Marx explains this structural feature of capitalism in his chapter on “simple reproduction” in volume one. We will interpret this concept as the reproduction, in and through cycles of production-consumption, of the relationship between capital and workers:
Marx sometimes refers to simple reproduction as an abstract thought experiment – capitalism without growth – but to leave it at that is to miss what the concept tells us about the inner mechanism of the process of accumulation. The chapter on simple reproduction concludes: “Capitalist production, therefore, under its aspect of a continuous connected process, of a process of reproduction, produces not only commodities, not only surplus-value, but it also produces and reproduces the capitalist relation; on the one side the capitalist, on the other the wage-labourer” (Marx, Capital, vol.1 (MECW 35), p.573).
Simple reproduction is maintained not out of “habit”, nor by the false or inadequate consciousness of workers, but by a material compulsion. This is the exploitation of wage-workers, the fact that all together, they can purchase only a portion of the goods they produce:
"[Capital prevents its] self-conscious instruments from leaving it in the lurch, for it removes their product, as fast as it is made, from their pole to the opposite pole of capital. Individual consumption provides, on the one hand, the means for their maintenance and reproduction: on the other hand, it secures by the annihilation of the necessaries of life, the continued re-appearance of the workman in the labour-market.” (Marx, Capital, vol.1 (MECW 35), p.573.)
Endnotes, Misery and Debt, On the Logic and History of Surplus Population and Surplus Capital, Endnotes #2 (2010), https://endnotes.org.uk/articles/misery-and-debt
All capital must accumulate, or it will fall behind in its competition with other capitals. Competitive price formation and variable cost structures within sectors lead to divergent intra-sectoral profit rates, which in turn drives efficiency-increasing innovations, for by reducing their costs beneath the sectoral average firms can either reap super profits, or lower prices to gain market share. But falling costs will in any case lead to falling prices, for the mobility of capital between sectors results in an equalisation of inter-sectoral profit rates, as the movement of capital in search of higher profits drives supply (and thus prices) up and down, causing returns on new investment to fluctuate around an inter-sectoral average. This perpetual movement of capital also spreads cost-reducing innovations across sectors — establishing a law of profitability which forces all capitals to maximise profits , irrespective of the political and social configuration in which they find themselves. Conversely, when profitability falls, there is nothing that can be done to re-establish accumulation short of the “slaughtering of capital values” and the “setting free of labour” which re-establish the conditions of profitability.
Endnotes, Misery and Debt, On the Logic and History of Surplus Population and Surplus Capital, Endnotes #2 (2010), https://endnotes.org.uk/articles/misery-and-debt
What does the primitive accumulation of capital, i.e., its historical genesis, resolve itself into? In so far as it is not immediate transformation of slaves and serfs into wage labourers, and therefore a mere change of form, it only means the expropriation of the immediate producers, i.e., the dissolution of private property based on the labour of its owner. Private property, as the antithesis to social, collective property, exists only where the means of labour and the external conditions of labour belong to private individuals. But according as these private individuals are labourers or not labourers, private property has a different character. The numberless shades, that it at first sight presents, correspond to the intermediate stages lying between these two extremes. The private property of the labourer in his means of production is the foundation of petty industry, whether agricultural, manufacturing, or both; petty industry, again, is an essential condition for the development of social production and of the free individuality of the labourer himself. Of course, this petty mode of production exists also under slavery, serfdom, and other states of dependence. But it flourishes, it lets loose its whole energy, it attains its adequate classical form, only where the labourer is the private owner of his own means of labour set in action by himself: the peasant of the land which he cultivates, the artisan of the tool which he handles as a virtuoso. This mode of production presupposes parcelling of the soil and scattering of the other means of production. As it excludes the concentration of these means of production, so also it excludes co-operation, division of labour within each separate process of production, the control over, and the productive application of the forces of Nature by society, and the free development of the social productive powers. It is compatible only with a system of production, and a society, moving within narrow and more or less primitive bounds. To perpetuate it would be, as Pecqueur rightly says, “to decree universal mediocrity". At a certain stage of development, it brings forth the material agencies for its own dissolution. From that moment new forces and new passions spring up in the bosom of society; but the old social organisation fetters them and keeps them down. It must be annihilated; it is annihilated. Its annihilation, the transformation of the individualised and scattered means of production into socially concentrated ones, of the pigmy property of the many into the huge property of the few, the expropriation of the great mass of the people from the soil, from the means of subsistence, and from the means of labour, this fearful and painful expropriation of the mass of the people forms the prelude to the history of capital. It comprises a series of forcible methods, of which we have passed in review only those that have been epoch-making as methods of the primitive accumulation of capital. The expropriation of the immediate producers was accomplished with merciless Vandalism, and under the stimulus of passions the most infamous, the most sordid, the pettiest, the most meanly odious. Self-earned private property, that is based, so to say, on the fusing together of the isolated, independent labouring individual with the conditions of his labour, is supplanted by capitalistic private property, which rests on exploitation of the nominally free labour of others, i.e., on wage labour.
