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
ACCUMULATION OF CAPITAL TEND TO BE MORE MECHANISED THAN
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
CAPITAL, HOW ELSE CAN A CAPITALIST FIRM INCREASE ITS
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
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
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
'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)
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
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
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
20. WHAT IS IMPERIALISM?
Imperialism is another name for monopoly capitalism or
A capitalist society has developed to the stage of
1) the concentration and centralisation of capital has proceeded to the
point where it has created monopolies which play a decisive role in
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
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.