339,1:17:12.739
as a weapon in class struggle

1:17:12.739,1:17:20.409
which actually regulates both the demand and supply of labour.

1:17:20.409,1:17:21.959
This is, if you like

1:17:21.959,1:17:25.739
the more sophisticated version

1:17:25.739,1:17:28.889
of the model of capital accumulation

1:17:28.889,1:17:31.150
which Marx constructs.

1:17:31.150,1:17:34.619
And as we'll see in the next section,

1:17:34.619,1:17:38.179
this leads him to the construction of production

1:17:38.179,1:17:45.179
of a relative surplus population, so Marx then talks about that.

1:17:45.689,1:17:48.909
But I'd just like to pause here and ask if you've got any kind of questions

1:17:48.909,1:17:53.409
about these two models and the bit in between about

1:17:53.409,1:17:59.989
organic, and value, and technical composition.

1:17:59.989,1:18:03.989
Or is it all clear?

1:18:05.989,1:18:10.339
» STUDENT: You said that there could be some factors that go against

1:18:10.339,1:18:12.339
the idea of a falling rate of profit?

1:18:12.339,1:18:15.570
» HARVEY: Well, one would be, for example, a pattern of

1:18:15.570,1:18:18.459
technological change which is capital saving,

1:18:18.459,1:18:22.520
which is not labour saving at all, but capital saving.

1:18:22.520,1:18:28.010
I.e: the means of production become cheaper faster.

1:18:28.010,1:18:32.610
Out of that comes…

1:18:32.610,1:18:37.620
Marx mentions foreign trade, and while he doesn't mention the word 'imperialism',

1:18:37.620,1:18:43.309
you could also introduce into this, imperialist domination

1:18:43.309,1:18:49.340
of raw material sources to make them extremely cheap,

1:18:49.340,1:18:50.690
so that

1:18:50.690,1:18:57.690
raw materials become cheaper and cheaper and cheaper because of imperialist domination.

1:19:01.529,1:19:06.429
As I already mentioned, there are patterns of technological change,

1:19:06.429,1:19:10.039
which would not give you a rising organic composition of capital at all,

1:19:10.039,1:19:11.939
but a stable organic composition of capital,

1:19:11.939,1:19:16.799
and in certain instances you might even get a declining organic composition of capital.

1:19:16.799,1:19:23.369
It really depends upon what kind of technological change you're talking about.

1:19:23.369,1:19:27.999
Now, I think there's no question that Marx' intuition that a lot of

1:19:27.999,1:19:31.339
capitalist technological change is about labour-saving,

1:19:31.339,1:19:33.190
is correct.

1:19:33.190,1:19:34.530
And to the degree that it

1:19:34.530,1:19:38.999
is biased towards labour saving, it would indeed produce

1:19:38.999,1:19:42.590
some of the difficulties that Marx is pointing to,

1:19:42.590,1:19:46.249
but there's no necessity for that,

1:19:46.249,1:19:48.869
you could imagine something else. In other words,

1:19:48.869,1:19:52.979
there are people who now would argue that actually you can set up a dynamic model

1:19:52.979,1:19:54.669
of this kind

1:19:54.669,1:19:58.389
with a pattern of technological change which is

1:19:58.389,1:20:00.519
going to equilibrate the system,

1:20:05.099,1:20:07.579
and give you a stable rate of profit over time.

1:20:07.579,1:20:13.689
The difficulty is to define exactly what the pattern of technological changes is that does that.

1:20:13.689,1:20:19.429
And so people talk for example about a knife-edge,

1:20:19.429,1:20:22.719
the appropriate technological change which is going to keep you in balance, you move too far

1:20:22.719,1:20:24.480
in one direction,

1:20:24.480,1:20:26.090
you get a crisis

1:20:26.090,1:20:29.409
of the sort that Marx is talking about,
you move to far in the other direction,

1:20:29.409,1:20:35.199
you've got another kind of crisis.

1:20:35.199,1:20:38.290
And in any case,

1:20:38.290,1:20:43.639
don't forget the assumptions we started out with,

1:20:43.639,1:20:49.520
for instance, if there is a serious problem in the market

1:20:49.520,1:20:51.899
then you may want to employ more workers and

1:20:51.899,1:20:57.809
you might want to give them more purchasing power because they've become an important part

1:20:57.809,1:21:04.570
of the consumerism that is going to mob up the surplus-value.

1:21:04.570,1:21:08.209
We ruled that out by assumption,

1:21:08.209,1:21:11.929
so far, we assume that's not a problem, but you see that could

1:21:11.929,1:21:14.129
indeed be a problem,

1:21:14.129,1:21:17.639
in which case you wouldn't want to go this way anyway.

1:21:17.639,1:21:21.480
The social system would have to go in another direction, that is to try to

1:21:21.480,1:21:24.060
employ more workers,

1:21:24.060,1:21:28.000
as a way of consuming the capitalist product,

1:21:28.000,1:21:34.409
otherwise you got a problem of

1:21:34.409,1:21:38.229
to whom do capitalists market their product?

1:21:38.229,1:21:41.389
Actually, it's very interesting,

1:21:41.389,1:21:42.849
Marx himself

1:21:42.849,1:21:48.440
at various points, both in the Grundrisse
and in Volume 3 of Capital, talks about

1:21:48.440,1:21:49.849
counter-acting influences,

1:21:51.299,1:21:54.070
and he changes his language in Volume 3:

1:21:54.070,1:21:57.019
The falling rate of profit goes from being a law,

1:21:57.019,1:21:59.050
to being a law of a tendency,

1:21:59.050,1:22:02.800
to being a tendency.

1:22:02.800,1:22:06.559
So, you see he's beginning

1:22:06.559,1:22:08.849
to see that there may be some problems with it.