As soon as this process of transformation has sufficiently decomposed the old society from top to bottom, as soon as the labourers are turned into proletarians, their means of labour into capital, as soon as the capitalist mode of production stands on its own feet, then the further socialisation of labour and further transformation of the land and other means of production into socially exploited and, therefore, common means of production, as well as the further expropriation of private proprietors, takes a new form. That which is now to be expropriated is no longer the labourer working for himself, but the capitalist exploiting many labourers. This expropriation is accomplished by the action of the immanent laws of capitalistic production itself, by the centralisation of capital. One capitalist always kills many. Hand in hand with this centralisation, or this expropriation of many capitalists by few, develop, on an ever-extending scale, the co-operative form of the labour process, the conscious technical application of science, the methodical cultivation of the soil, the transformation of the instruments of labour into instruments of labour only usable in common, the economising of all means of production by their use as means of production of combined, socialised labour, the entanglement of all peoples in the net of the world market, and with this, the international character of the capitalistic regime. Along with the constantly diminishing number of the magnates of capital, who usurp and monopolise all advantages of this process of transformation, grows the mass of misery, oppression, slavery, degradation, exploitation; but with this too grows the revolt of the working class, a class always increasing in numbers, and disciplined, united, organised by the very mechanism of the process of capitalist production itself. The monopoly of capital becomes a fetter upon the mode of production, which has sprung up and flourished along with, and under it. Centralisation of the means of production and socialisation of labour at last reach a point where they become incompatible with their capitalist integument. This integument is burst asunder. The knell of capitalist private property sounds. The expropriators are expropriated.
The capitalist mode of appropriation, the result of the capitalist mode of production, produces capitalist private property. This is the first negation of individual private property, as founded on the labour of the proprietor. But capitalist production begets, with the inexorability of a law of Nature, its own negation. It is the negation of negation. This does not re-establish private property for the producer, but gives him individual property based on the acquisition of the capitalist era: i.e., on co-operation and the possession in common of the land and of the means of production. The transformation of scattered private property, arising from individual labour, into capitalist private property is, naturally, a process, incomparably more protracted, violent, and difficult, than the transformation of capitalistic private property, already practically resting on socialised production, into socialised property. In the former case, we had the expropriation of the mass of the people by a few usurpers; in the latter, we have the expropriation of a few usurpers by the mass of the people.
Marx, Capital, Volume 1 (Progress Publishers, 1887), p.541-542
However much the capitalist mode of appropriation may seem to fly in the face of the original laws of commodity production, it nevertheless arises, not from a violation, but, on the contrary, from the application of these laws. Let us make this clear once more by briefly reviewing the consecutive phases of motion whose culminating point is capitalist accumulation.
We saw, in the first place, that the original conversion of a sum of values into capital was achieved in complete accordance with the laws of exchange. One party to the contract sells his labor-power, the other buys it. The former receives the value of his commodity, whose use value – labor – is thereby alienated to the buyer. Means of production which already belong to the latter are then transformed by him, with the aid of labor equally belonging to him, into a new product which is likewise lawfully his.
The value of the product includes: first, the value of the used-up means of production. Useful labor cannot consume these means of production without transferring their value to the new product, but, to be saleable, labor-power must be capable of supplying useful labor in the branch of industry in which it is to be employed.
The value of the new product further includes: the equivalent of the value of labor-power together with a surplus-value. This is so because the value of labor-power – sold for a definite length of time, say a day, a week etc – is less than the value created by its use during that time. But the worker has received payment for the exchange-value of his labor-power and by so doing has alienated its use value – this being the case in every sale and purchase.
