MARXIST INTERNET ARCHIVE  |  PRINCIPLES OF MARXISM-LENINISM | Bill Bland

PRINCIPLES OF MARXISM-LENINISM

A STUDY COURSE

CLASS THREE : HOW CAPITALISM WORKS (Part Two)

By W.B. Bland.

1. WHAT IS THE ACCUMULATION OF CAPITAL?

The transformation of surplus value into new capital so as to increase the amount of capital in the hands of an individual or firm.

Even if the rate of exploitation remains unchanged, the accumulation of capital enables the number of exploited workers employed by a particular individual or firm to be increased, so increasing the total surplus value obtained by the individual or firm concerned.

2. THE NEW MEANS OF PRODUCTION OBTAINED AS A RESULT OF THE

ACCUMULATION OF CAPITAL TEND TO BE MORE MECHANISED THAN THE OLD.

WHAT ADVANTAGE DOES THIS GIVE TO THE FIRM CONCERNED?

The increased productivity resulting from the increased mechanisation reduces the cost of production of each commodity, enabling the firm concerned (as long as it enjoys a technical advantage over its rivals) to make an above-average rate of profit.

NOTE: We call the ratio of constant capital (plant, etc.) to variable capital (wages), the organic composition of capital. Thus, the organic composition of capital tends constantly to increase.

3. WHAT IS CONCENTRATION OF CAPITAL?

The enlargement of individual capitals into larger and larger units. The concentration of capital follows from the process of accumulation of capital.

4. LEAVING ON ONE SIDE THE ACCUMULATION AND MECHANISATION OF

CAPITAL, HOW ELSE CAN A CAPITALIST FIRM INCREASE ITS PROFITS?

Only by increasing the amount of surplus value it obtains from each of its workers, for example:

1) by cutting wages (allowing prices to rise while wages are frozen represents a cut in real wages);

2) by increasing working hours while preventing a corresponding increase in real wages;

3) by increasing the intensity of work by methods such as piecework wage systems (where wages are geared to output), 'speed- up' of the conveyor belt system, time-and-motion-study (designed to eliminate any actions which do not contribute to production), etc.

5. WHAT IS THE BASIS OF THE CONFLICT OF INTEREST BETWEEN LABOUR AND CAPITAL WHICH MARXIST-LENINISTS CALL 'THE CLASS STRUGGLE'?

The division of the value produced by the workers between the two classes -- the working class and the capitalist class. Leaving on one side the accumulation and mechanisation of capital, higher profits can be obtained only at the expense of the living and working conditions of the working class, while improved living and working conditions for workers can be obtained only at the expense of profit.

There is, therefore, a fundamental conflict of interest between the working class and the capitalist class. At times smouldering beneath the surface, at times bursting into the open flames of strike or lock-out, the class struggle is inherent in capitalist society. No repressive measures can do more than hold it down for a while. It will disappear only when capitalists and capitalism no longer exist.

6. WHAT IS THE BASIC CAUSE OF SLUMPS?

Firstly, the unplanned, anarchic character of production under capitalism, where each firm 'plans' its production in the hope of maximising its profits, combined, secondly, with the fact that the working class (who comprise, in a developed capitalist country, the majority of the population) receive in wages considerably less than would enable them to purchase all the goods and services they produce, and with, thirdly, the tendency for the rate of profit to fall in line with the growth in the organic composition of capital.

Periodically, therefore, a glut of unsold goods piles up in warehouses and orders to producers are drastically cut. As a result, capitalists cut back their production, putting workers on short time or dismissing them. In consequence, the purchasing power of the working class is reduced still further, orders are further cut back, and the whole system sinks into a vicious spiral of slump or depression, with mass unemployment and widespread bankruptcies.

When production has fallen to a low level (often with masses of surplus produce being destroyed), the warehouses are compelled to order at least a minimum quantity of the goods required by the population. As a result, the capitalists take some workers back into employment and, in consequence of the rise in the purchasing power of the workers, more orders flow into producing firms. The system picks up into a recovery, followed by a boom -- at the height of which a new crisis of relative over-production is precipitated.

7. WHAT IS MONOPOLY?

A firm, or association of firms, which possesses monopoly power, i.e., which controls so much of the output of a commodity within a market that a competitive market can no longer be said to exist.