1:22:08.849,1:22:10.289
And at various points,

1:22:10.289,1:22:12.620
both in Capital and the Grundrisse, he talks about

1:22:12.620,1:22:15.150
the factors that can offset

1:22:15.150,1:22:19.049
the law of the tendency of the falling rate of profit.

1:22:19.049,1:22:23.660
And by the time to go through all of those factors, you say to yourself 'well,

1:22:23.660,1:22:26.349
if you add all of these up,

1:22:26.349,1:22:30.619
this law of the falling rate of profit is no law,

1:22:30.619,1:22:34.119
it's a tendency which you can see there, it has

1:22:34.119,1:22:38.059
elements of truth to it but

1:22:38.059,1:22:41.329
you can't call it a mechanical law,

1:22:41.329,1:22:46.169
and it's very dangerous, i think, to do that.

1:22:46.169,1:22:50.059
And after all, if Marx was correct

1:22:50.059,1:22:50.719
in saying that there's

1:22:50.719,1:22:56.869
a law of rising organic composition of capital,

1:22:56.869,1:23:00.300
and there's a falling rate of profit, we should have been having a falling rate of profit since

1:23:00.300,1:23:03.389
1850 at least.

1:23:03.389,1:23:07.089
And we should be closer and closer to zero, but we are not closer and closer to zero,

1:23:07.089,1:23:08.530
we plainly are not.

1:23:08.530,1:23:11.469
And this is then one of the things

1:23:11.469,1:23:18.469
he mentions, is opening up new sectors of production which are labour intensive.

1:23:19.179,1:23:21.060
Now think of that.

1:23:21.060,1:23:25.010
Think about what global capitalism has been doing,

1:23:25.010,1:23:27.640
a lot of the sectors of production which have opened up

1:23:27.640,1:23:31.469
has been labour intensive,

1:23:31.469,1:23:34.109
and in fact the proletariat has increased

1:23:34.109,1:23:38.019
by about two billion people over the last thirty years.

1:23:38.019,1:23:40.139
China,

1:23:40.139,1:23:41.999
Indonesia, so

1:23:41.999,1:23:47.209
new lines of production have opened up, many of which are labour intensive.

1:23:47.209,1:23:51.090
And actually, interestingly, in China

1:23:51.090,1:23:56.139
they're even in some instances dismantling these new technologies,

1:23:56.139,1:24:00.389
which are highly capital-intensive because they're so expensive.

1:24:00.389,1:24:04.530
They can buy these new technologies from the United States, very expensive,

1:24:04.530,1:24:06.280
which are labour saving,

1:24:06.280,1:24:09.869
or they can actually reinvent the production process

1:24:09.869,1:24:11.429
which is labour-intensive.

1:24:11.429,1:24:14.179
And in many instances they've done that, they've gone back to labour intensive,

1:24:14.179,1:24:15.179
and say 'why should we

1:24:15.179,1:24:18.019
buy this expensive piece of machinery,

1:24:18.019,1:24:19.749
when we have

1:24:19.749,1:24:26.590
these incredible available labour resources around?

1:24:26.590,1:24:28.300
Which then, by the way,

1:24:28.300,1:24:31.420
brings back one point of limitation on this

1:24:31.420,1:24:33.969
new technology stuff,

1:24:33.969,1:24:35.409
can you remember

1:24:35.409,1:24:42.409
what it is that puts a limitation on the employment of new machines?

1:24:43.299,1:24:46.690
STUDENT: Not until everyone catches up and gets…
HARVEY: Well, yes, but the other

1:24:46.690,1:24:47.940
is that the machine,

1:24:47.940,1:24:53.739
the value of the machine has to be less than the labour that's saved by it.

1:24:53.739,1:24:57.550
So, when you get to the point where the demand for labour

1:24:57.550,1:24:59.790
and

1:24:59.790,1:25:05.510
the wage rate has gone down so much because you have such a massive surplus population,

1:25:05.510,1:25:10.989
at some point or other there's no point in

1:25:10.989,1:25:13.839
continuing technological innovation.

1:25:13.839,1:25:16.849
So -that- cycle will go on until such point,

1:25:16.849,1:25:19.119
as you remember the case in Britain,

1:25:19.119,1:25:22.589
which did not employ the technologies which was employed in the United States because

1:25:22.589,1:25:26.259
there was such a surplus of labour in Britain, that it didn't make

1:25:26.259,1:25:28.999
economic sense to employ those technologies.

1:25:28.999,1:25:33.139
So what you may get is a situation where you produce such a surplus of population

1:25:33.139,1:25:35.889
at a given place,

1:25:35.889,1:25:41.819
that therefore there's no incentive for technological innovation, and you go back, in effect,

1:25:41.819,1:25:47.579
you switch back into this model 1 situation.

1:25:47.579,1:25:50.849
So again there are many situations where

1:25:50.849,1:25:55.059
you can imagine this,

1:25:55.059,1:26:01.639
if you emphasize the fluid possibilities of this,

1:26:01.639,1:26:08.479
and that's why this language of a law strikes me as a bit odd. Marx

1:26:08.479,1:26:12.879
generally speaking is always talking about the fluidity and the process

1:26:12.879,1:26:15.319
and the capacity. And then

1:26:15.319,1:26:17.170
turned up with

1:26:17.170,1:26:21.110
a pretty rigid statement about the law of rising organic composition of capital as he

1:26:21.110,1:26:22.079
does here.

1:26:22.079,1:26:24.840
He clearly thought

1:26:24.840,1:26:27.869
that he'd cracked the problem

1:26:27.869,1:26:31.099
of the falling rate of profit.