The fact that this particular commodity, labor-power, possesses the peculiar use value of supplying labor, and therefore, of creating value, cannot affect the general law of commodity production. If, therefore, the magnitude of the value advanced in wages is not merely found again in the product, but is found there augmented by a surplus-value, this is not because the seller has been defrauded, for he has really received the value of his commodity; it is due solely to the fact that this commodity has been used up by the buyer.
The law of exchange requires equality only between the exchange-values of the commodities given in exchange for one another. From the very outset, it presupposes even a difference between their use-values and it has nothing whatever to do with their consumption, which only begins after the deal is closed and executed.
Thus the original conversion of money into capital is achieved in the most exact accordance with the economic laws of commodity production and with the right of property derived from them. Nevertheless, the result is:
1. That the product belongs to the capitalist and not to the worker
2. That the value of this product includes, besides the value of the capital originally advanced, a surplus-value which costs the worker labor but the capitalist nothing, and which nonetheless becomes the legitimate property of the capitalist
3. That the worker has retained his labor-power and can sell it anew if he can find a buyer.
Simple reproduction is only the periodical repetition of this first operation; each time money is converted afresh into capital. Thus the law is not broken; on the contrary, it is merely enabled to operate continuously.
[...]
Nor does it matter if simple reproduction is replaced by reproduction on an extended scale, by accumulation. In the former case the capitalist squanders the whole surplus-value in dissipation, in the latter he demonstrates his bourgeois virtue by consuming only a portion of it and converting the rest into money.
Marx, Capital, Volume 1 (Progress Publishers, 1887), p.413-414
Whatever the form of the process of production in a society, it must be a continuous process, must continue to go periodically through the same phases. A society can no more cease to produce than it can cease to consume. When viewed, therefore, as a connected whole, and as flowing on with incessant renewal, every social process of production is, at the same time, a process of reproduction.
The conditions of production are also those of reproduction. No society can go on producing, in other words, no society can reproduce, unless it constantly reconverts a part of its products into means of production, or elements of fresh products. All other circumstances remaining the same, the only mode by which it can reproduce its wealth, and maintain it at one level, is by replacing the means of production – i.e., the instruments of labour, the raw material, and the auxiliary substances consumed in the course of the year – by an equal quantity of the same kind of articles; these must be separated from the mass of the yearly products, and thrown afresh into the process of production. Hence, a definite portion of each year’s product belongs to the domain of production. Destined for productive consumption from the very first, this portion exists, for the most part, in the shape of articles totally unfitted for individual consumption.
Marx, Capital, Volume 1 (Progress Publishers, 1887), p.401
Apart then from all accumulation, the mere continuity of the process of production, in other words simple reproduction, sooner or later, and of necessity, converts every capital into accumulated capital, or capitalized surplus-value. Even if that capital was originally acquired by the personal labor of its employer, it sooner or later becomes value appropriated without an equivalent, the unpaid labor of others materialized either in money or in some other object. We saw that in order to convert money into capital something more is required than the production and circulation of commodities. We saw that on the one side the possessor of value or money, on the other, the possessor of the value-creating substance; on the one side, the possessor of the means of production and subsistence, on the other, the possessor of nothing but labor-power, must confront one another as buyer and seller. The separation of labor from its product, of subjective labor-power from the objective conditions of labor, was therefore the real foundation in fact, and the starting point of capitalist production.
But that which at first was but a starting point, becomes, by the mere continuity of the process, by simple reproduction, the peculiar result, constantly renewed and perpetuated, of capitalist production. On the one hand, the process of production incessantly converts material wealth into capital, into means of creating more wealth and means of enjoyment for the capitalist. On the other hand, the laborer, on quitting the process, is what he was on entering it, a source of wealth, but devoid of all means of making that wealth his own. Since, before entering on the process, his own labor has already been alienated from himself by the sale of his labor-power, has been appropriated by the capitalist and incorporated with capital, it must, during the process, be realized in a product that does not belong to him. Since the process of production is also the process by which the capitalist consumes labor-power, the product of the laborer is incessantly converted, not only into commodities, but into capital, into value that sucks-up the value creating power, into means of subsistence that buy the person of the laborer, into means of production that command the producers. The laborer therefore constantly produces material, objective wealth, but in the form of capital, of an alien power that dominates and exploits him; and the capitalist as constantly produces labor-power, but in the form of a subjective source of wealth, separated from the objects in and by which it can alone be realized; in short he produces the laborer, but as a wage laborer. This incessant reproduction, the perpetuation of the laborer, is the sine qua non of capitalist production.
