Class 4 French

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Class 4

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Je pense que la plupart d'entre vous ont dû trouver

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les trois chapitres, cette semaine, plus facile à lire

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que les trois chapitres précédents.

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Du moins, je l'espère.

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Because they're much more straightforward and

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I think…targeted than what went on before.

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Because we're seeing a macro-transition
in the argument which, if you reflect back

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on where we've been, we started

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by looking simply at the exchange of commodities,

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commodity on commodity, kind of a
barter situation, in which we imagined

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the socially necessary labour
time embodied in each commodity even though

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there was a pretty much impossible
thing, so we went from a

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C-C relation,

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Commodity to Commodity relation,

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then to the argument that

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in order for exchange to
become general, you need some

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way in which markets can function

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and that required the emergence of
the money form. So we went to the…

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Commodity exchange is mediated by money.

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And towards the end of the
money chapter we suddenly got into

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this inversion where we started to look at
a form of circulation which had

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this form: (M-C-M),

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in which the objective is different

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from the C-M-C.
And as Marx puts it,

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in the C-M-C circuit

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you're perfectly happy about the fact that you're
exchanging equivalence, because you're exchanging

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different qualities of shirts and shoes and
apples and oranges and all the rest of it.

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And you're perfectly happy

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with the idea that you end up with the
same value as you started out with, because

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you're simply interested in the use-value.

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When we get to this, however,
as Marx points out, it's an absurd idea

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that you would actually take money and go
through all of the risk, and of all the problems,

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going through this circulation process,
to end up with the same amount at the end.

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So he kind of says: the only way in which this
circulation process makes sense is

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by adding in Delta-M or as
he's going to define it: the surplus value.

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And that poses the big question: where
does that surplus value come from?

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When the laws of exchange are very explicit,
as they are laid out in classical political economy

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and all the rest of it: that in
perfectly functioning markets

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you should have equivalents in exchange, that:

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an equivalence here, an equivalent there…
so where does the extra come from?

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And the answer is going to be that there's going
to be a commodity which has the capacity to

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produce more value than it itself has, and that's
labour-power. So that's the answer, if you like.

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So these three chapters are
really about this transition,

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where we're looking at

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what's going on in the market.
So that's the story of these three chapters.

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But as usual with Marx there
are some conundrums

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and some oddities and things that we need to

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sort of work out. And on the very first page

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of this chapter, which opens this

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analysis on…the general formula for capital,

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he poses an issue which I've

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actually raised a number of times already.
But here, I think, it takes on

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a more meaningful form and a form
that we need to reflect upon, because,

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I think, it has considerable
significance for how we understand

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our current situation.

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In effect, what he does
on this first page

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is to point out that there
is both a logical origin of capital,

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but there is also a historic origin.

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And we have to pay
attention to that historical origin.

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So he says: "The circulation of commodities
is the starting point of capital.

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The production of commodities
and their circulation

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in its developed form, namely trade, form the
historic presuppositions under which capital arises."

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So, the historic presuppositions are
important. "World trade and the world market

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date from the sixteenth century, and from then
on the modern history of capital starts to unfold."

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Here he's talking about the
historic origins of capitalism.

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And of course, by mentioning the sixteenth,
century, taking up an argument that Wallerstein

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made a great deal of in his world systems

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argument about the formation of the
world markets, sixteenth-century onwards,

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that this is the origins of capital.

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And towards the bottom of this page he says:

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"Historically speaking, capital invariably first
confronts landed property in the form of money;

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in the form of monetary wealth,

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merchants' capital and usurers' capital."

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And we're going to find this
question of the positionality

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of merchants' capital and usurers' capital,

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or as we would now call it 'finance capital',
much more respectable to call it that.

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What's the role of them in
relationship to industrial capital?

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And then he makes the logical argument:
"However, we do not need to look back at the history

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of capital's origins.(…)

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Every day the same story is
played out before our eyes."

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That capital enters "in the shape of
money, money which has to be transformed into

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capital by definite processes."

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Now the immediate implication of this
is that money is not necessarily capital.

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Capital is money used in a certain way.

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So not all money is capital.

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I can create capital by just simply taking
the money in my pocket and using it in a certain

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way, launching it into this form of circulation.

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I can take capital out of circulation simply
by saying: Oh, I'm not going to do that anymore,

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I'm going to take all this
money and put it back in my pocket.

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So if you ask the question:

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'What's the total amount of money in society?', and
'What is the total amount of capital in society?',

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you're asking two fundamentally different questions.

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And you have to understand that capital is created

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by a social decision, on the
part of some people somewhere

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to use capital in this particular way.

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And it is that process of
conversion of money into capital which

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Marx really wants to look at in these sections.

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"The first distinction", he says, is really

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in their "form of circulation".

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And he here goes back over some of the stuff
he earlier did in the chapter on money,

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he kind of repeats some of this stuff about:

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well going from C to M and
M to C are two different operations.

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In the same way,

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starting with M and going to M is
a different kind of operation from this one.

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So, you know, and then he gets into

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this notion immediately, as he
says on the middle of page 248:

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"…the circulatory process M-C-M
would be absurd and empty

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if the intention were,
by using this roundabout route,

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to exchange two equal
sums of money, £100 for £100."

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But, then there's something else
in here which is very important, which is:

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What is done with the money when it's received.

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As he says, on page 249, towards
the bottom, two thirds down:

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"The money therefore is not
spent, it is merely advanced."

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That is, the capitalist uses the money and
departs with the money but doesn't spend it in

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the ordinary sense on consumption.

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(He) advances the money

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in such a way to get back that money plus

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the profit, the surplus value.

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So the intent of the circulatory
process is what really matters.

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The exchange of use-values is one thing.

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And that is about the satisfying of

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a social need, or of a particular
individual need or want, or desire and so on.

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But then the other is this
quantitatively different amount

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of value, which you're seeking to acquire by

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this form of circulation:
the M-C-M' prime circulation.

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And that leads into his definition, which is a
very important definition on page 251, which says:

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"The process M-C-M does not therefore owe
its content to any qualitative difference

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between these extremes, for they
are both money, but solely to quantitative changes.

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This increment or excess over
the original value I call surplus-value."

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A fundamental category in
Marxian Theory: surplus-value.

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And the big question that is
going to be posed, of course is:

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'What is surplus-value, where does it come from,
what is it all about?'

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On top of page 252, he then elaborates on this
a bit: "The value originally advanced, therefore

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not only remains intact while in circulation,
but increases its magnitude, adds to itself

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a surplus-value, or is valorized."

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The valorisation of capital
is about the way in which

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the original intent to gain more money, is
realized at the end of the circulation process.

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And he then goes on to say:
"And this movement converts it into capital."

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Now, several times I've made the
kind of comment, that Marx

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is always interested in processes,
rather than things.

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And if you ask yourself the question:

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'Well, what is capital?' The answer
is immediately, I think, foretold in this phrase:

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It's value in motion.

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It is a circulation process.

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It is value which is moving

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in such a way as to create more value.

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And that is the definition of capital. When he says:
'And this movement converts it into capital.'

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So it is the movement that does it.

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It's not a thing.

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It's not that I go and look at something,
and say: 'Ah, that's capital.'

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That's not what happens.

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As far as Marx is concerned it's
when something is put in motion.

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Only when it is put in motion is it capital.
And when the motion ceases it is not capital.

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So it is this process-definition of capital,

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which is fundamental to Marx's argument.

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And as I already pointed out,

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all of us can go out and create
immense amounts of capital tomorrow,

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if we take all of our money in our pockets,
and start using it in this way.

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We could also get rid of a lot of capital tomorrow,
if we went around and took away all that money

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and said: 'Okay, we're just going to spend it.'

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And not use it in this kind of way.

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But this then also creates another interesting
element in the story. Because on page 253

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he points out the following:

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"The simple circulation of commodities…"

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"…the appropriation of use-values,
the satisfaction of needs…" etc.

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"As against this, the circulation
of money as capital is an end in itself,

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for the valorization of value takes place
only within this constantly renewed movement.

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The movement of capital is therefore limitless."

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Now, remember the chapter of money.

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When he talked about the way in
which money is a form of social power,

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and as a form of social power
it is potentially limitless.

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Therefore there are no limits on how much money,

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and that kind of social power you might accumulate.

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Whereas, there is a limit on the number of
use-values you can reasonably hoard, the numbers of

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shoes, numbers of Ferrari's, the number of yachts,
the number of houses. All those kinds of things.

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There is a limit, whereas this is limitless.

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So this is a form of circulation then,
that tends always towards breaking limits.

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Extending, expanding, growing, by definition.

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Movement. It must move, it must expand.

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It must always be finding delta M, more delta M.

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Whereas in a society governed by
simply exchange of use-values,

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we wouldn't have that imperative.

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Now, I earlier on posed
this question in Marx's Capital:

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What is socially necessary?

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But what we're seeing here is Marx immediately
making the argument, that what is socially

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necessary for the survival of
capitalism is its constant expansion,

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its constant growth.

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And that its striving towards limitless growth.

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It may not get there, it may encounter
all kinds of limits, it may crash,

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it may destroy the environment, it may destroy
politics, it may do all kinds of horrible things.

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But capitalism as a system
is socially necessarily connected

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to this drive for surplus-value.

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Which leads him on page 254 to
define the role of the capitalist.

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Now again remember, in Capital

0:14:54.040,0:14:57.960
we're dealing with roles, not individuals.

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I said, you and I can
become capitalists immediately.

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We can stop being capitalists.

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Some of us may to some
degree already be mini-capitalists.

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I have a pension fund which actually invests
in things. So in a sense I'm a bit of a capitalist.

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It's in the stock market.
The pension fund is in there.

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So it is the role which we are going
to look at, the role of the capitalist.

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And what Marx says is this on page 254:
"As the conscious bearer of this movement,

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the possessor of money becomes a capitalist.

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His person, or rather his pocket,

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is the point from which the money starts,
and to which it returns.

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The objective content of the
circulation we have been discussing

0:15:51.140,0:15:55.840
is his subjective purpose, and it is only in
so far as the appropriation of ever more wealth in

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the abstract is the sole driving force behind
his operations that he functions as a capitalist…"

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That is - if you're a capitalist you
have to be seeking that expansion.

0:16:08.950,0:16:10.920
Seeking the surplus value.

0:16:10.920,0:16:14.790
Gaining the surplus value.
Creating a world around you in which

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that surplus value can be realized,
in which your capital can be valorized.

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The implication of this is that: "Use-values
must therefore never be treated as the immediate

0:16:27.820,0:16:30.650
aim of the capitalist;

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nor must the profit on any single transaction. His
aim is rather the unceasing movement of profit-making.

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This boundless drive for enrichment,
this passionate chase after value, is common

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to the capitalist and the miser;

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but while the miser is merely a capitalist
gone mad, the capitalist is a rational miser.

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The ceaseless augmentation of value, which the miser
seeks to attain by saving his money from circulation,

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is achieved by the more acute capitalist by means of
throwing his money again and again into circulation."

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The literary example of that, which I always

0:17:14.029,0:17:18.620
loved is Balzac's novel "Eugenie Grandet",

0:17:18.620,0:17:21.020
which almost certainly Marx had read.

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And the beginning of the novel has this miser

0:17:25.020,0:17:30.710
Grandet, with all of the gold
hidden away in his house somewhere.