1:26:31.099,1:26:35.340
And that was to come in Volume Three of Capital,

1:26:35.340,1:26:36.829
and he felt

1:26:36.829,1:26:42.139
it very important to insert into Volume One of Capital his arguments about organic

1:26:42.139,1:26:47.030
value composition and technical composition, as a foundation for the Volume 3 argument.

1:26:47.030,1:26:50.530
He never completed the Volume 3 argument,

1:26:50.530,1:26:54.969
it's a bit all over the place and as i've suggested to you, the language there switches from

1:26:54.969,1:26:57.320
law to law of a tendency to tendency,

1:26:57.320,1:27:03.389
and in any case, there are all these counteracting forces which exist.

1:27:03.389,1:27:08.359
But I think as always with Marx, he's onto something which is important

1:27:08.359,1:27:13.559
by the way he has voiced it here is in this seemingly rigid

1:27:13.559,1:27:19.550
form which as many subsequent

1:27:19.550,1:27:23.559
theorists have suggested, doesn't really work.

1:27:26.209,1:27:30.139
And these kinds of models by the way have now being worked out mathematically,

1:27:30.139,1:27:31.559
so if you want

1:27:31.559,1:27:37.170
a good mathematical version of all of this, you go read somebody like Morishima,

1:27:37.170,1:27:39.710
'Marx's economics'.

1:27:39.710,1:27:42.799
Morishima is a first-rate mathematician,

1:27:42.799,1:27:46.739
and works all these things out mathematically, and basically says: there are instances

1:27:46.739,1:27:49.329
where a falling rate of profit could occur,

1:27:49.329,1:27:53.619
but there are plenty of instances where it won't.

1:27:53.619,1:27:59.599
But what Morishima emphasizes is the destabilizing role of technological change.

1:27:59.599,1:28:02.449
Which I think is right.

1:28:02.449,1:28:05.190
and if you look at our own society and we look at

1:28:05.190,1:28:08.069
the patterns of technological change,

1:28:08.069,1:28:11.389
and its relationship to worker control,

1:28:11.389,1:28:14.199
and the production of a relative surplus population and

1:28:14.199, 1:28:16.199
the role that that relative surplus population

1:28:16.199,1:28:17.019
has played,

1:28:17.019,1:28:18.839
say in Europe in particular,

1:28:18.839,1:28:22.519
has been particularly strong.

1:28:22.519,1:28:27.650
I mean, the structural unemployment in Europe is going on now for about twenty years,

1:28:28.860,1:28:33.540
and this is one of the ways in which you try to discipline the labour force all of the time,

1:28:33.540,1:28:35.260
hasn't worked too well,

1:28:35.260,1:28:38.360
but that's part of the dynamics of it.

1:28:38.360,1:28:40.749
In this country, of course, we've had

1:28:40.749,1:28:45.659
no need for that, the dynamics have gone on,

1:28:45.659,1:28:49.320
the insecurity generated amongst the working-class,

1:28:49.320,1:28:58.780
labour organization has not been that strong, labour organizations being effectively minimized,

1:28:58.780,1:29:04.239
the powers of technological change are not resisted,

1:29:04.239,1:29:07.380
and so capitalists can pretty much have it their own way,

1:29:07.380,1:29:11.569
and in addition if they can't have it their own way here, they go to China or

1:29:11.569,1:29:13.820
maquila zones or whatever.

1:29:13.820,1:29:17.080
But again, I think it's very important to recognize,

1:29:17.080,1:29:19.999
i think i mentioned this before,

1:29:19.999,1:29:28.300
that one of the biggest sources of insecurity in the labour force

1:29:28.300,1:29:35.300
and loss of jobs in this country is technological change, not outsourcing.

1:29:36.019,1:29:38.840
So, again, I think Marx is correct

1:29:38.840,1:29:42.650
very much to talk about the power of technological change

1:29:42.650,1:29:46.199
to structure an industrial reserve-army,

1:29:46.199,1:29:48.420
and create an industrial-reserve army,

1:29:48.420,1:29:58.010
and to put pressures on workers so that they don't create a problem.

1:29:58.010,1:30:00.859
As we've seen over the last 30 years,

1:30:00.859,1:30:03.469
capitalists have not shared with the workers any

1:30:03.469,1:30:09.730
of the gains that have been had from rising productivity, capitalists have taken it all.

1:30:09.730,1:30:15.840
Workers essentially won nothing

1:30:15.840,1:30:19.679
in terms of the benefits that come from rising productivity, which was not true in

1:30:19.679,1:30:25.369
the 1950s-60s, was not even true in the 1920s.

1:30:25.369,1:30:28.540
So that, this is a very unique period in

1:30:28.540,1:30:38.829
US history where none of those gains have been shared.

1:30:42.469,1:30:48.599
Ok, so if there are no more questions, lets go on to look at section 4.

1:30:48.599,1:30:51.879
We get three forms of

1:30:51.879,1:30:53.639
an industrial reserve army:

1:30:53.639,1:30:58.919
floating, the latent and the stagnant.

1:31:03.400,1:31:10.400
The floating, essentially are

1:31:11.210,1:31:15.760
workers who've been fully proletarianized,

1:31:15.760,1:31:22.590
fully integrated into the commodification of labour-power

1:31:22.590,1:31:29.230
and have been employed but were thrown out by these

1:31:29.230,1:31:34.210
waves of technological innovation which create unemployment.

1:31:34.210,1:31:38.699
They are people who are in the workforce and out of the workforce, depending upon

1:31:38.699,1:31:41.959
the industrial cycle.

1:31:41.959,1:31:47.619
They are typically registered as unemployed,

1:31:47.619,1:31:50.150
people seeking employment,

1:31:50.150,1:31:53.690
who've got unemployed.

