Marxian concept Capital accumulation

1 marxian concept

1.1 over-accumulation , crisis
1.2 concentration , centralization
1.3 rate of accumulation
1.4 circuit of capital accumulation production
1.5 simple , expanded reproduction
1.6 origins
1.7 capital accumulation social relation

marxian concept

in karl marx s economic theory, capital accumulation operation whereby profits reinvested economy, increasing total quantity of capital. capital understood marx expanding value, is, in other terms, sum of capital, expressed in money, transformed through human labor larger value , extracted profits. here, capital defined economic or commercial asset value used capitalists obtain additional value (surplus-value). requires property relations enable objects of value appropriated , owned, , trading rights established.

over-accumulation , crisis

the marxist analysis of capital accumulation , development of capitalism identifies systemic issues process arise expansion of productive forces. crisis of overaccumulation of capital occurs when rate of profit greater rate of new profitable investment outlets in economy, arising increasing productivity rising organic composition of capital (higher capital input labor input ratio). depresses wage bill, leading stagnant wages , high rates of unemployment working class while excess profits search new profitable investment opportunities. marx believed cyclical process fundamental cause dissolution of capitalism , replacement socialism, operate according different economic dynamic.

in marxist thought, socialism succeed capitalism dominant mode of production when accumulation of capital can no longer sustain due falling rates of profit in real production relative increasing productivity. socialist economy not base production on accumulation of capital, instead basing production on criteria of satisfying human needs , directly producing use-values. concept encapsulated in principle of production use .

concentration , centralization

according marx, capital has tendency concentration , centralization in hands of richest capitalists. marx explains:

concentration of capitals formed, destruction of individual independence, expropriation of capitalist capitalist, transformation of many small few large capitals.... capital grows in 1 place huge mass in single hand, because has in place been lost many.... battle of competition fought cheapening of commodities. cheapness of commodities demands, caeteris paribus, on productiveness of labour, , again on scale of production. therefore, larger capitals beat smaller. further remembered that, development of capitalist mode of production, there increase in minimum amount of individual capital necessary carry on business under normal conditions. smaller capitals, therefore, crowd spheres of production modern industry has sporadically or incompletely got hold of. here competition rages.... ends in ruin of many small capitalists, capitals partly pass hands of conquerors, partly vanish.

the rate of accumulation

in marxian economics, rate of accumulation defined (1) value of real net increase in stock of capital in accounting period, (2) proportion of realized surplus-value or profit-income reinvested, rather consumed. rate can expressed means of various ratios between original capital outlay, realized turnover, surplus-value or profit , reinvestment s (see, e.g., writings of economist michał kalecki).

other things being equal, greater amount of profit-income disbursed personal earnings , used consumptive purposes, lower savings rate , lower rate of accumulation be. however, earnings spent on consumption can stimulate market demand , higher investment. cause of endless controversies in economic theory how spend, , how save .

in boom period of capitalism, growth of investments cumulative, i.e. 1 investment leads another, leading expanding market, expanding labor force, , increase in standard of living majority of people.

in stagnating, decadent capitalism, accumulation process increasingly oriented towards investment on military , security forces, real estate, financial speculation, , luxury consumption. in case, income value-adding production decline in favour of interest, rent , tax income, corollary increase in level of permanent unemployment.

as rule, larger total sum of capital invested, higher return on investment be. more capital 1 owns, more capital 1 can borrow , reinvest @ higher rate of profit or interest. inverse true, , 1 factor in widening gap between rich , poor.

ernest mandel emphasized rhythm of capital accumulation , growth depended critically on (1) division of society s social product between necessary product , surplus product , , (2) division of surplus product between investment , consumption. in turn, allocation pattern reflected outcome of competition among capitalists, competition between capitalists , workers, , competition between workers. pattern of capital accumulation can therefore never explained commercial factors, involved social factors , power relationships.

the circuit of capital accumulation production

strictly speaking, capital has accumulated when realized profit income has been reinvested in capital assets. process of capital accumulation in production has, suggested in first volume of marx s das kapital, @ least 7 distinct linked moments:

the initial investment of capital (which borrowed capital) in means of production , labor power.
the command on surplus-labour , appropriation.
the valorisation (increase in value) of capital through production of new outputs.
the appropriation of new output produced employees, containing added value.
the realisation of surplus-value through output sales.
the appropriation of realised surplus-value (profit) income after deduction of costs.
the reinvestment of profit income in production.

all of these moments not refer economic or commercial process. rather, assume existence of legal, social, cultural , economic power conditions, without creation, distribution , circulation of new wealth not occur. becomes clear when attempt made create market none exists, or people refuse trade.