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And in the end of the story

0:17:33.090,0:17:37.910
he puts all the gold in bags, and he's riding
into town in order to convert it into rents,

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so he can get a rate of return

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//in the money market on it.
So this is a story of //

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the miser and the capitalist.
And the conversion

0:17:50.440,0:17:56.060
of the miser into the capitalist.
I often wonder if Marx had that story

0:17:56.060,0:17:58.280
in mind when he wrote this

0:17:58.280,0:18:02.690
brief thing. He read all
of Balzac. We know that.

0:18:02.690,0:18:08.490
So almost certainly, I suspect he
had that in mind when when he wrote this.

0:18:08.490,0:18:12.180
This then leads

0:18:12.180,0:18:19.180
to a further contemplation on pages 255-256
on the definition of capital.

0:18:20.030,0:18:27.030
Because, while capital is value in motion, it
also takes on these physical forms.

0:18:28.279,0:18:32.429
It is objectified in these
physical forms, and it

0:18:32.429,0:18:37.160
has to be objectified in physical forms.

0:18:37.160,0:18:41.670
As he says: "It is constantly changing
from one form into another,

0:18:41.670,0:18:45.450
without becoming lost in this
movement; it thus becomes transformed

0:18:45.450,0:18:50.880
into an automatic subject…
We reach the following elucidation:

0:18:50.880,0:18:54.570
capital is money, capital is commodities."

0:18:54.570,0:18:58.159
That is, when we look at this form
of circulation: we see capital here exists

0:18:58.159,0:19:02.390
in money form; here it exists in commodity form;

0:19:02.390,0:19:05.440
here it comes back into the money form.

0:19:05.440,0:19:14.980
So in terms of its objectifications
it's in these forms.

0:19:14.980,0:19:21.790
He then goes on: "In truth, however,
value is here the subject of a process

0:19:21.790,0:19:27.080
in which, while constantly assuming
the form in turn of money and commodities,

0:19:27.080,0:19:33.510
it changes its own magnitude, throws off surplus
value from itself considered as original value,

0:19:33.510,0:19:37.240
and thus valorizes itself independently.

0:19:37.240,0:19:40.540
For the movement in the course of which it
adds surplus-value is its own movement, its

0:19:40.540,0:19:43.800
valorization is therefore self-valorization.

0:19:43.800,0:19:49.010
By virtue of being value, it has
acquired the occult ability to add value to itself.

0:19:49.010,0:19:57.390
It brings forth living offspring,
or at least lays golden eggs."

0:19:57.390,0:20:06.880
Two things about this -
First: value is a subject.

0:20:06.880,0:20:12.060
Value is here the subject of a process,

0:20:12.060,0:20:19.230
because the capitalist is a bearer
of this quest for surplus-value.

0:20:19.230,0:20:24.740
And so Marx is kind of saying:
'The capitalist doesn't have necessarily any choice.

0:20:24.740,0:20:31.240
If they're going to be a
capitalist this is what they have to do.'

0:20:31.240,0:20:33.290
And what that means is that

0:20:33.290,0:20:40.240
instead of analyzing what individual
capitalists do, we analyze the circulation of value

0:20:40.240,0:20:44.730
in these terms, in order to
understand what it is that capitalists do.

0:20:44.730,0:20:50.700
What is it that drives them
to do the things they do?

0:20:50.700,0:20:57.700
The second thing about this passage is,
there is heavy irony involved.

0:20:58.190,0:21:03.400
When Marx talks about the way of being value:
"(..)it has acquired the occult ability to add value

0:21:03.400,0:21:09.500
to itself. It brings forth living
offspring, or at least lays golden eggs."

0:21:09.500,0:21:15.409
Now, Marx often uses irony
and often uses heavy jokes.

0:21:15.409,0:21:21.320
And you have to be careful not
to take the jokes as actually serious.

0:21:21.320,0:21:26.500
Of course he's talking about the world of appearance.

0:21:26.500,0:21:31.289
It appears as if it's got occult, and much
of capital is going to be about elucidating

0:21:31.289,0:21:42.210
what goes on behind that apparent occult
quality of laying golden eggs for itself.

0:21:42.210,0:21:46.210
I once was invited to be an examiner on a

0:21:46.210,0:21:51.110
doctoral thesis in philosophy
which actually took this passage seriously,

0:21:51.110,0:22:00.450
and went on and on about
Marx's occult theory of value-creation.

0:22:00.450,0:22:03.659
And I said something like: 'Well, did you read
the section on fetishism of commodities?

0:22:03.659,0:22:06.880
Didn't you realize that actually
what Marx is going to do here,

0:22:06.880,0:22:13.060
is set up the fetish concept, in
order to deconstruct it, and to demystify it?'

0:22:13.060,0:22:19.590
All of the student's advisors were
very embarrassed, and said: 'What was that?'

0:22:19.590,0:22:25.060
So be careful reading Marx,
not to take something like this,

0:22:25.060,0:22:30.700
which is an irony or a joke,
and treat it too seriously.

0:22:30.700,0:22:35.320
A lot of problems arise out of that.

0:22:35.320,0:22:38.730
So he's setting it up in this world of appearance.
What does capital appear like?

0:22:38.730,0:22:43.930
You can see from where the occult quality comes from.

0:22:43.930,0:22:47.090
If you have a savings account you put it

0:22:47.090,0:22:55.570
in a bank, you put it in a savings account.
By the end of the year you end up with interest…

0:22:55.570,0:22:56.990
golden eggs…happened magically…right?

0:22:56.990,0:23:01.090
You think it's natural.

0:23:01.090,0:23:04.000
But Marx is kind of saying: 'Yeah, we all

0:23:04.000,0:23:11.000
live in a world where, actually, it seems as
if it's inevitable that our capital grows.'

0:23:13.940,0:23:20.279
So the point here is that indeed
it does have that appearance of occult quality.

0:23:20.279,0:23:27.870
And if we are simply content with that occult
quality and imagine it's just going to lay golden eggs

0:23:27.870,0:23:35.620
in a sense, what the argument
was about the privatisation of social security was,

0:23:35.620,0:23:42.450
we were invited, or you were invited- it's a bit
too late to invite me on this- but you were invited

0:23:42.450,0:23:48.260
to put your money in somewhere,
and just wait for it to grow.

0:23:48.260,0:23:53.630
And to actually believe in this occult quality,
that somehow or other this was going to be your

0:23:53.630,0:23:56.450
golden nest egg.

0:23:56.450,0:24:00.280
So what Marx is doing here, is
simply pointing out that, actually,

0:24:00.280,0:24:02.820
we live in a world,

0:24:02.820,0:24:08.360
and this was true of rentier
incomes during Marx's time,

0:24:08.360,0:24:14.080
and which is the story of Eugenie Grandet, that

0:24:14.080,0:24:23.630
he's going to get the golden
eggs that come from investing in rents.

0:24:25.260,0:24:29.340
So this then leads him to say the following:

0:24:29.340,0:24:36.530
That out of these two forms,
money - commodity - money,

0:24:36.530,0:24:42.960
at what point in that process

0:24:42.960,0:24:48.340
are you in a position to measure
how much value you've got?

0:24:48.340,0:24:51.710
The answers is: in the money form.

0:24:51.710,0:24:55.529
So there's a certain asymmetry in all of this.

0:24:55.529,0:24:59.700
I don't know what the commodity
is worth until I get it to the market.

0:24:59.700,0:25:03.860
Only when I get it to the market, I know
that I get the money form, and only then I know

0:25:03.860,0:25:08.270
that I've got the surplus value.

0:25:08.270,0:25:21.870
So he says on page 256:
"In simple circulation

0:25:21.870,0:25:27.350
…the circulation M-C-M, value suddenly presents
itself as a self-moving substance which passes

0:25:27.350,0:25:38.500
through a processes of its own, and for
which commodities and money are both mere forms."

0:25:38.500,0:25:44.560
And then he talks about the way this works.

0:25:44.560,0:25:48.800
And earlier on, he's made the comment:
"There is here no antagonism, as in the case of

0:25:48.800,0:25:52.530
hoarding, between the money and commodities."

0:25:52.530,0:25:57.510
Then he uses this expression,
which I'm sure some of you wondered about.

0:25:57.510,0:26:02.740
"The capitalist knows that all commodities, however
tattered they may look, or however badly they may

0:26:02.740,0:26:06.610
smell, are in faith and in truth money,
are by nature circumcised Jews,

0:26:06.610,0:26:13.200
and what is more, a wonderful means
for making still more money out of money."

0:26:13.200,0:26:18.950
Further down he comes to the conclusion.
"Value therefore now becomes value in process,

0:26:18.950,0:26:24.929
money in process, and, as such capital."

0:26:24.929,0:26:32.180
That is money is the place where we start.

0:26:32.180,0:26:35.100
Now, there are a number of things

0:26:35.100,0:26:39.930
going on here, which I think
are important to look at.

0:26:39.930,0:26:43.110
On the passage about Jews there is a debate,

0:26:43.110,0:26:46.520
where I'm sure, if want to you get into it,
you will find no end of it.

0:26:46.520,0:26:51.110
As to the the degree to
which Marx is anti-semitic.

0:26:51.110,0:26:56.640
And his comments on Jews are
frequently of this nature.

0:26:56.640,0:26:59.530
The are various ways
in which you can read this.

0:26:59.530,0:27:05.650
There are various explications as to how
and why he used this kind of language.

0:27:05.650,0:27:10.550
Of course it was not uncommon
language at that time.

0:27:10.550,0:27:16.640
You've only got to think of Dickens
and Fagin and all the rest of it.

0:27:16.640,0:27:19.140
So this was not uncommon.

0:27:19.140,0:27:24.820
But then, I think, there's also one other
way in which you can read this.

0:27:24.820,0:27:29.240
And that is to say: What Marx is saying

0:27:29.240,0:27:35.570
is that all those really nasty horrible
things that are said about the Jew,

0:27:35.570,0:27:41.110
had long been said about
the Jew in Christian society,

0:27:41.110,0:27:45.090
should in fact be said about the capitalist.

0:27:45.090,0:27:49.400
That actually you should take all of that stigma,
and all that rhetoric which is directed at

0:27:49.400,0:27:52.560
a particular ethnic group
which is associated with money,

0:27:52.560,0:27:56.620
and then actually transfer it onto

0:27:56.620,0:28:03.620
that group which is really using the money
that way - which is the capitalist class.

0:28:03.840,0:28:06.520
You can take that, or leave it.

0:28:06.520,0:28:18.320
Go read the debate and the discussion,
there's a lot of discussion on this topic.

0:28:18.320,0:28:24.700
But we come back again and again
in this chapter to the idea that

0:28:24.700,0:28:27.740
capital is value in motion.
It is a process.

0:28:27.740,0:28:30.769
It is defined in those terms.

0:28:30.769,0:28:35.660
But it is a process which
can only be measured and understood

0:28:35.660,0:28:39.590
in terms of the money value.

0:28:39.590,0:28:43.030
So the money form becomes, as it were,

0:28:43.030,0:28:50.030
upfront in the circulation process.

0:28:51.370,0:28:57.399
He then comes back to a topic
he briefly touched on in Chapter Two.

0:28:57.399,0:29:04.500
Which is to say: 'Well, there are
various ways in which M-C-M can occur,

0:29:04.500,0:29:07.670
we get merchants capital,

0:29:07.670,0:29:14.670
we get interest-bearing capital,
we get industrial capital.'

0:29:16.110,0:29:23.380
So we have to take into account all those
different forms of circulation and recognize

0:29:23.380,0:29:36.059
that they all fall under this general rubric
of this M-C-M plus delta-M form of circulation.