1:31:53.690,1:31:56.170
So you can get a measure of the floating population in this country

1:31:56.170,1:31:58.940
by looking at data on the unemployed,

1:31:58.940,1:32:03.920
the data is not that great,

1:32:03.920,1:32:07.519
and the category of the 'discouraged worker' ought to be in there,

1:32:07.519,1:32:09.229
as well, which is

1:32:09.229,1:32:14.139
workers who have just given up trying to get a job.

1:32:14.139,1:32:17.840
So, you've got a floating population.

1:32:17.840,1:32:22.449
The latent population

1:32:22.449,1:32:29.449
are groups in the population who have not yet been fully proletarianized.

1:32:29.639,1:32:37.889
Marx frequently mentions the way in which women and children were drawn into

1:32:37.889,1:32:40.749
the labour force.

1:32:40.749,1:32:47.599
In his time one of the biggest reserves was of course the peasant, agrarian population

1:32:47.599,1:32:51.119
increasingly thrown off the land.

1:32:51.119,1:32:53.640
And that has not gone away,

1:32:53.640,1:32:56.530
if you look at

1:32:56.530,1:33:01.019
Mexico or India and so on, you'll find an agrarian population that's increasingly being forced off

1:33:01.019,1:33:05.449
the land into the cities as a latent reserve.

1:33:05.449,1:33:11.250
Now, the point about the latent reserve is they have to be mobilized in some way.

1:33:11.250,1:33:14.729
By what processes are they going to be mobilized?

1:33:14.729,1:33:18.409
But there are other latent reserves also,

1:33:18.409,1:33:23.570
there is the petit-bourgeoisie, an independent petit-bourgeoisie.

1:33:23.570,1:33:27.669
An artisan and self-employed population

1:33:27.669,1:33:33.070
that can be forced into the labour force.

1:33:33.070,1:33:38.480
So that, when we start to talk about latent reserves,

1:33:38.480,1:33:47.169
we're talking about a wide range of population possibilities.

1:33:47.169,1:33:54.859
And as soon as we start to think of it geographically,

1:33:54.859,1:33:56.689
then we would say,

1:33:56.689,1:34:03.080
the floating reserve is usually around where capital is,

1:34:03.080,1:34:08.639
the latent reserve is all over the world and can be mobilized.

1:34:08.639,1:34:14.260
In the 19th century you would mobilize coolie labour and take it to South-Africa,

1:34:14.260,1:34:17.090
Fiji or whatever.

1:34:17.090,1:34:23.590
You'd mobilize Indian labour and take it to Trinidad,

1:34:23.590,1:34:27.400
those kinds of things. So the surplus population can be

1:34:27.400,1:34:35.179
global, and increasingly we saw them within Europe,

1:34:35.179,1:34:42.379
in the late 1960s, there was a labour shortage in Europe, and labour was well-organized,

1:34:42.379,1:34:44.679
strongly unionized,

1:34:44.679,1:34:50.559
socialist parties, communist parties,

1:34:50.559,1:34:54.570
and how was the shortage of labour addressed? Well, the French government

1:34:54.570,1:35:03.090
went out and organized a massive importation of labour from the Maghreb.

1:35:03.090,1:35:06.909
This was official government policy in the 1970s,

1:35:06.909,1:35:13.820
they brought them into the car industry and many other areas,

1:35:13.820,1:35:18.479
Maghrebians came into the factories,

1:35:18.479,1:35:21.880
it was a the government policy, which of course it's not anymore,

1:35:21.880,1:35:24.880
now they want to send them back (!)

1:35:24.880,1:35:30.619
but at that time there was a mobilization of this labour-surplus

1:35:30.619,1:35:33.059
from the Maghreb. And look at

1:35:33.059,1:35:37.209
the incredible significance of Mexico

1:35:37.209,1:35:41.449
to the economy of this country, in terms of the labour surplus in Mexico.

1:35:41.449,1:35:44.400
And it's not only in Mexico it's elsewhere, much of Latin-America,

1:35:44.400,1:35:47.400
but the Mexican labour-surplus

1:35:47.400,1:35:52.719
is absolutely crucial as a threat against American labour.

1:35:52.719,1:35:56.630
But also, it has to be mobilized, which is why all this stuff about immigration is getting

1:35:56.630,1:36:01.860
so interesting, because the more you
keep Mexican labour out, the less

1:36:01.860,1:36:06.699
the threat that labour surplus becomes,

1:36:06.699,1:36:10.500
and if you really shut it all out,

1:36:10.500,1:36:16.250
and we already see in agribusiness they're already hurting, they haven't got the labour-surplus.

1:36:16.250,1:36:20.780
Strawberries are rotting in the fields and apples aren't being picked of the trees because

1:36:20.780,1:36:25.439
the labour surplus isn't available.

1:36:25.439,1:36:29.449
Immigration stuff is there.

1:36:29.449,1:36:33.969
So the whole question of 'where is the labour surplus?'

1:36:33.969,1:36:38.369
and how it is mobilized,

1:36:38.369,1:36:40.939
the history of

1:36:40.939,1:36:45.909
where that latent surplus is and how it gets mobilized in relationship to the dynamics

1:36:45.909,1:36:53.769
of capital accumulation, is in itself a very fascinating history.

1:36:53.769,1:36:57.789
Countries like Sweden maintain full employment, and everybody says see:

1:36:57.789,1:36:59.739
you can have full employment,

1:36:59.739,1:37:05.780
in a country like Sweden and this, what Marx is talking about, doesn't work.

1:37:05.780,1:37:11.369
And the answer to that is: there are all these labourers coming from

1:37:11.369,1:37:14.699
Yugoslavia, Turkey, etc.