[…]
Capitalist production, therefore, of itself reproduces the separation between labor-power and the means of labor. It thereby reproduces and perpetuates the condition for exploiting the laborer. It incessantly forces him to sell his labor-power in order to live and enables the capitalist to purchase labor-power in order that he may enrich himself. It is no longer a mere accident, that capitalist and laborer confront each other in the market as buyer and seller. It is the process itself that incessantly hurls back the laborer on to the market as a vendor of his labor-power and that incessantly converts his own product into a means by which another man can purchase him. In reality, the laborer belongs to capital before he has sold himself to capital. His economic bondage is both brought about and concealed by the periodic sale of himself, by his change of masters, and by the oscillations in the market-price of labor-power.
Capitalist production, therefore, under its aspect of a continuous connected process, of a process of reproduction, produces not only commodities, not only surplus-value, but it also produces and reproduces the capitalist relation; on the one side the capitalist, on the other the wage laborer.
Marx, Capital, Volume 1 (Progress Publishers, 1887), p.403, 407
Employing surplus-value as capital, reconverting it into capital, is called accumulation of capital.
Marx, Capital, Volume 1, p.410
In so far as each single transaction invariably conforms to the laws of the exchange of commodities, the capitalist buying labor-power, the laborer selling it, and we will assume at its real value; in so far as all of this is true, it is evident that the laws of appropriation or of private property, laws that are based on the production and circulation of commodities, become by their own inner and inexorable dialectic changed into their very opposite. The exchange of equivalents, the original operation with which we started, has now become turned round in such a way that there is only an apparent exchange. This is owing to the fact, first, that the capital which is exchanged for labor-power is itself but a portion of the product of other’s labor appropriated without an equivalent; and, secondly, that this capital must not only be replaced by its producer, but replaced together with an added surplus. The relation of exchange subsisting between capitalist and laborer becomes a mere semblance appertaining to the process of circulation, a mere form, foreign to the real nature of the transaction, and only mystifying it. The ever-repeated purchase and sale of labor-power is now the mere form; what really takes place is this – the capitalist again and again appropriates, without equivalent, a portion of the previously materialized labor of others, and exchanges it for a greater quantity of living labor. At first the rights of property seemed to us to be based on a man’s own labor. [...] Now, however, property turns out to be the right, on the part of the capitalist, to appropriate the unpaid labor of others or its products, and to be the impossibility, on the part of the laborer, of appropriating his own product. The separation of property from labor has become the necessary consequence of a law that apparently originated in their identity.
Marx, Capital, Volume 1 (Progress Publishers, 1887), p.412-413
Variable capital is therefore only a particular historical form of appearance of the fund for providing the necessaries of life, or the labour-fund which the labourer requires for the maintenance of himself and family, and which, whatever be the system of social production, he must himself produce and reproduce. If the labour-fund constantly flows to him in the form of money that pays for his labour, it is because the product he has created moves constantly away from him in the form of capital. But all this does not alter the fact, that it is the labourer’s own labour, realised in a product, which is advanced to him by the capitalist. Let us take a peasant liable to do compulsory service for his lord. He works on his own land, with his own means of production, for, say, 3 days a week. The 3 other days he does forced work on the lord’s domain. He constantly reproduces his own labour-fund, which never, in his case, takes the form of a money payment for his labour, advanced by another person. But in return, his unpaid forced labour for the lord, on its side, never acquires the character of voluntary paid labour. If one fine morning the lord appropriates to himself the land, the cattle, the seed, in a word, the, means of production of this peasant, the latter will thenceforth be obliged to sell his labour-power to the lord. He will, ceteris paribus, labour 6 days a week as before, 3 for himself, 3 for his lord, who thenceforth becomes a wages-paying capitalist. As before, he will use up the means of production as means of production, and transfer their value to the product. As before, a definite portion of the product will be devoted to reproduction. But from the moment that the forced labour is changed into wage labour, from that moment the labour-fund, which the peasant himself continues as before to produce and reproduce, takes the form of a capital advanced in the form of wages by the lord. The bourgeois economist whose narrow mind is unable to separate the form of appearance from the thing that appears, shuts his eyes to the fact, that it is but here and there on the face of the earth, that even nowadays the labour fund crops up in the form of capital.