0:29:36.059,0:29:43.059
Next chapter.

0:29:50.179,0:29:54.380
He immediately raises the problem

0:29:54.380,0:30:01.380
of where can this
surplus value possibly come from.

0:30:06.130,0:30:16.520
On pages 260-261 he starts to talk about the problem.

0:30:16.520,0:30:22.630
Right at the bottom, first off he talks about:

0:30:22.630,0:30:26.220
"The vulgar economists have practically no
inkling of the nature of value; hence whenever they

0:30:26.220,0:30:30.350
wish to consider the phenomena
in its purity, after their fashion,

0:30:30.350,0:30:33.399
they assume that supply and demand are equal,

0:30:33.399,0:30:35.780
i.e. that they cease to have any effect at all."

0:30:35.780,0:30:39.550
I have several times mentioned
to you this argument, which Marx is

0:30:39.550,0:30:45.200
frequently introducing.
Which is that supply and demand conditions

0:30:45.200,0:30:51.110
explain why prices are
yo-yo-ing all over the place, but

0:30:51.110,0:30:56.010
the equilibrium price is what
we're going to be looking at.

0:30:56.010,0:31:01.570
And even the capitalist theorists

0:31:01.570,0:31:06.559
accepted that equality should
be a condition of exchange.

0:31:06.559,0:31:12.770
So on page 261 he says: "Where equality
exists there is no gain.

0:31:12.770,0:31:17.429
It is true that commodities may be sold at prices
which diverge from their values, but this divergence

0:31:17.429,0:31:23.140
appears as an infringement of the
laws governing the exchange of commodities."

0:31:23.140,0:31:30.900
Now, the laws are the laws
of political economy as set up

0:31:30.900,0:31:39.140
in a perfectly functioning competitive
market world of Adam Smith and Ricardo.

0:31:39.140,0:31:41.250
So he says:

0:31:41.250,0:31:45.440
"In its pure form, the exchange of commodities
is an exchange of equivalents, and thus it

0:31:45.440,0:31:50.190
is not a method of increasing value."

0:31:50.190,0:31:54.760
He then goes on to say, well one of the
ways of which classical political economists,

0:31:54.760,0:31:57.330
and he singles out Condillac,

0:31:57.330,0:32:00.089
has dealt with this, is by kind of

0:32:00.089,0:32:04.409
immediately switching, say: well,
it must be something about use-values.

0:32:04.409,0:32:09.900
But Marx rebuts that and says: you know,
our whole analysis says it can't be use-values.

0:32:09.900,0:32:13.210
And their analysis says it can't be use-values.

0:32:13.210,0:32:16.110
Faced with this conundrum,
of where does the profit come from,

0:32:16.110,0:32:21.890
they can't take refuge in use-values.

0:32:21.890,0:32:24.940
Which leads him therefore to the following

0:32:24.940,0:32:29.789
conclusion on page 262:
"If commodities, or commodities and money

0:32:29.789,0:32:33.990
of equal exchange-value, and consequently
equivalents, are exchanged it is plain that

0:32:33.990,0:32:36.910
no one abstracts more value from circulation

0:32:36.910,0:32:38.470
than he throws into it.

0:32:38.470,0:32:42.370
The formation of surplus-value
does not take place.

0:32:42.370,0:32:46.100
In its pure form,
the circulation process necessitates

0:32:46.100,0:32:48.669
the exchange of equivalents,

0:32:48.669,0:32:53.040
but in reality processes do
not take place in their pure form.

0:32:53.040,0:32:56.080
Let us therefore assume an
exchange of non-equivalents."

0:32:56.080,0:33:01.270
And then he goes through a series of cases.
Let's suppose the seller is privileged

0:33:01.270,0:33:05.080
for some reason. Sellers are
privileged for some reason.

0:33:05.080,0:33:09.740
But then when you examine people's roles you
find out, if the sellers are privileged,

0:33:09.740,0:33:11.629
then as buyers they are underprivileged.

0:33:11.629,0:33:14.920
So, they're not going to get a net gain.
The same thing applies

0:33:14.920,0:33:17.960
if buyers are privileged for some reason.

0:33:17.960,0:33:23.440
Then as sellers, they're going to be losers.
So there's no net gain.

0:33:23.440,0:33:27.330
Which leads him, on page 264, to consider

0:33:27.330,0:33:34.330
the issue of what he calls 'effectual demand'
and what we now call 'effective demand'.

0:33:38.399,0:33:43.040
What he's dealing with here is one answer that

0:33:43.040,0:33:53.500
was given to this conundrum by some economists,
particularly Malthus, in his political economy.

0:33:53.500,0:34:02.370
Which used to say: Well, there's a class
of consumers, somewhere or other, whose duty it is

0:34:02.370,0:34:07.280
to consume as much as they possibly can,
because they've got excess money.

0:34:07.280,0:34:15.119
And that's where the extra demand is going
to come from that's going to give you the delta-M.

0:34:15.119,0:34:20.790
And in particular Malthus argued in the following
way: There are three big classes in society:

0:34:20.790,0:34:27.229
Workers, who cannot possibly be
a source of effectual demand.

0:34:27.229,0:34:32.859
Capitalist, who are reinvesting their money.
So they can't be a source of effectual demand.

0:34:32.859,0:34:40.709
And then there is a bunch of parasites in society;
aristocrats and lords and parsons

0:34:40.709,0:34:43.410
and all the rest of it, who sit around

0:34:43.410,0:34:48.700
with loads of money, and their
job is to consume to the hilt

0:34:48.700,0:34:53.759
in order to stabilize the system.

0:34:53.759,0:35:00.609
And Malthus also suggested that
in the absence of a consuming class domestically

0:35:00.609,0:35:05.410
you might also go for foreign trade.

0:35:05.410,0:35:07.709
And Marx answers both of those

0:35:07.709,0:35:10.509
questions in the negative by saying:

0:35:10.509,0:35:14.169
Well, if there's a class of landlords out there
somewhere, then at some point or other

0:35:14.169,0:35:18.759
they're going to be brought within
the system and to the degree that they are

0:35:18.759,0:35:25.569
actually using money, the money's going to come from
here somewhere, so they're not going to be the answer.

0:35:25.569,0:35:28.299
All of those hangers-on in the state apparatus

0:35:28.299,0:35:32.480
get their money from somewhere, it comes from
this circulation process, so it's being extracted.

0:35:32.480,0:35:36.519
So whatever is being extracted is
simply being brought back in.

0:35:36.519,0:35:41.639
And then he uses the arguing about tribute
to Rome, to say, well you know, even if you exchange

0:35:41.639,0:35:45.349
with foreigners and you rip them off

0:35:45.349,0:35:49.169
then they rip you off in reverse and so again,
there's no surplus value which is going to

0:35:49.169,0:35:50.659
come out of that. So the

0:35:50.659,0:35:58.189
effective demand argument, the external source
of effective demand does not work in Marx's view.

0:35:58.189,0:36:03.619
Nor does the internal class of consumers work.

0:36:03.619,0:36:10.209
I mean, one of the great paradoxes of course in
Malthus' case was, his political economy

0:36:10.209,0:36:19.279
talked about the necessity of a class of
consumers who consumed like crazy in order to keep

0:36:19.279,0:36:22.420
the economy in equilibrium.

0:36:22.420,0:36:26.359
At the same time he talked about
poor people who were poor

0:36:26.359,0:36:30.329
because they were reproducing to such a point
that there were not enough resources to go around

0:36:30.329,0:36:32.999
and there were…
all of those kinds of problems.

0:36:32.999,0:36:38.159
So, in a sense, when
he wrote his political economy

0:36:38.159,0:36:42.349
Malthus had a completely different
explanation of how the world worked than when

0:36:42.349,0:36:45.209
he wrote his theory of population.

0:36:45.209,0:36:48.329
And it's very interesting to look at those

0:36:48.329,0:36:51.199
two representations that Malthus came up with,

0:36:51.199,0:36:54.829
but his recognition of the effectual demand
problem was important. As I mentioned last time,

0:36:54.829,0:37:01.289
Keynes took that up as being

0:37:01.289,0:37:06.859
very critical and said: Well actually,
debt financing is going to be one of the

0:37:06.859,0:37:12.249
ways we can do this.
But for Marx that can't work.

0:37:12.249,0:37:15.999
And then he goes through the final

0:37:15.999,0:37:18.519
argument which is: Well,
maybe the problem is we're looking at

0:37:18.519,0:37:23.219
the thing in aggregate, so we
just simply look at individuals.

0:37:23.219,0:37:26.739
And if we look at individuals, what
we see is in a sense: Yes, indeed, there can be

0:37:26.739,0:37:33.479
a lot of robbing Peter to pay Paul, but there's no
aggregate surplus value available in society that way.

0:37:33.479,0:37:37.549
One person's loss is somebody else's gain.

0:37:37.549,0:37:40.519
But then it quickly gets
reversed, so there's no aggregate

0:37:40.519,0:37:43.569
benefit that comes from that.

0:37:43.569,0:37:49.649
Which leads into the conclusion on page 266:
"However much we twist and turn,

0:37:49.649,0:37:55.529
the final conclusion remains the same.
If equivalents are exchanged, no surplus-value results,

0:37:55.529,0:38:01.069
and if non-equivalents are exchanged,
we still have no surplus-value.

0:38:01.069,0:38:05.539
Circulation, or the exchange
of commodities, creates no value."

0:38:05.539,0:38:10.779
Very important proposition in Marx,
and something you really have to think about.

0:38:10.779,0:38:16.479
Circulation creates no value.
Value cannot be created by market exchange.

0:38:16.479,0:38:22.249
It can be redistributed through
market exchange, but it cannot be created

0:38:22.249,0:38:27.819
through market exchange, if the market
exchange is of this perfect competitions sort.

0:38:27.819,0:38:30.999
Which leads him then to say:

0:38:30.999,0:38:40.109
'Okay, we also have to deal with
merchants' capital, and usurers' capital.'

0:38:40.109,0:38:47.459
And he says: 'Yes, ok, merchants' capital
was one of the antediluvian forms of capital,

0:38:47.459,0:38:53.049
back in the early
sixteenth century, seventeenth century.'

0:38:53.049,0:39:04.180
And merchants' capital was indeed
based on violating the laws of exchange.

0:39:04.609,0:39:10.729
On page 267 he quotes Franklin:
"War is robbery, commerce is cheating".

0:39:10.729,0:39:14.939
So yes, merchants cheated
much of the world of value.

0:39:14.939,0:39:19.329
They stole it; predatory practices,
and all the rest of it.

0:39:19.329,0:39:21.799
But that is a violation of the laws

0:39:21.799,0:39:26.449
of market exchange as envisaged by
the classical political economists.

0:39:26.449,0:39:33.539
The same applies to usurers capital.

0:39:33.539,0:39:38.499
And usurers' capital poses the problem

0:39:38.499,0:39:42.380
of Aristotle's distinction
between economics, which

0:39:42.380,0:39:46.029
for Aristotle was about use-values.

0:39:51.130,0:39:55.059
What Aristotle talked about as
chrematistics was about

0:39:55.059,0:40:00.150
money-making, and money-making was
filthy, bad, and all the rest of it;

0:40:00.150,0:40:07.359
economics was good because it
is about the exchange of use-values.

0:40:07.359,0:40:15.689
And so, there's a critique of interest in here.