1:37:14.699,1:37:19.399
There was a labour-surplus available to the Swedes and they used it,

1:37:19.399,1:37:23.249
both as labour-control but also as

1:37:23.249,1:37:26.179
the necessary labour-surplus in order to fuel

1:37:26.179,1:37:31.940
accumulation of capital.

1:37:31.940,1:37:36.179
Now, the latent category…

1:37:36.179,1:37:39.900
or rather stagnant category,

1:37:39.900,1:37:45.170
is different from the latent,

1:37:45.170,1:37:48.360
in many way it's…

1:37:48.360,1:37:52.280
Marx says of it, this is about…

1:37:52.280,1:37:54.879
he's not very kind to groups of this sort

1:37:54.879,1:37:57.159
this is the lumpenproletariat,

1:37:57.159,1:38:01.750
the almost unemployable population.

1:38:01.750,1:38:08.109
In some cases you can have sympathy, because as he says, this is the hospital

1:38:08.109,1:38:12.280
of the reserve army.

1:38:12.280,1:38:15.920
And they're people who are so destroyed

1:38:15.920,1:38:19.820
mentally or physically, that it's very hard to mobilize them

1:38:19.820,1:38:22.489
into the population. You can in extremis,

1:38:25.139,1:38:30.459
I guess it's what William Julius Wilson liked to call the 'underclass',

1:38:30.459,1:38:32.219
a term I don't like,

1:38:32.219,1:38:36.479
anymore than I like the term 'lumpenproletariat', but what Marx is talking about is that

1:38:36.479,1:38:40.839
there's a group in the population that has

1:38:40.839,1:38:46.699
been in the proletariat but which can no longer function,

1:38:46.699,1:38:57.920
for a variety of reasons, as part of that proletariat.

1:38:57.920,1:39:06.349
This then leads into the production of pauperism,

1:39:09.819,1:39:12.719
and as he says on p.798:

1:39:12.719,1:39:15.290
“The more extensive, finally,

1:39:15.290,1:39:19.330
the pauperized sections of the working class and the industrial reserve army,

1:39:19.330,1:39:26.150
the greater is official pauperism. This is the absolute general law of capitalist accumulation.”

1:39:26.150,1:39:28.389
Again this is strong language,

1:39:28.389,1:39:33.469
"the absolute general law of capitalist accumulation",

1:39:33.469,1:39:36.090
but then of course,

1:39:36.090,1:39:37.580
he introduces his modifier:

1:39:37.580,1:39:40.580
“like all other laws it is modified in its working by many circumstances,

1:39:40.580,1:39:43.969
the analysis of which does not concern us here.”

1:39:43.969,1:39:52.809
Nevertheless, it's a very strong statement but its got its modifier.

1:39:52.809,1:39:56.880
So, “The first word of this adaptation is the creation of a relative surplus population,

1:39:56.880,1:39:59.139
or industrial reserve army.

1:39:59.139,1:40:05.970
Its last word is the misery of constantly expanding strata of the active army of labour,

1:40:05.970,1:40:12.709
and the dead weight of pauperism.”

1:40:12.709,1:40:16.369
He says right at the bottom: “We saw in Part IV, when analysing the production of relative

1:40:16.369,1:40:19.419
surplus-value,

1:40:19.419,1:40:24.549
that within the capitalist system all methods for raising the social productivity of labour

1:40:24.549,1:40:29.550
are put into effect at the cost of the individual worker;

1:40:29.550,1:40:33.940
that all means for the development of production undergo a dialectical inversion

1:40:33.940,1:40:38.350
so that they become means of domination and exploitation of the producers;

1:40:38.350,1:40:42.139
they distort the worker into a fragment of a man,

1:40:42.139,1:40:45.480
they degrade him to the level of an appendage of a machine,

1:40:45.480,1:40:50.219
they destroy the actual content of his labour by turning it into a torment;

1:40:50.219,1:40:52.789
they alienate [entfremden] from him

1:40:52.789,1:40:55.479
the intellectual potentialities of the labour process

1:40:55.479,1:41:01.149
in the same proportion as science is incorporated in it as an independent power;

1:41:01.149,1:41:04.179
they deform the conditions under which he works,

1:41:04.179,1:41:08.629
subject him during the labour process to a despotism the more hateful for its meanness;

1:41:08.629,1:41:12.729
they transform his life-time into working-time, and drag his wife and child

1:41:12.729,1:41:15.449
beneath the wheels of the juggernaut of capital.

1:41:15.449,1:41:18.369
But all methods for the production of surplus-value are at the same time

1:41:18.369,1:41:20.369
methods of accumulation,

1:41:20.369,1:41:23.459
and every extension of accumulation becomes, conversely,

1:41:23.459,1:41:26.459
a means for the development of those methods.

1:41:26.459,1:41:30.260
It follows therefore that in proportion as capital accumulates,

1:41:30.260,1:41:36.269
the situation of the worker, be his payment high or low, must grow worse.

1:41:36.269,1:41:38.629
Finally, the law which always holds the relative surplus population

1:41:38.629,1:41:41.629
or industrial reserve army in equilibrium

1:41:41.629,1:41:46.429
with the extent and energy of accumulation rivets the worker to capital more firmly

1:41:46.429,1:41:50.529
than the wedges of Hephaestus held Prometheus to the rock.

1:41:50.529,1:41:58.369
It makes an accumulation of misery a necessary condition,

1:41:58.369,1:42:03.489
corresponding to the accumulation of wealth.

1:42:03.489,1:42:07.989
Accumulation of wealth at one pole is, therefore, at the same time accumulation of misery,

1:42:07.989,1:42:14.989
the torment of labour, slavery, ignorance, brutalization and moral degradation at the opposite pole,

1:42:15.079,1:42:26.409
i.e. on the side of the class that produces its own product as capital.”