8. WHAT ARE THE ADVANTAGES OF MONOPOLY POWER TO THE CAPITALISTS POSSESSING IT?

A monopoly can price its commodities higher than would be possible under conditions of competition, i.e., it can sell its commodities above their value. It can assist this process further by restricting output. Thus, a monopoly can make a higher rate of profit than would be possible under conditions of competition.

9. A MONOPOLY MAY BE: 1) A TRUST; 2) A COMBINE, OR 3) A CARTEL. WHAT ARE THE CHARACTERISTICS OF EACH?

A trust is a single giant firm with monopoly power, such as Imperial Chemical Industries.

A combine is a group of firms under single control possessing monopoly power, such as Unilever.

A cartel or ring is an association of separate firms which have agreed to restrict competition among themselves in order to reap the advantages of monopoly power, A cartel may, for example, fix production quotas and the share of the market for the participating firms and/or agreed prices for a commodity. An example of an international cartel is the Organisation of Petroleum Exporting Countries.

10. DOES MONOPOLY END COMPETITION?

No. It reduces competition in the area covered by the monopoly, while accentuating it in other fields -- e.g., between monopoly capitalists and non-monopoly capitalists and between rival groups of monopolists in the same or different countries.

11. WHAT IS FINANCE CAPITAL?

As capitalism develops, concentration and centralisation, of capital proceed in banking as in industry, and a merging of bank and industrial capital takes place, so that a small group of monopoly capitalists -- a financial oligarchy -- comes to control the large banks and financial institutions as well as the large industrial firms. This merged bank and industrial capital is called finance capital.

12. WE HAVE SEEN THAT THE CAPITALIST CLASSES OF ALL COUNTRIES ARE FACED WITH A MARKET PROBLEM. HOW DO THEY ENDEAVOUR TO SOLVE THIS PROBLEM?

'In theory' they could raise the workers' wages to equal the value of the commodities they produce, but since this would reduce their profits to nil, capitalists reject this solution.

Consequently, they endeavour to solve their perennial market problem by exporting commodities. Since all the developed capitalist countries have a market problem, each tends to direct its export drive primarily towards less developed countries.

13. WHY DOES THE EXPORT OF COMMODITIES TEND TO LEAD TO THE EXPORT OF CAPITAL AND TO COLONIALISM?

Because an underdeveloped country is economically backwards, its population as a whole tends to be poor. Furthermore, its economy tends to be autarkic (that is, relatively self- contained). Consequently, an underdeveloped country provides a poor market for the surplus commodities from a developed capitalist country unless its economy is radically transformed.

This is one reason why capitalist firms in developed capitalist countries 'export capital' to such underdeveloped countries, i.e,, invest it in the acquisition of large tracts of land for conversion into plantations or mines. They flood the underdeveloped country with cheap manufactured goods which ruin many of the native artisans (who still use handicraft methods which cannot compete with machine production). And if they can control the administration of the underdeveloped country -- a process known as colonialism -- they can force a large part of the peasantry from the land they traditionally held (for example, by imposing money taxes which can be met only from wages).

These ruined artisans and landless peasants are compelled to seek employment at starvation wages in foreign-owned plantations or mines producing cheap raw materials and food for the developed capitalist countries (at a very high rate of profit for the firms involved -- this providing a second important reason for the export of capital.

14. WHAT ARE SUPER-PROFITS?

Surplus value which a capitalist class obtains by the exploitation of workers outside its own country, particularly in underdeveloped colonial-type countries where the degree of civilisation (and so the value and price of labour power) is lower than in the developed capitalist country, so that the rate of profit is (often very considerably) higher.

15. WHAT IS A COLONY?

A colonial-type country which is administered directly by a developed capitalist country, e.g., Gibraltar, Northern Ireland.

16. WHAT IS A SEMI-COLONY?

A country which is nominally independent but is in fact dominated by a foreign power (e.g., Saudi Arabia).

17. SOME PEOPLE CLAIM THAT THE WORKING CLASS OF A DEVELOPED CAPITALIST COUNTRY AS A WHOLE SHARES IN THE EXPLOITATION OF COLONIAL-TYPE COUNTRIES. IS THIS TRUE?