0:40:15.689,0:40:19.789
Then Marx says something interesting on page 267:
"In the course of our investigation, we shall find that both

0:40:19.789,0:40:24.479
merchants' capital and interest-bearing
capital are derivative forms,

0:40:24.479,0:40:28.920
and at the same time it will
become clear why, historically, these two forms

0:40:28.920,0:40:35.910
appear before the modern primary form of capital."

0:40:35.910,0:40:39.779
What he's leading to here,
is this following idea:

0:40:39.779,0:40:42.469
Capitalism had to get going somehow.

0:40:42.469,0:40:47.099
From the sixteenth century onwards
merchants' capital and usurers' capital

0:40:47.099,0:40:50.999
played a crucial role in the dissolution

0:40:50.999,0:40:56.539
of pre-capitalist forms of power;
notably feudalism in Europe,

0:40:56.539,0:41:03.539
some predating state forms elsewhere.

0:41:03.659,0:41:07.990
Usurers lent to the landed nobility, and then
the landed nobility couldn't pay them back and the

0:41:07.990,0:41:10.589
landed nobility lost their lands.

0:41:10.589,0:41:17.629
Merchants who couldn't make money
internally within a country went outside,

0:41:17.629,0:41:19.839
robbed the rest of the world

0:41:19.839,0:41:22.849
of use-values, came back, made lots of money.

0:41:22.849,0:41:27.079
Used that money-power to
start to develop political power,

0:41:27.079,0:41:32.009
which allowed them, at some point
or other, to confront and destroy

0:41:32.009,0:41:35.239
the power of landed property.

0:41:35.239,0:41:39.409
So there's a historical story to be told about
the origins of capitalism, which Marx is alluding to.

0:41:39.409,0:41:42.499
And that historical story

0:41:42.499,0:41:48.769
has a very powerful,
and important role assigned to it,

0:41:48.769,0:41:53.549
by merchants' capital and usurers' capital.

0:41:53.549,0:42:01.259
But at some point or other,
the modern industrial form of capital takes over.

0:42:01.259,0:42:08.959
And the industrial form of capital
needs merchants, and needs an interest system.

0:42:08.959,0:42:14.529
But that system has to be disciplined
to the needs of industrial capital.

0:42:14.529,0:42:16.689
So what Marx is talking about,

0:42:16.689,0:42:19.829
is a transformation in the role of
merchants' capital

0:42:19.829,0:42:25.019
and usurers' capital from
something which is undisciplined, out there,

0:42:25.019,0:42:27.249
doing all kinds of outrageous things,

0:42:27.249,0:42:30.519
which are non-permissible in
terms of the rules of the market.

0:42:30.519,0:42:34.799
Are being corralled and brought back into

0:42:34.799,0:42:43.170
the capitalist system, disciplined to
the requirements of industrial capital.

0:42:43.170,0:42:51.699
The historical distinction which
is made between usury and interest for example.

0:42:51.699,0:42:56.439
What was Martin Luther about?

0:42:56.439,0:43:00.239
Nailing to the wall his
theses and so on, saying:

0:43:00.239,0:43:04.679
Interest is a fair rate of return on capital.

0:43:04.679,0:43:10.869
Usury was abhorred, and as we know,
it is still the case that interest

0:43:10.869,0:43:13.959
is not consistent with Islamic law.

0:43:13.959,0:43:21.079
But what we frequently don't know is that
the Catholic Church had a ban on interest

0:43:21.079,0:43:29.739
up until the eighteen forties, eighteen fifties,
even to the eighteen sixties.

0:43:29.739,0:43:32.059
And interest…

0:43:32.059,0:43:37.259
the taking of interest was associated
directly with forms of prostitution.

0:43:37.259,0:43:40.059
In nineteenth century France, for example,
this was a very common way

0:43:40.059,0:43:45.879
for right wing catholics to talk about it.
There is a wonderful cartoon that I used

0:43:45.879,0:43:54.189
in my Paris book which is by a cartoonist
called Gavarni, about mid-century, in which

0:43:54.189,0:44:01.149
this buxom lady is attempting to
lure this old gent into an investment house.

0:44:01.149,0:44:04.049
And she says to him:

0:44:04.049,0:44:09.249
'You can put down as much as you want,
I'm sure your rate of return will be very good.

0:44:09.249,0:44:14.249
Whatever you give me, I'll make
sure you get it back with interest.'

0:44:14.249,0:44:18.959
And the poor guy is shrieking away from this
whole kind of thing. So this association of

0:44:18.959,0:44:20.989
an investment house with a brothel,

0:44:20.989,0:44:24.659
in nineteenth century France,
was very strong. So the whole

0:44:24.659,0:44:29.999
kind of question of the role of interest in
relationship to industrial capital is a problematic one.

0:44:29.999,0:44:33.379
And it continues to be problematic and we
may want to think about this further today

0:44:33.379,0:44:36.599
because there is a question:

0:44:36.599,0:44:40.529
To what degree is industrial capital in control?

0:44:40.529,0:44:49.469
Right now to what degree is interest-bearing
capital, finance capital, in control?

0:44:49.469,0:44:53.169
For many years in Britain,
particularly in the post war period,

0:44:53.169,0:44:58.509
there was a contest between the
interests of industrial capital in Britain

0:44:58.509,0:45:03.640
and the city of London financial interests.

0:45:03.640,0:45:08.519
And if the city of London financial interests
were going to be served, that frequently

0:45:08.519,0:45:13.269
harmed seriously the British industrial interest.

0:45:13.269,0:45:19.919
And it was a Labour prime minister, Harold
Wilson, back in around 1964/65 who made a key decision

0:45:19.919,0:45:27.079
to favor the city of
London over the industrial interest.

0:45:27.079,0:45:33.019
And one of results of that eventually was
the deindustrialization of Britain,

0:45:33.019,0:45:35.239
in the same way that

0:45:35.239,0:45:41.099
the rising power of financial interest
in the United States has coincided

0:45:41.099,0:45:46.789
with a huge wave of deindustrialization
inside of the United States.

0:45:46.789,0:45:51.609
So the big question then is:
Who has the power?

0:45:51.609,0:45:54.589
But what Marx is dealing with
is a situation where,

0:45:54.589,0:45:57.739
as far as he was concerned,

0:45:57.739,0:46:04.389
industrial capital was the key to understanding

0:46:04.389,0:46:06.430
how surplus value is going to be produced,

0:46:06.430,0:46:08.569
how it was going to circulate.

0:46:08.569,0:46:11.549
And industrial capital, therefore,

0:46:11.549,0:46:15.429
was the form of capital he was
going to concentrate on,

0:46:15.429,0:46:22.199
but he's here giving this historical role.

0:46:22.199,0:46:26.289
So we come back, on page 268,

0:46:26.289,0:46:29.959
for the final conundrum:
"We have shown that surplus-value cannot arise

0:46:29.959,0:46:33.140
from circulation, and therefore that,

0:46:33.140,0:46:37.799
for it to be formed, something must take place
in the background which is not visible…",

0:46:37.799,0:46:43.799
that's the occult side, OK,
"is not visible in the circulation itself."

0:46:43.799,0:46:47.309
Bottom of page: "Capital cannot
therefore arise from circulation,

0:46:47.309,0:46:51.109
and it is equally impossible for it
to arise apart from circulation.

0:46:51.109,0:46:56.409
It must have its origin both
in circulation and not in circulation.

0:46:56.409,0:46:59.809
(…)The transformation of money
into capital has to be developed

0:46:59.809,0:47:06.229
on the basis of the immanent laws of the exchange
of commodities," that's the equality principle,

0:47:06.229,0:47:10.929
"in such a way that the starting-point is the
exchange of equivalents. The money-owner,

0:47:10.929,0:47:16.459
who is as yet only a capitalist in larval
form, must buy his commodities at their value,

0:47:16.459,0:47:21.359
sell them at their value, and yet at the end
of the process withdraw more value from circulation

0:47:21.359,0:47:24.229
than he threw into it at the beginning.

0:47:24.229,0:47:29.700
His emergence as a butterfly must, and yet
must not, take place in the sphere of circulation.

0:47:29.700,0:47:34.829
These are the conditions of the problem.
Hic Rhodus, hic salta!",

0:47:34.829,0:47:37.929
here is the ball, now you run with it!.

0:47:37.929,0:47:44.049
So that's the conundrum to be
solved and looked at in the next chapter.

0:47:44.049,0:47:52.400
So let's let's look at
the sale and purchase of labour power.

0:47:52.400,0:47:55.449
And having posed a rhetorical question

0:47:55.449,0:48:02.269
at the end of the last chapter, kind of saying:
where on earth does this surplus value come from?,

0:48:02.269,0:48:04.059
he immediately says: well, there's an

0:48:04.059,0:48:07.440
immediate answer and we'll
just go straight to it on page 270:

0:48:07.440,0:48:11.719
"In order to extract value out of
the consumption of a commodity, our friend the

0:48:11.719,0:48:17.259
money-owner must be lucky
enough to find within the sphere of circulation,

0:48:17.259,0:48:22.880
on the market, a commodity
whose use-value possesses the peculiar property

0:48:22.880,0:48:27.619
of being a source of value,
whose actual consumption is therefore itself

0:48:27.619,0:48:32.649
an objectification of labour,
hence the creation of value.

0:48:32.649,0:48:37.119
The possessor of money does find
such a special commodity on the market:

0:48:37.119,0:48:42.729
the capacity for labour,
in other words labour-power."

0:48:42.729,0:48:49.609
Now Marx is going to make a
big distinction between labour and labour-power.

0:48:49.609,0:48:57.450
Labour-power is the capacity to create value.

0:48:57.450,0:49:04.450
And of course we know that value
is socially necessary labour time.

0:49:08.259,0:49:12.140
And the important idea here is that

0:49:12.140,0:49:22.009
the capitalist must find a commodity,
and in particular the commodity labour-power

0:49:22.009,0:49:29.729
which can be bought and sold
in such a way as to make absolutely sure

0:49:29.729,0:49:35.400
that the labour power which
is given to the capitalist is greater

0:49:35.400,0:49:42.880
than the labour which is
required to reproduce the laborer.

0:49:42.880,0:49:46.169
That's the calculus we're going to get into.

0:49:46.169,0:49:49.999
Now, one of the big consequences of this

0:49:49.999,0:49:54.709
is that Marx is going to make an analysis
of capitalism that does not involve in any

0:49:54.709,0:50:03.349
way cheating, in the world of exchange.

0:50:03.349,0:50:10.489
All commodities, in this analysis,
are going to exchange at their value.

0:50:10.489,0:50:14.799
There is no violation
of the equivalency requirement.

0:50:14.799,0:50:16.049
Now this is something that

0:50:16.049,0:50:20.249
some people find a bit strange about Marx.
He would have thought that Marx would have said:

0:50:20.249,0:50:25.619
Oh, those people violating exchange, you know,
power relations, this kind of thing.

0:50:25.619,0:50:31.319
But here we come back to, I think, one of Marx's

0:50:31.319,0:50:40.109
central missions, which is to
undermine classical political economy.

0:50:40.109,0:50:44.849
And classical political economy, as I've suggested,

0:50:44.849,0:50:50.459
perpetually spun the story that, if the world

0:50:50.459,0:50:53.960
was made out of perfectly functioning markets,

0:50:53.960,0:50:58.969
then everybody would be better off.

0:50:58.969,0:51:03.680
And perfectly functioning markets
assume equivalence in exchange.

0:51:03.680,0:51:08.539
So Marx says: Okay, I assume
equivalency in exchange also.

0:51:08.539,0:51:15.539
Now does this mean he believes that that's
how capitalism is? No, not necessarily at all.