1:42:28.909,1:42:31.479
This is of course the famous thesis

1:42:31.479,1:42:36.579
of the increasing immiseration of the proletariat,

1:42:36.579,1:42:44.280
which is a necessary condition of capitalist accumulation.

1:42:44.280,1:42:47.829
And you'll find people saying immediately: 'well that's not true, let's face it,

1:42:47.829,1:42:52.840
the working-class in this country is much better off than it was a 100 years ago.

1:42:52.840,1:42:59.389
And yeah, okay some of this stuff may be going on in China, Bangladesh, Indonesia etc.

1:42:59.389,1:43:04.310
but let's face it: there has been progress, for many of the workers of the world,

1:43:04.310,1:43:10.559
even when they weren't particularly united'.

1:43:10.559,1:43:13.039
So, this is one of Marx his

1:43:13.039,1:43:16.999
predictions, if you want to call it that, or statements,

1:43:16.999,1:43:21.329
which is often used

1:43:21.329,1:43:24.650
both in a dogmatic way on the part of some marxists, who say

1:43:24.650,1:43:28.530
'see this is what capitalism is bound to do',

1:43:28.530,1:43:30.550
and an equally dogmatic way by a lot of non-marxists

1:43:30.550,1:43:32.750
who say 'well this is what Marx says is bound to happen,

1:43:32.750,1:43:38.929
it didn't happen that way'.

1:43:38.929,1:43:45.050
I think here again it's very important to go back to the assumptions,

1:43:45.050,1:43:49.810
this statement is a statement which is contingent upon

1:43:49.810,1:43:55.219
the dynamics of accumulations as Marx has set this up.

1:43:55.219,1:43:57.959
This is Volume One of Capital,

1:43:57.959,1:44:02.610
we are simply looking at the dynamics of production,

1:44:02.610,1:44:07.829
what goes on within the realm of production

1:44:07.829,1:44:12.929
and within the realm of capital accumulation.

1:44:12.929,1:44:24.739
From that standpoint what we will find is that, at the end of Volume Two,

1:44:24.739,1:44:26.670
Marx will start to talk about

1:44:26.670,1:44:32.590
the problems of effective demand,

1:44:32.590,1:44:38.940
and that the only way which the effective demand problem could be solved

1:44:38.940,1:44:45.940
is by “rational consumption on the part of the working-class”.

1:44:46.510,1:44:52.669
And he means by “rational consumption on the part of the working-class”, two things.

1:44:52.669,1:44:56.679
First, that the working class should have sufficient resources

1:44:56.679,1:45:04.159
available to be able to consume the goods that capitalists produce,

1:45:04.159,1:45:09.340
and secondly, the working class will have acquired the consumption habits

1:45:09.340,1:45:17.099
whereby it will utilize its money incomes

1:45:17.099,1:45:23.409
in ways which fit with the dynamic of accumulation.

1:45:23.409,1:45:27.520
So at the end of Volume 2 we find bourgeois philanthropy is going in

1:45:27.520,1:45:30.709
and teaching the working class how to consume right.

1:45:30.709,1:45:34.949
So they can have a rational consumption from the standpoint

1:45:34.949,1:45:38.780
of the dynamics of accumulation process.

1:45:38.780,1:45:44.499
So the end of Volume 2 gives you a completely different story to this one.

1:45:44.499,1:45:49.739
This one says, if capitalism worked like this,

1:45:49.739,1:45:52.039
just like this,

1:45:52.039,1:45:57.019
then what what you get? You would get this.

1:45:57.019,1:46:01.399
Can we see some of this going on in the world economy?

1:46:01.399,1:46:05.409
The answer is 'yes'.

1:46:05.409,1:46:11.229
You go to China, or Indonesia or Bangladesh

1:46:11.229,1:46:13.899
and you'll see it,

1:46:13.899,1:46:17.869
appalling conditions of exploitation

1:46:17.869,1:46:22.449
you see people being forced off the land, forced into the cities

1:46:22.449,1:46:26.519
the latent reserves are being mobilized all over the place

1:46:26.519,1:46:28.789
by all kinds of mechanisms.

1:46:28.789,1:46:33.570
So yes, you'll see the latent reserves being mobilized.

1:46:33.570,1:46:35.659
And indeed you will see

1:46:35.659,1:46:42.659
agony and toil, and indeed you will see the accumulation of wealth at one pole,

1:46:43.260,1:46:48.119
right now I don't think anybody would deny that capitalism is about the accumulation of wealth,

1:46:48.119,1:46:53.319
at that pole, and there's huge accumulation of wealth going on.

1:46:53.319,1:46:57.949
But where is the production going on that backs up that huge accumulation of wealth

1:46:57.949,1:47:04.379
and what are the conditions of labour which exist?

1:47:04.379,1:47:09.369
Well, you can find out,

1:47:09.369,1:47:16.369
NGOs that have reports and Oxfam and others have reports on this sort of thing.

1:47:17.729,1:47:21.279
Labor organizations have reports on this kind of thing, you'll find reports of this sort

1:47:21.279,1:47:25.909
in UN reports and so on.

1:47:25.909,1:47:28.909
So, yes indeed, the accumulation of wealth at one pole,

1:47:28.909,1:47:32.909
and accumulation of misery at the other pole.

1:47:33.599,1:47:36.500
In many respects over the last thirty years

1:47:36.500,1:47:39.070
the accumulation of wealth at

1:47:39.070,1:47:43.649
one pole has gone astronomically high,

1:47:43.649,1:47:47.119
and the accumulation of misery at the other end has

1:47:47.119,1:47:49.989
gone very much in the other direction.