in fact marx argues original or primitive accumulation of capital occurs through violence, plunder, slavery, robbery, extortion , theft. argues capitalist mode of production requires people forced work in value-adding production else, , purpose, must cut off sources of income other selling labor power.

simple , expanded reproduction

in volume 2 of das kapital, marx continues story , shows that, aid of bank credit, capital in search of growth can more or less smoothly mutate 1 form another, alternately taking form of money capital (liquid deposits, securities, etc.), commodity capital (tradeable products, real estate etc.), or production capital (means of production , labor power).

his discussion of simple , expanded reproduction of conditions of production offers more sophisticated model of parameters of accumulation process whole. @ simple reproduction, sufficient amount produced sustain society @ given living standard; stock of capital stays constant. @ expanded reproduction, more product-value produced necessary sustain society @ given living standard (a surplus product; additional product-value available investments enlarge scale , variety of production.

the bourgeois claim there no economic law according capital re-invested in expansion of production, such depends on anticipated profitability, market expectations , perceptions of investment risk. such statements explain subjective experiences of investors , ignore objective realities influence such opinions. marx states in vol.2, simple reproduction exists if variable , surplus capital realized dept. 1—producers of means of production—exactly equals of constant capital of dept. 2, producers of articles of consumption (pg 524). such equilibrium rests on various assumptions, such constant labor supply (no population growth). accumulation not imply necessary change in total magnitude of value produced can refer change in composition of industry (pg. 514).

ernest mandel introduced additional concept of contracted economic reproduction, i.e. reduced accumulation business operating @ loss outnumbers growing business, or economic reproduction on decreasing scale, example due wars, natural disasters or devalorisation.

balanced economic growth requires different factors in accumulation process expand in appropriate proportions. markets cannot spontaneously create balance, in fact drives business activity precisely imbalances between supply , demand: inequality motor of growth. partly explains why worldwide pattern of economic growth uneven , unequal, although markets have existed everywhere long time. people argue explains government regulation of market trade , protectionism.

origins

according marx, capital accumulation has double origin, namely in trade , in expropriation, both of legal or illegal kind. reason stock of capital can increased through process of exchange or trading through directly taking asset or resource else, without compensation. david harvey calls accumulation dispossession. marx not discuss gifts , grants source of capital accumulation, nor analyze taxation in detail (he couldn t, died before completing major book, das kapital). nowadays tax take large (i.e., 25-40% of gdp) authors refer state capitalism. gives rise proliferation of tax havens evade tax liability.

the continuation , progress of capital accumulation depends on removal of obstacles expansion of trade, , has historically been violent process. markets expand, more , more new opportunities develop accumulating capital, because more , more types of goods , services can traded in. capital accumulation may confront resistance, when people refuse sell, or refuse buy (for example strike investors or workers, or consumer resistance).

capital accumulation social relation

accumulation of capital refers in marxist writings reproduction of capitalist social relations (institutions) on larger scale on time, i.e., expansion of size of proletariat , of wealth owned bourgeoisie.

this interpretation emphasizes capital ownership, predicated on command on labor, social relation: growth of capital implies growth of working class (a law of accumulation ). in first volume of das kapital marx had illustrated idea reference edward gibbon wakefield s theory of colonisation:

...wakefield discovered in colonies, property in money, means of subsistence, machines, , other means of production, not yet stamp man capitalist if there wanting correlative — wage-worker, other man compelled sell himself of own free-will. discovered capital not thing, social relation between persons, established instrumentality of things. mr. peel, moans, took him england swan river, west australia, means of subsistence , of production amount of £50,000. mr. peel had foresight bring him, besides, 3,000 persons of working-class, men, women, , children. once arrived @ destination, “mr. peel left without servant make bed or fetch him water river.” unhappy mr. peel, provided except export of english modes of production swan river!

in third volume of das kapital, marx refers fetishism of capital reaching highest point interest-bearing capital, because capital seems grow of own accord without doing anything. in case,

relations of capital assume externalised , fetish-like form in interest-bearing capital. have here



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, money creating more money, self-expanding value, without process effectuates these 2 extremes. in merchant s capital,



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, there @ least general form of capitalistic movement, although confines solely sphere of circulation, profit appears merely profit derived alienation; @ least seen product of social relation, not product of mere thing. (...) obliterated in



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, form of interest-bearing capital. (...) thing (money, commodity, value) capital mere thing, , capital appears mere thing. result of entire process of reproduction appears property inherent in thing itself. depends on owner of money, i.e., of commodity in continually exchangeable form, whether wants spend money or loan out capital. in interest-bearing capital, therefore, automatic fetish, self-expanding value, money generating money, brought out in pure state , in form no longer bears birth-marks of origin. social relation consummated in relation of thing, of money, itself.—instead of actual transformation of money capital, see here form without content.