0:51:16.619,0:51:22.049
So here he's beginning to look
at the whole kind of relationship between

0:51:22.049,0:51:26.249
classical political economy and the
realities on the ground, and he's

0:51:26.249,0:51:30.319
firmly going after classical political
economy rather than trying to describe

0:51:30.319,0:51:35.199
the realities on the ground.

0:51:35.199,0:51:45.239
Let us suppose a perfectly
functioning market economy.

0:51:45.239,0:51:48.959
And he says: "We mean by labour-power,
or labour-capacity, the aggregate

0:51:48.959,0:51:54.279
of those mental and physical capabilities existing
in the physical form, the living personality,

0:51:54.279,0:51:59.189
of a human being, capabilities
which he sets in motion

0:51:59.189,0:52:03.689
whenever he produces a use-value of any kind."

0:52:03.689,0:52:08.419
But various conditions must be met

0:52:08.419,0:52:11.839
if labour-power is going to become a commodity.

0:52:11.839,0:52:16.459
The first condition is that the
laborer must be, as he says on page 271,

0:52:16.459,0:52:23.459
"(…) the free proprietor of
his own labour-capacity, hence of his person.

0:52:24.559,0:52:28.410
He and the owner of money meet in the market,
and enter into relations with each other on a

0:52:28.410,0:52:30.850
footing of equality as owners of commodities,

0:52:30.850,0:52:33.389
with the sole difference that one is a buyer,

0:52:33.389,0:52:38.209
the other a seller; both are therefore equal
in the eyes of the law." So again, we assume that

0:52:38.209,0:52:40.299
the law is going to be good in all of this

0:52:40.299,0:52:49.400
which it ain't necessarily so,
but Marx is going to assume it.

0:52:49.769,0:52:53.479
So "(…) the proprietor of labour-power",
that is the laborer,

0:52:53.479,0:52:58.199
"must always sell it
for a limited period only (…)".

0:52:58.199,0:53:00.589
He hands "(…) it over to the buyer

0:53:00.589,0:53:05.469
for the" [buyer] "to consume, for a definite
period of time, temporarily.

0:53:05.469,0:53:10.099
In this way he manages both to alienate his
labour-power and to avoid renouncing his

0:53:10.099,0:53:16.359
rights of ownership over it.

0:53:16.359,0:53:21.929
The second essential condition", on page 272,

0:53:21.929,0:53:25.419
is this: "(…) that the possessor of labour-power,
instead of being able to sell commodities

0:53:25.419,0:53:28.079
in which his labour has been objectified,

0:53:28.079,0:53:31.169
must rather be compelled to offer

0:53:31.169,0:53:37.979
for sale as a commodity that very labour-
power which exists only in his living body."

0:53:37.979,0:53:44.399
This is Marx's version of bio-politics.

0:53:44.399,0:53:48.279
"For the transformation of money
into capital, therefore,

0:53:48.279,0:53:52.599
the owner of money must find the free worker
available on the commodity-market; and this

0:53:52.599,0:53:57.029
worker must be free in the double sense

0:53:57.029,0:54:03.119
that as a free individual he can
dispose of his labour-power as his own commodity,

0:54:03.119,0:54:07.939
and that, on the other hand, he has no other
commodity for sale, (i.e.) he is rid of them, he is

0:54:07.939,0:54:14.939
free of all the objects needed for
the realization of his labour-power."

0:54:16.069,0:54:20.019
Now this is an interesting riff
on the notion of freedom.

0:54:20.019,0:54:22.969
The laborer is free in the double sense:

0:54:22.969,0:54:26.920
free to sell his or her labour-power to whomsoever,

0:54:26.920,0:54:36.569
under any conditions of contract,
always in control of their own body

0:54:36.569,0:54:42.929
as a laborer, a proprietor over
their own body, we're not dealing with slavery here,

0:54:42.929,0:54:45.589
even though of course slavery
continues to exist,

0:54:45.589,0:54:48.729
but Marx is talking about the free laborer.

0:54:48.729,0:54:57.069
But they're also freed of
any control over the means of production.

0:54:57.069,0:55:00.599
So they're free in that double sense.

0:55:00.599,0:55:06.549
So every time I hear George Bush talk about
how he's going to deliver freedom unto the world

0:55:06.549,0:55:13.479
I think: Yes, this is what he's about, he's going to
free everybody of any control over the means of

0:55:13.479,0:55:18.589
production. At the same time he's going to turn them
into individual proprietors and wage laborers.

0:55:18.589,0:55:22.699
So next time you hear this mission

0:55:22.699,0:55:26.449
about bringing freedom to the rest of the world,

0:55:26.449,0:55:33.099
then remember what Marx's
definition of freedom is, under capitalism.

0:55:33.099,0:55:35.679
And then when you actually look at

0:55:35.679,0:55:39.759
politics on the ground under the Bush regime
you got a pretty good idea that indeed, this

0:55:39.759,0:55:45.009
Marxian definition is pretty much what it is about.

0:55:45.009,0:55:51.829
It's hardly an accident
that coalition provisional authority in Iraq,

0:55:51.829,0:55:57.159
about a year after the occupation,
actually enforced the whole free

0:55:57.159,0:56:01.259
labour regime rights, all this kind of stuff,

0:56:01.259,0:56:08.559
as central part of the Iraqi
constitution. At the same time,

0:56:10.559,0:56:16.489
as they were saying, that there should
be no barriers to foreign ownership and no barriers to

0:56:16.489,0:56:26.849
finance capital, no barriers to anything.
You know, they were freeing up the territory for

0:56:26.849,0:56:30.409
relieving people of any kind of concern about

0:56:30.409,0:56:35.589
having control of the means of production.

0:56:35.589,0:56:41.249
Now this then brings us to, of course,
the historical question on page 273:

0:56:41.249,0:56:45.849
"Why this free worker confronts him in the sphere
of circulation is a question which does not interest

0:56:45.849,0:56:49.249
the owner of money,

0:56:49.249,0:56:53.559
for he finds the labour-market in existence as
a particular branch of the commodity-market."

0:56:53.559,0:57:02.129
This is where we recognize
that there has been a historical process.

0:57:02.129,0:57:06.609
And Marx goes on to say: "And for the present
it interests us just as little. We confine ourselves

0:57:06.609,0:57:12.459
to the fact theoretically, as he does practically."

0:57:12.459,0:57:15.079
Then he throws in

0:57:15.079,0:57:19.379
an immediate qualification: "One thing (…) is clear:
nature does not produce on the one hand owners of

0:57:19.379,0:57:26.179
money or commodities, and on the other hand
men possessing nothing but their own labour-power.

0:57:26.179,0:57:29.989
This relation has no basis in natural history,

0:57:29.989,0:57:33.739
nor does it have a social basis
common to all periods of human history.

0:57:33.739,0:57:37.829
It is clearly the result

0:57:37.829,0:57:42.619
of a past historical development,
the product of many economic revolutions,

0:57:42.619,0:57:48.609
of the extinction of a whole series
of older formations of social production."

0:57:48.609,0:57:53.289
And then he goes on to say: and the economic
categories have undergone a similar revolution.

0:57:53.289,0:57:55.719
That what we understood by labour

0:57:55.719,0:58:02.170
under feudalism is something very different
from what we understand by labour under capitalism.

0:58:02.170,0:58:07.009
What we understood as commodities,

0:58:07.009,0:58:13.190
and, at the bottom here, he makes,
I think, a very important argument,

0:58:13.190,0:58:16.200
towards the bottom of page 273:
"The appearance of products

0:58:16.200,0:58:20.869
as commodities requires a level of
development of the division of labour

0:58:20.869,0:58:25.949
within society such that the
separation of use-value from exchange-value,

0:58:25.949,0:58:29.779
a separation which first begins
with barter, has already been completed.

0:58:29.779,0:58:34.459
But such a degree of development is
common to many economic formations of society,

0:58:34.459,0:58:39.069
with the most diverse historical characteristics."

0:58:39.069,0:58:43.939
Not all markets societies are capitalist societies.

0:58:43.939,0:58:48.259
You can have sophisticated market systems,

0:58:48.259,0:58:55.259
commodity exchange systems,
which are non-capitalistic.

0:59:00.779,0:59:07.779
He then goes on to say, well on the next page,

0:59:09.639,0:59:22.069
that all of these other forms
were precursors, if you like.

0:59:22.069,0:59:26.369
So he says on page 274:
"The historical conditions of its existence",

0:59:26.369,0:59:28.249
that is capital,

0:59:28.249,0:59:32.799
capital's existence "are by no means given with
the mere circulation of money and commodities.

0:59:32.799,0:59:36.920
It arises only when the owner
of the means of production and subsistence

0:59:36.920,0:59:42.900
finds the free worker available, on the market,
as the seller of his own labour-power.

0:59:42.900,0:59:48.559
And this one historical pre-condition
comprises a world's history.

0:59:48.559,0:59:56.369
Capital, therefore, announces from the outset
a new epoch in the process of social production."

0:59:56.369,1:00:01.929
What's involved here is that

1:00:01.929,1:00:05.130
capital could not be capital without

1:00:05.130,1:00:16.439
there having been a whole process of wage labour
creation, proletarianization, which preceded it.

1:00:16.439,1:00:19.529
So it's not simply money

1:00:19.529,1:00:26.299
and commodities in these sophisticated forms
that is necessary. Yes, they are necessary,

1:00:26.299,1:00:31.569
but the other element that is necessary,
which comprises a world's history,

1:00:31.569,1:00:39.159
is the creation of a proletariat,
the creation of a wage-labour-force

1:00:39.159,1:00:46.159
which is selling its labour-power as a commodity.

1:00:48.389,1:00:54.900
So again there is this historical
element which enters in.

1:00:54.900,1:00:59.199
And we'll see that entering
in a different way, too.

1:00:59.199,1:01:06.199
The big question that then arises is:
What constitutes the value of labour power?

1:01:06.829,1:01:10.619
And in the next series of passages he says:

1:01:10.619,1:01:17.900
Well, the worker needs
subsistence, needs to live.

1:01:17.900,1:01:22.409
So you have to provide enough commodities

1:01:22.409,1:01:25.749
to allow the worker to live.

1:01:25.749,1:01:28.609
But that then immediately poses the problem:

1:01:28.609,1:01:35.389
how many commodities does
the worker need to live?

1:01:35.389,1:01:41.849
Part of that has to do
with the nature of the labour

1:01:41.849,1:01:45.149
which you are demanding of the worker.

1:01:45.149,1:01:51.189
You work them very hard,
you've got to feed them better.

1:01:51.189,1:01:57.159
As he says on pages 274-275: "(…)definite quantities
of human muscle, nerve, brain (…) have to be replaced.

1:01:57.159,1:02:00.429
Since more is expended, more must be received.

1:02:00.429,1:02:04.769
(…)His means of subsistence must
therefore be sufficient to maintain him

1:02:04.769,1:02:08.619
in his normal state as a working individual."

1:02:08.619,1:02:12.259
Now, normal state, what is a normal state?

1:02:12.259,1:02:20.469
"His natural needs(…) vary according to the
climatic and other physical peculiarities of

1:02:20.469,1:02:24.349
his country. On the other hand, the number and
extend of his so-called necessary requirements,

1:02:24.349,1:02:26.359
as also the manner in which they are satisfied,

1:02:26.359,1:02:31.129
are themselves products of history,
and depend therefore to a great extent

1:02:31.129,1:02:34.799
on the level of civilization
attained by a country;

1:02:34.799,1:02:38.099
in particular they depend on
the conditions in which,

1:02:38.099,1:02:44.619
and consequently on the habits and expectations with
which, the class of free workers has been formed.