1:47:49.989,1:47:54.179
In other words, in many respects,

1:47:54.179,1:47:58.880
whereas in the 1950s-60s when you had strong labour organizations

1:47:58.880,1:48:03.199
and social democratic parties and

1:48:03.199,1:48:06.199
see a lot of political pressure

1:48:06.199,1:48:09.449
on the consumer side and all the rest of it,

1:48:09.449,1:48:13.419
you'd argue that in aggregate,

1:48:13.419,1:48:18.889
the whole question of rational consumption was crucial

1:48:18.889,1:48:21.090
to get the people to consume automobiles.

1:48:21.090,1:48:26.079
How do you do that? You build cities where the only way you can get around is with automobiles,

1:48:26.079,1:48:29.379
things of that sort.

1:48:29.379,1:48:33.679
which means that workers have to have money to buy automobiles

1:48:33.679,1:48:37.929
and buy the gasoline and all the things that go with it.

1:48:37.929,1:48:40.770
So, indeed,

1:48:40.770,1:48:43.310
this was not happening in the core

1:48:43.310,1:48:50.380
parts of the world where capitalism was very well-established,

1:48:50.380,1:48:54.299
but since the neo-liberal agenda has taken off,

1:48:54.299,1:48:59.699
since the 1970s or so this has increasingly been happening.

1:48:59.699,1:49:03.629
Working class in this country hasn't gone anywhere

1:49:03.629,1:49:06.300
but workers have been absorbed into,

1:49:06.300,1:49:09.919
about two billion of them since 1970,

1:49:09.919,1:49:16.079
have been mobilized in from the latent reserves into

1:49:16.079,1:49:18.360
active membership of the proletariat,

1:49:18.360,1:49:20.569
not least in China.

1:49:20.569,1:49:23.750
But also of course in the Soviet Union, the ex-Soviet Union,

1:49:23.750,1:49:26.519
and also in several of those countries like India

1:49:26.519,1:49:30.909
and so on which had large agrarian bases,

1:49:30.909,1:49:36.420
large agrarian bases sometimes in Latin-America too.

1:49:36.420,1:49:38.739
So that the latent reserves have been

1:49:38.739,1:49:45.439
really pulled in over the last thirty years

1:49:45.439,1:49:49.040
and you'd argue that you're pretty close,

1:49:49.040,1:49:52.380
you're much closer to this story that's told at the end of Volume One now,

1:49:52.380,1:49:55.380
than you were 30 years ago.

1:49:55.380,1:49:59.510
And that, in a curious kind of way, is predictable

1:49:59.510,1:50:03.300
you see, because what Marx has done, and remember this,

1:50:03.300,1:50:09.050
what Marx has done is to take

1:50:09.050,1:50:13.239
the words of the classical political-economists seriously

1:50:13.239,1:50:19.789
and imagined we are in a perfectly competitive market society.

1:50:19.789,1:50:24.219
In other words he's taken the utopian vision,

1:50:24.219,1:50:26.510
liberal vision,

1:50:26.510,1:50:28.880
taken it at its word

1:50:28.880,1:50:32.049
and then said 'what is the consequence

1:50:32.049,1:50:37.059
of trying to construct a society around that utopian vision?'

1:50:37.059,1:50:39.219
Adam Smith said what?

1:50:39.219,1:50:41.100
The consequence is

1:50:41.100,1:50:44.820
everybody's gonna be better off,

1:50:44.820,1:50:48.860
Marx's argument is: the closer you get to that utopian vision,

1:50:48.860,1:50:51.329
the closer you get

1:50:51.329,1:50:57.959
to accumulation of wealth at one pole, and accumulation of misery at the other pole.

1:50:57.959,1:51:04.959
And that's how it was working in the 19th century and that's what the neo-liberal

1:51:05.249,1:51:06.989
economic and political project

1:51:06.989,1:51:11.559
has yielded us over the last thirty years.

1:51:11.559,1:51:16.939
In other words, it's brought us back much closer to the Volume One analysis

1:51:16.939,1:51:28.079
to the degree that capitalism has changed its trajectory and moved back

1:51:28.079,1:51:31.489
towards that liberal utopian vision,

1:51:31.489,1:51:36.280
in neo-liberal guise.

1:51:36.280,1:51:39.779
So, Marx in a sense has

1:51:39.779,1:51:45.409
taken the classical political-economists seriously, at their word,

1:51:45.409,1:51:47.199
step-by-step shown us

1:51:47.199,1:51:51.309
how the dynamic of capitalism works and brought us to the point of saying:

1:51:51.309,1:51:53.389
if capitalism works this way

1:51:53.389,1:51:56.630
and under the assumptions we've already laid out at the beginning

1:51:56.630,1:52:00.050
then this is the result that's going to come out.

1:52:00.050,1:52:07.050
So why would anybody in their right mind take this particular path?

1:52:08.069,1:52:13.549
Well, the answer is obvious: it's obviously the wealthy.

1:52:13.549,1:52:17.900
And who put us on this path, this neo-liberal path?

1:52:17.900,1:52:20.989
Well, it was the wealthy,

1:52:20.989,1:52:25.630
who decided they weren't getting enough.
The wealthy

1:52:25.630,1:52:28.530
weren't getting enough surplus-value,

1:52:28.530,1:52:32.190
wages and real wages were going too high,

1:52:32.190,1:52:35.949
we have to do something about it.
What are we gonna do? We launch into

1:52:35.949,1:52:42.469
this version of the model, really push the technological change big time

1:52:42.469,1:52:47.669
at the same time as we discipline labour and we outsource and do all those other things,

1:52:47.669,1:52:50.349
mobilize the latent population.