No. Super-profits from the exploitation of the working people of colonial-type countries go to the capitalists of the developed capitalist countries concerned. While a small portion of these super-profits may be used to bribe a stratum of highly- paid workers (mainly the officials in the labour movement who act as agents of capital) the workers as a whole receive only the value of their labour power in wages and do not share in the super-profits.

Nevertheless, the existence of the small stratum of workers bribed by imperialist super-profits (the so-called 'labour aristocracy') creates an objective split in the working class which complicates the development of the socialist movement.

For the most part, however, the fact that the standard of living of the British workers has risen over the past hundred years is not because they receive in wages more than the value of their labour-power, but because the value of their labour- power has increased. A considerable part of the super-profits from colonial-type countries has been used to accumulate capital and mechanise production at home, so that productivity has risen and with it the 'degree of civilisation' which contributes to the determination of the value of labour power. In other words, total production has risen very considerably over the last century and the working class has been accorded a minor portion of this in the form of increased real wages. However, the share of total production received in wages by the working class has fallen, so that the exploitation of the British working class has increased over this period.

18. THE ECONOMIC TRANSFORMATION OF A COLONIAL-TYPE COUNTRY LIMITS IN TIME THE USEFULNESS OF THE COUNTRY TO THE DEVELOPED CAPITALIST COUNTRY CONCERNED. HOW DOES THIS COME ABOUT?

The capitalists of the dominating country need a stratum of well-educated native people to serve them as civil servants, office workers, etc., and these people become frustrated by the fact that the higher positions are reserved for representatives of the foreign dominating power.

Furthermore, although the foreign capitalists try to limit capitalist development in the colonial-type country, they need railways, harbours, etc. in order to bring out raw materials and food from the country. This helps to bring about the development of a national capitalist class or national bourgeoisie which, although frustrated in many ways by the dominating foreign power (frustrations which assist in developing the political consciousness of the national bourgeoisie), develops a degree of native capitalist industry which competes with the export industries of the developed capitalist country. It also creates an industrial working class, small in size but relatively concentrated; this naturally gives rise to a labour movement, which begins to struggle for higher wages and better working conditions.

In time, all these factors lead to the rise of a national liberation movement, led initially by the national bourgeoisie, the aim of which is to free the colonial-type country from the domination and exploitation of the foreign capitalsts.

19. HOW DO THE CAPITALISTS OF THE DOMINATING FOREIGN POWER RESPOND TO THE RISE OF A NATIONAL LIBERATION MOVEMENT?

First of all, by attempting to suppress it by force. Secondly, when the national liberation movement has attained a certain strength, by seeking to neutralise it by transferring poltical power nominally to a group of landlords and comprador capitalists who are dependent upon the foreign power for their ability to exploit the working people.

20. WHAT IS IMPERIALISM?

Imperialism is another name for monopoly capitalism or finance capitalism.

A capitalist society has developed to the stage of imperialism when:

1) the concentration and centralisation of capital has proceeded to the point where it has created monopolies which play a decisive role in economic life;
2) the merging of bank and industrial capital has developed to the point where it has created, on the basis of finance capital, a financial oligarchy;
3) the export of capital, as distinct from the export of commodities, has become extremely important.

On a world scale we must note the creation of international monopolies and the fact that, by 1914, all the underdeveloped countries of the world had been brought within the sphere of influence of one or another imperialist power, so that further imperialist expansion could only be at the expense of some other imperialist power.

     CLASS ONE : THE DEVELOPMENT OF SOCIETY

General Definitions.

     CLASS TWO : HOW CAPITALISM WORKS (Part One)

The Commodity; Money; Labour Power...

     CLASS THREE : HOW CAPITALISM WORKS (Part Two)

The accumulation of Capital; Capial and Labour; Imperialism...

     CLASS FOUR : THE STATE AND THE ROAD TO SOCIALISM

The State; Parties; Socialism; fascism...

     CLASS FIVE : THE PARTY OF THE WORKING CLASS

Reformism; Class interests; Revisionism...

     CLASS SIX : THE NATIONAL QUESTION

Nations; Proletarian Internationalism...

     CLASS SEVEN : WAR

Civil wars; just and unjust wars; wars of national liberation...

     CLASS EIGHT : HOW  SOCIALISM  WORKS

What is Socialism; its class character...