1:02:44.619,1:02:47.499
In contrast, therefore, with
the case of other commodities,

1:02:47.499,1:02:52.979
the determination of the value of labour-power
contains a historical and moral element.

1:02:52.979,1:02:58.839
Nevertheless, in a given country at a given period,
the average amount of the means of subsistence

1:02:58.839,1:03:06.909
necessary for the worker is a known datum."

1:03:06.909,1:03:15.999
The value of labour-power is
not simply a physical quantity.

1:03:15.999,1:03:19.859
Dependent upon the degree of civilization
of the countries, dependent upon

1:03:19.859,1:03:25.289
the dynamics of class struggle.

1:03:25.289,1:03:29.779
It depends on what people got used to,
it depends on climate, it depends on

1:03:29.779,1:03:32.349
the nature of the labour.

1:03:32.349,1:03:37.969
In other words, when we come to say:
What is the value of labour power?

1:03:37.969,1:03:41.919
What is the value of a workers labour power?

1:03:41.919,1:03:46.269
We have to recognize this as

1:03:46.269,1:03:51.549
a determination that comes from multiple sources.

1:03:51.549,1:03:55.549
And it's obviously a very complicated history.

1:03:55.549,1:04:05.819
And it varies greatly from place
to place and from time to time.

1:04:05.819,1:04:07.400
But, he then goes on to say,

1:04:07.400,1:04:16.109
in a given situation
we know what that value is.

1:04:16.109,1:04:19.729
Now it's interesting when you look at

1:04:19.729,1:04:26.479
contemporary society. We have various
ways in which we start to set that datum.

1:04:26.479,1:04:35.269
There is something, for example,
called the 'poverty level' in this country.

1:04:35.269,1:04:44.539
What does it take to feed, house,
cloth, reproduce…a family of four.

1:04:44.539,1:04:48.259
I don't know what the contemporary figure is.
Anyone know? 17, 18 thousand something

1:04:48.259,1:04:52.729
like that a year? Something like that.

1:04:52.729,1:04:57.619
»STUDENT: 18 and change currently.
»HARVEY: 18 and change currently, thanks.

1:04:57.619,1:05:01.349
So in a sense you could say: well, in this society

1:05:01.349,1:05:09.390
we still have got some datum there…about,
in this society it's that. Now if you're in Ecuador,

1:05:09.390,1:05:11.869
what would the poverty level be in Ecuador?

1:05:11.869,1:05:16.839
What would it be in contemporary Argentina?
What would it be in contemporary China?

1:05:16.839,1:05:21.179
Clearly it is very different in different places.

1:05:21.179,1:05:25.699
So Marx is accepting: yes, it's
going to vary all over the place,

1:05:25.699,1:05:28.409
and when class struggle gets hold of it,

1:05:28.409,1:05:35.409
the definition of what is the value
of labour-power starts to change.

1:05:35.479,1:05:39.199
And when the bourgeoisie starts to feel guilty

1:05:39.199,1:05:43.649
and decide they want to live in a civilized
country where there's not poverty on their doorsteps

1:05:43.649,1:05:52.659
all the time, they may say: well, maybe we
should raise everybody up to a certain

1:05:52.659,1:05:55.559
'civilized' level.

1:05:55.559,1:05:57.520
So there are all kinds of forces at work

1:05:57.520,1:06:01.169
in the determination of the value of labour-power.

1:06:01.169,1:06:05.649
But what Marx is going to do is to recognize
that and then say: but for our purposes

1:06:05.649,1:06:11.509
of analysis I'm going to assume it's known.

1:06:11.509,1:06:18.509
And just make that assumption,
say: We know what the datum is.

1:06:20.299,1:06:26.380
And the datum is further flexible
because you also have to

1:06:26.380,1:06:30.119
incorporate in here some
accounting for reproduction costs.

1:06:30.119,1:06:35.739
Because you're not simply feeding
the laborer at night so they can

1:06:35.739,1:06:40.569
come back the next morning.
You gotta think about, you know, kids,

1:06:40.569,1:06:44.789
reproduction of the working class.

1:06:44.789,1:06:50.399
You've also got to think about
the qualities of the labour-power,

1:06:50.399,1:06:54.500
the skills, how much you're going to spend
on skills, this kind of stuff, what's the value

1:06:54.500,1:07:01.019
of skills and so on.

1:07:01.019,1:07:07.229
So what we're coming up
with here is a movable datum

1:07:07.229,1:07:09.479
which, nevertheless, we're going to have to say,

1:07:09.479,1:07:16.399
for purposes of analysis, we know what it is.

1:07:16.399,1:07:23.399
But we see straight away that labour-power
is not a commodity like any other commodity.

1:07:24.059,1:07:29.329
Because a moral, civilizational,
class struggle element enters in.

1:07:29.329,1:07:34.319
Now there may be other commodities
where that happens, too.

1:07:34.319,1:07:40.709
But in the case of labour all
of that is upfront and fundamental

1:07:40.709,1:07:42.950
to what determines the value of labour-power.

1:07:42.950,1:07:51.329
And therefore you have to
look at it in those terms.

1:07:51.399,1:07:58.399
Furthermore there's another peculiarity
about labour-power as a commodity.

1:07:58.399,1:08:08.319
The capitalist goes into the market and buys all
of these commodities and then puts them to work.

1:08:08.319,1:08:12.480
But in the case of labour-power
the capitalist only pays

1:08:12.480,1:08:15.729
the laborer after the work is done.

1:08:15.729,1:08:21.929
So in effect the laborer is
advancing their labour to the capitalist,

1:08:21.929,1:08:25.949
hoping to get payed at the end of the day.

1:08:25.949,1:08:30.069
And in China, as we know about, I don't know,
thirty percent of the labour force in some parts

1:08:30.069,1:08:32.750
of the country don't even get their wages.

1:08:32.750,1:08:39.179
So they advance their labour and they
don't get their wages at the end of the day.

1:08:39.179,1:08:42.180
And of course declaring bankruptcy
is one of the ways in which

1:08:42.180,1:08:47.940
you can get away with that in this country, too.

1:08:47.940,1:08:51.310
So there are all kinds of peculiarities in
this commodity, so when we start to talk

1:08:51.310,1:09:02.119
about the commodity 'labour-power'
we have to acknowledge its peculiarities.

1:09:05.029,1:09:16.749
Now, what is it that went
into the value of labour-power?

1:09:16.749,1:09:19.620
And here, I think, the best
way to look at this is,

1:09:19.620,1:09:25.449
what Marx is arguing is in effect,

1:09:25.449,1:09:29.620
how the original poverty level was defined in this
country by Mollie Orshansky, I think it was,

1:09:29.620,1:09:33.029
back in 1965 or something like that,

1:09:33.029,1:09:37.519
and they first set-up the
definition of the poverty level.

1:09:37.519,1:09:40.150
And the way it was set up was this-
They asked the question:

1:09:40.150,1:09:45.569
what is the market basket of
commodities which a family needs to survive,

1:09:45.569,1:09:48.789
how much do they need to pay on housing,

1:09:48.789,1:09:51.539
how much on clothing, how much on food,

1:09:51.539,1:09:53.279
how much on transportation?

1:09:53.279,1:09:57.260
They add up the value of all of those commodities

1:09:57.260,1:10:01.139
and the aggregate value of all of those commodities

1:10:01.139,1:10:06.679
when prorated over the year
gave you the poverty level.

1:10:06.679,1:10:12.069
in other words it was a particular
market basket of necessary commodities

1:10:12.069,1:10:16.290
at a given standard of living at a given time.

1:10:16.290,1:10:18.329
Now, it's interesting to go back

1:10:18.329,1:10:23.669
and look at the history of
arguments over what should be

1:10:23.669,1:10:29.679
in that market basket of commodities.

1:10:29.679,1:10:36.449
Back in 1965 it did not include cell phones.

1:10:36.449,1:10:43.069
Does it include that now?
Should it include it?

1:10:43.069,1:10:48.440
Some items have fallen out,
some have entered in.

1:10:48.440,1:10:52.190
And of course what the conservative right does
is to say: You've chosen the wrong market basket,

1:10:52.190,1:10:57.219
and they find a market basket which gives
you a poverty level of sixteen thousand.

1:10:57.219,1:11:01.539
And if you're of the left you make it
so that it comes to twenty thousand.

1:11:01.539,1:11:05.270
But it is a social determination.

1:11:05.270,1:11:13.139
Nevertheless, it's based on the value of the
commodities which the laborer needs to survive.

1:11:13.139,1:11:16.070
In other words you pin the definition

1:11:16.070,1:11:19.929
of the poverty level and the minimum wage
and all the rest of it, or living wage,

1:11:19.929,1:11:22.969
even the idea of a living wage,
for example, is about

1:11:22.969,1:11:26.179
what is it that you need to survive,
what is the market basket

1:11:26.179,1:11:31.689
of commodities you need to survive
in today's world in the United States?

1:11:31.689,1:11:34.589
And that's what you use.

1:11:34.589,1:11:38.369
So the value of labour-power

1:11:38.369,1:11:40.850
is fixed by the value of the commodities

1:11:40.850,1:11:48.219
which are necessary to reproduce
the laborer at a given standard of living,

1:11:48.219,1:11:54.580
at a given moment and a given place.

1:11:54.580,1:12:01.580
That's how the value of labour-power is determined.

1:12:02.300,1:12:09.900
And that value is fixed in
a given place and a given time.

1:12:09.900,1:12:12.849
And you can see also how it is sensitive

1:12:12.849,1:12:17.989
to the changing value of commodities.

1:12:17.989,1:12:31.429
For example: if necessities suddenly decrease
in value then the value of labour power declines.

1:12:31.429,1:12:36.529
They still get the same bundle of goods,
but the goods are much cheaper because

1:12:36.529,1:12:42.690
the industries producing them
have become much more productive.

1:12:42.690,1:12:46.670
And one of the reasons why you can keep labour
cost down in this country is of course because

1:12:46.670,1:12:51.969
WalMart is exploiting the hell out of China.

1:12:51.969,1:12:55.469
So the market basket is much cheaper than
it otherwise would be, if you didn't have

1:12:55.469,1:12:57.920
cheap imported commodities.

1:12:57.920,1:13:02.480
This is one of the reasons why, you know,
all this stuff about putting protectionism

1:13:02.480,1:13:07.400
and so on is really problematic.

1:13:07.400,1:13:14.050
Because if you really sort of forced
the Chinese to up all those prices by revaluing,

1:13:14.050,1:13:18.579
or you started to put tariffs on Chinese products,

1:13:19.380,1:13:22.949
suddenly you'd find the value of all those goods
would increase and you'd have to pay workers more

1:13:22.949,1:13:29.949
in order to keep them at the
standard of living to which they're accustomed.

1:13:30.719,1:13:45.159
So what this means then is that the
value of labour-power is fixed in the marketplace

1:13:45.159,1:13:50.199
by these processes of configuration of
what the value of labour-power is in terms of the

1:13:50.199,1:13:57.199
value of the commodities used.

1:13:57.860,1:14:01.820
Now there's an interesting element here.

1:14:01.820,1:14:07.559
What kind of circulation process is the laborer in?

1:14:07.559,1:14:10.659
They're in the C-M-C circuit.

1:14:10.659,1:14:14.780
They start with this commodity 'labour-power'

1:14:14.780,1:14:16.579
that they're going to trade to the capitalist.