1:52:50.349,1:52:53.789
That's what globalization has been about,

1:52:53.789,1:53:00.400
it's about creating the necessary conditions which allow

1:53:00.400,1:53:06.199
this result to be achieved, in which there's an immense accumulation of wealth at one pole.

1:53:06.199,1:53:11.939
With no mind as to what goes on at the other pole.

1:53:11.939,1:53:16.510
What Marx does in section 5, as I've suggested to you, it to talk about what's going

1:53:16.510,1:53:21.920
all over the place, in Britain at that time.

1:53:21.920,1:53:31.280
We could write section 5 about conditions of labour in Nike factories,

1:53:31.280,1:53:37.149
GAP factories, all the rest of it, in Guatamala, in maquila zones,

1:53:37.149,1:53:40.619
in China etc. We could write this stuff,

1:53:40.619,1:53:43.939
it's not hard to go the reports in the press and

1:53:43.939,1:53:48.599
to go to reports in the press and assemble it.

1:53:48.599,1:53:52.889
In fact, when I used to set exams on this class,

1:53:52.889,1:53:57.150
about six years ago, one of the exams I had set was:

1:53:57.150,1:54:01.019
imagine you've had a letter from your parents at home,

1:54:01.019,1:54:05.339
saying 'Oh, I hear you're taking a course on Marx's Capital,

1:54:08.339,1:54:10.769
I guess it's pretty interesting,

1:54:10.769,1:54:15.420
once upon a time capital worked like that but thank god it's no longer like that.

1:54:15.420,1:54:19.429
Then I gave them a great wadge of newspaper accounts, from respectable sources like the

1:54:19.429,1:54:23.599
New York Times, about Indonesian factories and

1:54:23.599,1:54:25.809
Vietnamese factories and what's going on in Guatemala,

1:54:25.809,1:54:27.409
and what happened to Kathie Lee Gifford when

1:54:27.409,1:54:31.579
she found out that all of her nice clothing system was

1:54:31.579,1:54:35.849
being produced in Guatemala by thirteen-year-old kids who hadn't been paid for 6 months,

1:54:35.849,1:54:38.799
all those kinds of things.
So I said,

1:54:38.799,1:54:44.379
why don't you construct a letter back to your parents explaining this.

1:54:44.379,1:54:47.859
So they did, and then I asked them: well, did you send it?

1:54:47.859,1:54:50.919
They said: No! No!

1:54:50.919,1:54:54.629
It's actually really quite shocking right now, when you go into that literature, you don't have

1:54:54.629,1:54:57.400
to go far to find a vast literature

1:54:57.400,1:55:02.239
from which you construct the equivalent of section 5 around this thesis and you'll just show

1:55:02.239,1:55:06.519
how this is going on globally without any difficulty whatsoever.

1:55:06.519,1:55:09.030
And that again, I think, is in part,

1:55:09.030,1:55:11.900
a tribute to Marx's strength in analysis.

1:55:11.900,1:55:15.899
That he brings you to the point where you can see

1:55:15.899,1:55:20.679
clearly that a free market system will produce this result

1:55:20.679,1:55:23.099
to the degree that it's followed.

1:55:23.099,1:55:27.579
Including, by the way, and this is interesting: including the increasing centralization of

1:55:27.579,1:55:35.940
capital, that the free market system

1:55:35.940,1:55:38.510
is going to disrupt and destroy its own conditions

1:55:38.510,1:55:44.510
by actually tending more and more to oligopoly and monopoly etc.

1:55:44.510,1:55:48.630
and the centralization of capital
will go on a pace as well,

1:55:48.630,1:55:52.769
and if you ask yourself the question:
has the centralization of capital

1:55:52.769,1:56:00.969
increased dramatically over the last thirty years? i think the answer is: oh yes!

1:56:00.969,1:56:05.469
So, in fact you can defend Marx in a conditional way,

1:56:05.469,1:56:12.589
you can defend Marx in this statement, by saying: we know that's not the whole story

1:56:12.589,1:56:16.599
“Like all other laws, it is modified in its working by many circumstances, the analysis

1:56:16.599,1:56:20.179
of which does not concern us here.”

1:56:20.179,1:56:23.150
You can introduce the qualifier. but

1:56:23.150,1:56:29.949
it certainly tells us something about one of the major trends within a free-market capitalism,

1:56:29.949,1:56:34.009
and where those kinds are directed and where they're likely to go

1:56:34.009,1:56:36.689
and to the degree that they've gone there,

1:56:36.689,1:56:39.280
gives you a great deal, I think, of

1:56:39.280,1:56:42.479
confidence in Marx' analysis,

1:56:42.479,1:56:47.550
that this is the way the system works.

1:56:47.550,1:56:52.819
And how it got there and how it all started

1:56:52.819,1:56:54.230
is of course one of the other

1:56:54.230,1:56:56.499
big questions which we'll

1:56:56.499,1:56:59.639
deal with next time.

1:56:59.639,1:57:01.030
We're out of time now,

1:57:01.030,1:57:03.059
next time

1:57:03.059,1:57:06.659
i want you to read the whole of part 8,

1:57:06.659,1:57:08.929
short chapters,

1:57:08.929,1:57:11.479
not too long,

1:57:11.479,1:57:14.829
and we need to talk through this.

1:57:14.829,1:57:18.759
This is of course the historical origins of this whole system.

1:57:18.759,1:57:23.259
This, if you like, is where it's going to,

1:57:23.259,1:57:26.649
what we've been looking at here is where it's going go, all other things being equal which

1:57:26.649,1:57:28.699
they never are.

1:57:28.699,1:57:31.619
What we're now going to look at is where it came from,

1:57:31.619,1:57:33.459
and how it originated.

1:57:33.459,1:57:40.649
okay, so next week we'll take up part 8.

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