Marx, Capital, Volume 1 (Progress Publishers, 1887), p.402
The ownership of past unpaid labour is thenceforth the sole condition for the appropriation of living unpaid labour on a constantly increasing scale. The more the capitalist has accumulated, the more is he able to accumulate.
Marx, Capital, Volume 1, p.412
All capital must accumulate, or it will fall behind in its competition with other capitals. Competitive price formation and variable cost structures within sectors lead to divergent intra-sectoral profit rates, which in turn drives efficiency-increasing innovations, for by reducing their costs beneath the sectoral average firms can either reap super profits, or lower prices to gain market share. But falling costs will in any case lead to falling prices, for the mobility of capital between sectors results in an equalisation of inter-sectoral profit rates, as the movement of capital in search of higher profits drives supply (and thus prices) up and down, causing returns on new investment to fluctuate around an inter-sectoral average. This perpetual movement of capital also spreads cost-reducing innovations across sectors — establishing a law of profitability which forces all capitals to maximise profits , irrespective of the political and social configuration in which they find themselves. Conversely, when profitability falls, there is nothing that can be done to re-establish accumulation short of the “slaughtering of capital values” and the “setting free of labour” which re-establish the conditions of profitability.
Yet this formalistic conception of the valorisation process fails to capture the historical dynamic to which Marx’s analysis is attuned. The law of profitability alone cannot ensure expanded reproduction, for this also requires the emergence of new industries and new markets. Rises and falls in profitability act as signals to the capitalist class that innovations have occurred in specific industries, but what is important is that over time the composition of output — and therefore employment — changes: industries that once accounted for a large portion of output and employment now grow more slowly, while new industries take a rising share of both. Here, we have to look at the determinants of demand, as independent from the determinants of supply.
Demand varies with the price of a given product. When the price is high, the product is purchased only by the wealthy. As labour-saving process innovations accumulate, prices fall, transforming the product into a mass-consumption good. At the cusp of this transformation, innovations cause the market for a given product to expand enormously. This expansion stretches beyond the capacity of existing firms, and prices fall more slowly than costs, leading to a period of high profitability. Capital then rushes into the line, pulling labour with it. At a certain point, however, the limits of the market are reached; that is, the market is saturated. Now innovations cause total capacity to rise beyond the size of the market: prices fall more quickly than costs, leading to a period of falling profitability. Capital will leave the line, expelling labour. [10]
[10]: This process applies only to consumer-goods industries. Capital-goods industries, tend to expand and contract in accordance with the needs of the particular consumer-goods which ‘lead’ each cycle. But the relationship between the two ‘departments’ is never so simple. As we will show, labour-saving ‘process-innovations’ in dept. 1 may lead to ‘product innovations’ in dept. 2, expanding the market as a whole.
This process, which economists have called the “maturation” of industries, has occurred many times. The agricultural revolution, which first broke out in early modern England, eventually hit the limits of the domestic market for its products. Labour-process innovations such as the consolidation of fragmented land holdings, the abolition of the fallow, and the differentiation of land use according to natural advantages meant — under capitalist conditions of reproduction — that both labour and capital were systematically pushed out of the countryside. England rapidly urbanised as a result, and London became the largest city in Europe.
It is here that the key dynamic of expanded reproduction comes into play. For the workers thrown out of agriculture were not left to languish indefinitely in the cities. They were eventually taken up in the manufacturing sector of an industrialising Britain, and especially in the growing textile industry, which was transitioning from wool to cotton cloth. But once again, labour-process innovations such as the spinning jenny, spinning mule, and the power loom meant that eventually this industry, too, began to throw off labour and capital. And the decline in the industries of the first Industrial Revolution, as a percentage of total labour employed and capital accumulated, made way for those of the second Industrial Revolution (chemicals, telecommunications, electric and engine-powered commodities). It is this movement of labour and capital into and out of lines, based on differential rates of profit, that ensures the continued possibility of expanded reproduction:
[E]xpansion … is impossible without disposable human material, without an increase in the number of workers, which must occur independently of the absolute growth of the population. This increase is effected by the simple process that constantly “sets free” a part of the working class; by methods which lessen the number of workers employed in proportion to the increase in production. Modern industry’s whole form of motion therefore depends on the constant transformation of a part of the working population into unemployed or semi-employed hands.