1:14:16.579,1:14:19.909
They're given money.

1:14:19.909,1:14:24.360
And they're given the amount of money needed
to buy that bundle of commodities which allows

1:14:24.360,1:14:29.060
them to reproduce themselves and their kids,

1:14:29.060,1:14:35.829
reproduce the working class,
so that they are continually there.

1:14:35.829,1:14:42.829
Free as air, free as always (laughter).

1:14:45.370,1:14:48.419
Interesting dynamic here:

1:14:48.419,1:14:50.650
the laborer is in the C-M-C,

1:14:50.650,1:14:56.549
capital in the M-C-M. And that distinction

1:14:56.549,1:15:04.900
is going to be very important to
understanding the result of this conundrum

1:15:04.900,1:15:17.840
which we've been looking at.
So he says, on page 279:

1:15:17.840,1:15:25.170
"The use-value which the former gets…",

1:15:25.170,1:15:34.219
because in effect, what the capitalist
does is to buy the use-value of labour-power.

1:15:34.219,1:15:40.479
So "The use-value which the capitalist gets in
exchange manifests itself only in the actual

1:15:40.479,1:15:46.319
utilization, in the process of the
consumption of the labour-power."

1:15:46.319,1:15:52.499
That is, the capitalists are going
to use the labour-power in production.

1:15:52.499,1:15:57.949
"The consumption of labour-power is completed,
as in the case of every other commodity,

1:15:57.949,1:16:04.709
outside the market or the sphere of circulation."

1:16:04.709,1:16:06.879
So, says Marx, "…therefore, in

1:16:06.879,1:16:11.659
company with the owner of money and the
owner of labour-power, leave this noisy sphere,

1:16:11.659,1:16:15.329
where everything takes place on
the surface and in full view of everyone,

1:16:15.329,1:16:21.900
and follow them into the hidden abode of
production, on whose threshold there hangs

1:16:21.900,1:16:28.169
the notice 'No admittance except on business'.

1:16:28.169,1:16:35.530
Here we shall see, not only how capital
produces, but how capital is itself produced."

1:16:35.530,1:16:38.099
And who produces it?

1:16:38.099,1:16:43.790
"The secret of profit-making
must at last be laid bare."

1:16:43.790,1:16:50.159
But in order to understand this we have
to get out of the sphere of circulation.

1:16:50.159,1:16:58.859
So he says on page 280: we have to
get out of this and depart from

1:16:58.859,1:17:03.729
"…a very Eden of the innate rights of man.
It is the exclusive realm of Freedom, Equality,

1:17:03.729,1:17:08.600
Property and Bentham."

1:17:08.600,1:17:14.019
He then goes on and talks about the way in which
"Freedom, because both buyer and seller of commodity,

1:17:14.019,1:17:20.599
(…) are determined only by their own free will.
They contract as free persons, who are equal before

1:17:20.599,1:17:24.949
the law.(…)Equality, because each enters into
relation with each other, as with a simple owner

1:17:24.949,1:17:27.419
of commodities, and they
exchange equivalent for equivalent.

1:17:27.419,1:17:31.289
Property, because each disposes
only of what is his own.

1:17:31.289,1:17:36.719
And Bentham, because each
looks only to his own advantage."

1:17:36.719,1:17:39.449
And here we get the Adam Smith view again.

1:17:39.449,1:17:42.449
The only thing that brings them together "(…)
and putting them into relation with each other,

1:17:42.449,1:17:45.630
is the selfishness, the gain
and the private interest of each.

1:17:45.630,1:17:51.409
Each pays heed to himself only,
and no one worries about the others.

1:17:51.409,1:17:55.719
And precisely for that reason, either in accordance
with the pre-established harmony of things,

1:17:55.719,1:17:59.429
or under the auspices of an omniscient
providence, they all work together

1:17:59.429,1:18:03.919
to their mutual advantage, for the
common weal, and in the common interest."

1:18:03.919,1:18:08.879
Marx is being a little ironic.

1:18:08.879,1:18:13.429
"When we leave this sphere of simple
circulation or the exchange of commodities,

1:18:13.429,1:18:17.130
which provides the 'free-trader vulgaris' with
his views, his concept and the standard by which

1:18:17.130,1:18:19.969
he judges the society of capital and wage-labour,

1:18:19.969,1:18:23.000
a certain change takes place(…)

1:18:23.000,1:18:28.150
He who was previously the money-owner
now strides out in front as a capitalist;

1:18:28.150,1:18:30.790
the possessor of labour-power
follows as his worker.

1:18:30.790,1:18:33.679
The one smirks self-importantly and
intent on business;

1:18:33.679,1:18:36.399
The other is timid and holds back,

1:18:36.399,1:18:39.139
like someone who has
brought his own hide to market

1:18:39.139,1:18:46.650
and now has nothing else
to expect but - a tanning."

1:18:46.650,1:18:48.099
Interesting point here.

1:18:48.099,1:18:56.589
This notion of rights and freedom.

1:18:56.589,1:18:59.080
What Marx is actually doing here is, in a way,

1:18:59.080,1:19:13.969
pointing out that bourgeois constitutionality
is entirely concerned with market relations.

1:19:13.969,1:19:23.260
And the definitions of
freedom and rights pertain there.

1:19:23.260,1:19:30.659
But bourgeois constitutionality has almost nothing
to say about what goes on inside of production.

1:19:30.659,1:19:35.780
What goes on inside of a factory?

1:19:35.780,1:19:41.070
And when states start to interfere with what
goes on inside of the factory by passing legislation

1:19:41.070,1:19:48.000
like OSHA, capitalists get outraged.

1:19:48.000,1:19:53.699
It is a violation of the
rights of private property.

1:19:53.699,1:20:00.510
You don't want anybody prying around
inside of the production process.

1:20:00.510,1:20:04.550
And bourgeois constitutionality
has nothing to say about what goes on inside

1:20:04.550,1:20:10.290
the production process,
nothing to say about it whatsoever.

1:20:10.290,1:20:16.709
Yes, you can try and take somebody's
market relations and bring them back into…

1:20:16.709,1:20:22.879
…and apply them to this world
of production, but that's very hard to do.

1:20:22.879,1:20:27.330
And this, I think, is a fascinating kind of point.

1:20:27.330,1:20:33.410
Because a lot of politics right
now is precisely about freedom and rights.

1:20:33.410,1:20:41.229
Perfectly consistent with the
bourgeois vision of the world.

1:20:41.229,1:20:43.849
And Marx is kind of saying:

1:20:43.849,1:20:49.100
Yeah, you can have a great time
there playing around with Bentham, notions

1:20:49.100,1:20:52.949
of freedom and rights and all this kind of stuff,
and private property and all the rest of it.

1:20:52.949,1:20:56.059
I mean, this is the neoliberal ethic.

1:20:56.059,1:21:03.489
Run wild, it's the liberal theory,
run wild, liberal constitutionality.

1:21:03.489,1:21:08.089
And whenever a revolutionary movement
comes in, like happened in Portugal in the

1:21:08.089,1:21:13.169
1970s, and they try to set up a constitution
which actually tried to legislate

1:21:13.169,1:21:22.770
how production was to be organized,
the bourgeoisie went utterly crazy.

1:21:22.770,1:21:29.510
That is something you cannot and must not do.

1:21:29.510,1:21:32.559
And what is interesting to
me is to think how much

1:21:32.559,1:21:39.679
of politics over the last thirty
years has actually forgotten that.

1:21:39.679,1:21:42.799
How much of politics,

1:21:42.799,1:21:47.310
by going to abstract notions of human rights
and freedom and rights and all this kind of stuff,

1:21:47.310,1:21:52.499
is actually talking about something
which is outside of what is going on

1:21:52.499,1:21:58.179
in the actual production process itself.

1:21:58.179,1:22:05.319
Because what Marx is saying is: you can't
find the secret of how capital is produced

1:22:05.319,1:22:08.789
by simply looking at the market.

1:22:08.789,1:22:12.929
You can see that there's a
commodity there, called labour-power,

1:22:12.929,1:22:23.279
which clearly has the capacity to
produce more value than it itself has.

1:22:23.279,1:22:30.639
But in order to crack the secret
of profit making and the production of capital

1:22:30.639,1:22:35.230
you have to go inside the production process,
you have to go inside the labour-process.

1:22:35.230,1:22:37.229
And look at what is happening

1:22:37.229,1:22:44.229
inside the factory, look at what's happening
in the labour process on the production line,

1:22:45.229,1:22:52.510
in the fields, agri-business, in the minds,

1:22:52.510,1:23:00.319
in the factories, and all
those huge complexes in China,

1:23:00.319,1:23:06.349
employing thousands and thousands of people
making socks and all the rest of it, things we wear.

1:23:06.349,1:23:09.590
So that's where we have to go.

1:23:09.590,1:23:15.879
And unless we're prepared to go into that
realm, we'll never going to find

1:23:15.879,1:23:22.079
the real secret of how profit is made.

1:23:22.079,1:23:32.030
But in order to get to that point we have
to understand that a proletariat has to exist.

1:23:32.030,1:23:36.819
Proletarianization has to have occurred.

1:23:36.819,1:23:39.819
And again Marx is saying:

1:23:39.819,1:23:42.169
Look, I'm not going to be talking here

1:23:42.169,1:23:46.709
about how the proletariat was formed.

1:23:46.709,1:23:51.079
Actually, he does, in Capital,
talk about that, but it is in part eight

1:23:51.079,1:23:59.760
where he deals with the formation
the proletariat and primitive accumulation.

1:23:59.760,1:24:01.779
But here he's saying:

1:24:01.779,1:24:05.609
I'm assuming there's a labour market,

1:24:05.609,1:24:07.829
the proletariat is already in place,

1:24:07.829,1:24:14.059
wage labour is everywhere,
the value of labour-power is known.

1:24:14.059,1:24:19.569
All that data is known.

1:24:19.569,1:24:28.110
We then go on to construct a theory
on the basis of that form of argument.

1:24:28.110,1:24:31.900
Now again: there are
assumptions built into this.

1:24:31.900,1:24:40.210
He's clearly taking on, here and
everywhere else, the theses of liberalism

1:24:40.210,1:24:44.379
and the theses of classical political economy.

1:24:44.379,1:24:47.969
And he's taking them at their word.

1:24:47.969,1:24:52.280
He then wants to show,
when you take them at their word,

1:24:52.280,1:24:56.179
you can't solve the secret of profit-making,

1:24:56.179,1:25:01.969
unless you do something else,
which is part three,

1:25:01.969,1:25:11.800
which is going to be about the production
of surplus value, of absolute surplus value.

1:25:12.919,1:25:26.199
So what we'll do next time
is to read the next three chapters.

1:25:26.199,1:25:39.079
Paying particular attention to the first ten
pages or so of Chapter Seven on the labour-process.

1:25:39.079,1:25:43.929
So we have some time for general discussion
on what's going on in these three chapters.

1:25:43.929,1:25:46.740
Anybody want to raise questions?

1:25:46.740,1:26:06.179
» STUDENT: (inaudible)

1:26:06.179,1:26:12.760
» HARVEY: You could make that argument, but then…

1:26:12.760,1:26:17.179
that will then depend on a historical,

1:26:17.179,1:26:19.960
you know, on the historical
events that actually happened.

1:26:19.960,1:26:28.739
We will see some of that being depicted
in Capital. Now, Marx's account of that is that

1:26:28.739,1:26:35.239
the formation of a proletariat really
began to form in the sort of fourteenth…

1:26:35.239,1:26:39.360
…thirteenth/fourteenth centuries.
So it was a long, long process.

1:26:39.360,1:26:43.300
So you get elements of a wage labour system,

1:26:43.300,1:26:48.439
which are arising when
there's no industrial capital around.

1:26:48.439,1:26:54.980
There is certainly at some point an agrarian
capital which begins to kick in and start

1:26:54.980,1:26:58.789
to proletarianize in
the countryside, wage labour,

1:26:58.789,1:27:03.380
conversion of peasants into wage-laborers
in the countryside through the enclosure movement.

1:27:03.380,1:27:08.250
So you start to see elements of this. So yes,
you could argue that there is a co-evolution

1:27:08.250,1:27:12.929
of the rise of the proletariat
and the rise of a capitalist class,

1:27:12.929,1:27:15.590
but the way in which Marx depicts it, is that

1:27:15.590,1:27:21.070
many elements of proletarianization
preceded the rise of,

1:27:21.070,1:27:24.089
as it was, the industrial form of
capital which is going to be

1:27:24.089,1:27:27.489
fundamentally concerned with the exploitation

1:27:27.489,1:27:30.810
of labour-power in production
at the end of the eighteenth century.

1:27:30.810,1:27:35.949
By then an extensive proletariat
was already in place,

1:27:35.949,1:27:38.999
functioning in all kinds of ways.
Including, by the way,

1:27:38.999,1:27:44.619
and this is a very important element
in the British case, as a servant class,

1:27:44.619,1:27:47.989
which is a class of wage laborers

1:27:47.989,1:27:54.659
employed as menial servants and,
you know, coachmen and all that kind of stuff

1:27:54.659,1:28:00.209
for a fairly affluent consuming class.
So there was a class of wage laborers, that was

1:28:00.209,1:28:02.570
spreading around, and then

1:28:02.570,1:28:07.189
already in place before industrial
capitalism could seize upon that

1:28:07.189,1:28:13.770
and start to use it. So, in a sense,
this was more the egg and the chicken is

1:28:13.770,1:28:16.429
the industrialization that occurred a bit later.

1:28:16.429,1:28:22.499
But, in order for wage labour to have occurred,
there had to be kind of wage labour relations

1:28:22.499,1:28:26.480
established in the countryside, established
in the service sector and all the rest of it.

1:28:26.480,1:28:29.219
And the service sector in Britain, for example,

1:28:29.219,1:28:34.539
was very large and a lot of
it was indeed straight wage-labour.

1:28:34.539,1:28:44.679
So that was not a capitalist relation,
that was a sort of master-servant kind of relation.

1:28:44.679,1:28:49.980
» STUDENT: The notion of human rights as we know it
today is much…didn't exist at the time Marx was

1:28:49.980,1:28:53.399
writing. But I'm just curious, because you said
something very quickly, and I was trying to understand

1:28:53.399,1:28:58.399
when you're talking about notions of rights and
freedoms being, something that had to be, had to

1:28:58.399,1:29:05.030
address, to be evolved inside what means
production in the production process.

1:29:05.030,1:29:11.989
One of the more marginalized areas of human
rights today is economic, social and cultural rights

1:29:11.989,1:29:20.999
which I, as I was reading how he
defined the actual value of labour power is…

1:29:20.999,1:29:26.509
…I mean…economic and social rights
is about the right to have a house…

1:29:26.509,1:29:28.219
it's the struggle to define and to challenge

1:29:28.219,1:29:33.100
those notions. So I was trying to understand
if you were suggesting or…

1:29:33.100,1:29:36.229
…that Marx or you yourself,

1:29:36.229,1:29:40.690
that all notions…it's that…
do we already begin with…I mean…

1:29:40.690,1:29:45.919
obviously it's problematic, right, if you're trying
to define things within the system without…

1:29:45.919,1:29:51.840
were you saying that all human rights
as we define them now

1:29:51.840,1:29:53.760
do not try to challenge the actual system itself,

1:29:53.760,1:29:58.659
that it's actually just a
reflection of the bourgeoisie…

1:29:58.659,1:30:04.050
» HARVEY: It depends, what we're
talking about here is, of course

1:30:04.050,1:30:09.659
one of the ways in which class struggle unfolds
is over the rights of labour to a decent wage.

1:30:09.659,1:30:11.960
A living wage,

1:30:11.960,1:30:17.289
rights to housing and medical care and all the rest
of it. So there are struggles in the market

1:30:17.289,1:30:21.469
which are very important struggles to be waged.

1:30:21.469,1:30:25.689
Which play a very crucial role in determining
the value of labour-power and, therefore, from

1:30:25.689,1:30:30.340
the standpoint of the proletariat
are very important struggles, OK?

1:30:30.340,1:30:38.159
That's very different, however,
from rights and powers which arise

1:30:38.159,1:30:43.139
for labour in the production-process.

1:30:43.139,1:30:48.479
Now there's a good deal of evidence
that the labour reforms that came through,

1:30:48.479,1:30:55.479
I mean, the national labour relations board,
which was set up in the 1930s,

1:30:56.149,1:31:05.699
paralleled the setting up of legislation which
empowered unions towards collective bargaining

1:31:05.699,1:31:10.099
strategies which allowed them to improve
their positionality in the market.

1:31:10.099,1:31:14.710
And there was a trade-off being
offered between empowering

1:31:14.710,1:31:22.099
people in the market and disempowering
them in the production process.

1:31:22.099,1:31:25.610
In the 1920s and 1930s one of the
ways in which workers insisted

1:31:25.610,1:31:32.439
on empowerment in the production
process was through definition of skills.

1:31:32.439,1:31:40.260
And if you look at the number of skilled

1:31:40.260,1:31:45.670
categories that existed in something like the steel
industry in the 1920s, it was huge.

1:31:45.670,1:31:50.040
And it meant a worker in a particular skilled
category could not be displaced by another worker

1:31:50.040,1:31:51.989
in another skilled category. In other words:

1:31:51.989,1:31:57.829
there was a good deal of worker-monopoly-power
inside of the production process.

1:31:57.829,1:32:02.290
What the national labour relations board did was
to start to dismantle some of that through

1:32:02.290,1:32:08.119
a process of external adjudication over

1:32:08.119,1:32:13.369
skill disputes within production, for example.

1:32:13.369,1:32:19.179
And what this led to in the long run was a gradual
disempowerment of workers at the point of production,

1:32:19.179,1:32:22.259
as opposed to their empowerment in the market.

1:32:22.259,1:32:26.189
So in a sense what happened was a legislative move

1:32:26.189,1:32:36.010
which is deliberately about:
let workers be treated however you want

1:32:36.010,1:32:38.769
at the point of production.
Empower them in the market.

1:32:38.769,1:32:41.710
Because in the 1930s that was
very important anyway, because of

1:32:41.710,1:32:45.229
the effective demand problem.

1:32:45.229,1:32:49.659
So the point here is not to say
that struggles over rights

1:32:49.659,1:32:54.709
over wages and over health care and
all that kind of thing are irrelevant, but to say

1:32:54.709,1:32:56.850
that they're fundamentally different

1:32:56.850,1:33:01.409
from struggles over rights
at the point of production.

1:33:01.409,1:33:06.489
And that disempowerment of
workers at the point of production

1:33:06.489,1:33:13.690
is really an issue. I mean, we saw that for
example in that mining tragedy in Idaho.

1:33:13.690,1:33:16.889
Where people might be getting a decent wage and
they're maybe getting good health care and so on,

1:33:16.889,1:33:20.469
but if you die down in the
pit because they haven't done anything

1:33:20.469,1:33:23.820
about the production process in the pit, and
they're not going to do anything about it

1:33:23.820,1:33:29.219
because it costs too much,
then you're in a different world.

1:33:29.219,1:33:33.969
And I think what Marx is doing here is to
point out that there are two different arenas,

1:33:33.969,1:33:35.670
and they're quite different from each other.

1:33:35.670,1:33:38.820
And if you concentrate only on one

1:33:38.820,1:33:40.539
to the detriment of the other,

1:33:40.539,1:33:43.659
you're going to be looking at the one
which the bourgeoisie wants you to look at,

1:33:43.659,1:33:47.739
where the bourgeoisie is perfectly
happy to negotiate. Because

1:33:47.739,1:33:54.409
it's within the area of legality and
you can hire lawyers and all that kind of stuff.

1:33:54.409,1:34:00.489
And of course is great for the lawyers and
all the rest of it.

1:34:00.489,1:34:05.199
But then, what Marx saying,
empowerment at the point of production.

1:34:05.199,1:34:10.659
I mean, for instance, the right of
agricultural laborers who are working

1:34:10.659,1:34:17.400
with all those pesticides.

1:34:17.400,1:34:23.050
To know what pesticides they are working with
and what the health consequences are.

1:34:23.050,1:34:28.100
OSHA at one point tried to set up
a system where it was mandatory

1:34:28.100,1:34:34.370
for every major kind of industrial
process to list the kinds of

1:34:34.370,1:34:38.899
chemicals you were working with in
the production process

1:34:38.899,1:34:43.260
and say something about their qualities. Were
they carcinogenic?, what kinds of health

1:34:43.260,1:34:47.459
things could come from this etc.

1:34:47.459,1:34:51.300
Of course all that disappeared with
Reagan and all the rest of it.

1:34:51.300,1:34:53.639
But the point here is that:

1:34:53.639,1:34:56.610
what goes on at the point
of production is actually

1:34:56.610,1:35:00.210
very vital for what happens to the worker,

1:35:00.210,1:35:03.090
and what happens to him on
the production line, to what

1:35:03.090,1:35:10.050
degree can they resist disciplinary
actions on the production line?

1:35:10.050,1:35:14.079
Is there harassment on the production line?
What happens?, those kinds of things.

1:35:14.079,1:35:16.079
So it's kind of complicated.

1:35:16.079,1:35:21.030
Well, so what Marx is simply
saying is that the field of rights

1:35:21.030,1:35:26.450
is very much one that is familiar
to the bourgeoisie and therefore

1:35:26.450,1:35:30.020
we talk about that a lot, and some of that
is very important, obviously,

1:35:30.020,1:35:32.079
in terms of determining
the value of labour-power

1:35:32.079,1:35:36.300
and the conditions of labour and so on.
But, we have to look at another field

1:35:36.300,1:35:41.110
which is empowerment at the point of production.

1:35:41.110,1:35:44.829
And the language of rights is
very hard to apply at that point.

1:35:44.829,1:35:47.969
It's about power relations.

1:35:47.969,1:35:51.819
And about knowledge and information and
all kinds of things of that kind.

1:35:51.819,1:35:55.510
So it's hard to articulate it in terms of the
simple language of rights.

1:35:55.510,1:36:01.020
And so to a degree that NGOs and all the rest
of it concentrate on a language of rights,

1:36:01.020,1:36:05.599
they're actually concentrating on
a language of bourgeois discourse

1:36:05.599,1:36:09.019
where progressive things can happen.

1:36:09.019,1:36:10.969
But you're still limiting yourself

1:36:10.969,1:36:14.229
by not looking at what's going
on in terms of the production process.

1:36:14.229,1:36:16.440
And that's where Marx says
you've got to also look.

1:36:16.440,1:36:19.679
You've got to look at
both of these arenas together.

1:36:19.679,1:36:24.559
OK, we're a bit over time,
the temporality law steps in,

1:36:24.559,1:36:30.570
socially necessary labour time is over,
so we'll see you next week.

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