Expanded reproduction is, in this way, the continual reproduction of the conditions of simple reproduction. Capitals that can no longer reinvest in a given line due to falling profitability will tend to find, available to them on the labour market, workers who have been thrown out of other lines. These “free” quantities of capital and labour will then find employment in expanding markets, where rates of profit are higher, or come together in entirely new product lines, manufacturing products for markets that do not yet exist. An increasing number of activities are thus subsumed as capitalist valorisation processes, and commodities spread from luxury into mass markets.
The bourgeois economist Joseph Schumpeter described this process in his theory of the business cycle. He noted that the contraction of older lines rarely happens smoothly or peacefully, that it is usually associated with factory closures and bankruptcies as capitals attempt to deflect losses onto one another in competitive price wars. When several lines contract simultaneously (and they usually do, since they are based on linked sets of technological innovations), a recession ensues. Schumpeter calls this shedding of capital and labour “creative destruction”—“creative” not only in the sense that it is stimulated by innovation, but also because destruction creates the conditions for new investment and innovation: in a crisis, capitals find means of production and labour-power available to them on the market at discount prices. Thus, like a forest fire, the recession clears the way for a new bout of growth.
Many Marxists have espoused something similar to Schumpeter’s conception of cyclical growth, to which they merely add the resistance of workers (or perhaps the limits of ecology) as an external constraint. Hence the Marxist notion of crisis as a self-regulating mechanism is complemented by a conviction that crises provide opportunities to assert the power of labour (or correct the ecologically destructive tendencies of capitalism). In these moments, “another world is possible”. Yet Marx’s theory of capitalism contains no such distinction between “internal” dynamics and “external” limits. For Marx it is in and through this process of expanded reproduction that the dynamic of capital manifests itself as its own limit, not through cycles of boom and bust but in a secular deterioration of its own conditions of accumulation.
Endnotes, Misery and Debt, On the Logic and History of Surplus Population and Surplus Capital, Endnotes #2 (2010), https://endnotes.org.uk/articles/misery-and-debt
But whether condition or consequence, the growing extent of the means of production, as compared with the labour power incorporated with them, is an expression of the growing productiveness of labour. The increase of the latter appears, therefore, in the diminution of the mass of labour in proportion to the mass of means of production moved by it, or in the diminution of the subjective factor of the labour process as compared with the objective factor. This change in the technical composition of capital, this growth in the mass of means of production, as compared with the mass of the labour power that vivifies them, is reflected again in its value composition, by the increase of the constant constituent of capital at the expense of its variable constituent.
This law of the progressive increase in constant capital, in proportion to the variable, is confirmed at every step (as already shown) by the comparative analysis of the prices of commodities, whether we
compare different economic epochs or different nations in the same epoch. The relative magnitude of the element of price, which represents the value of the means of production only, or the constant part of capital consumed, is in direct, the relative magnitude of the other element of price that pays labour (the variable part of capital) is in inverse proportion to the advance of accumulation.
Marx, Capital, Volume 1 (Progress Publishers, 1887), p.438-439
The laws of this centralisation of capitals, or of the attraction of capital by capital, cannot be developed here. A brief hint at a few facts must suffice. The battle of competition is fought by cheapening of commodities. The cheapness of commodities demands, caeteris paribus, on the productiveness of labour, and this again on the scale of production. Therefore, the larger capitals beat the smaller. It will further be remembered that, with the development of the capitalist mode of production, there is an increase in the minimum amount of individual capital necessary to carry on a business under its normal conditions. The smaller capitals, therefore, crowd into spheres of production which Modern Industry has only sporadically or incompletely got hold of. Here competition rages in direct proportion to the number, and in inverse proportion to the magnitudes, of the antagonistic capitals. It always ends in the ruin of many small capitalists, whose capitals partly pass into the hands of their conquerors, partly vanish. Apart from this, with capitalist production an altogether new force comes into play – the credit system, which in its first stages furtively creeps in as the humble assistant of accumulation, drawing into the hands of individual or associated capitalists, by invisible threads, the money resources which lie scattered, over the surface of society, in larger or smaller amounts; but it soon becomes a new and terrible weapon in the battle of competition and is finally transformed into an enormous social mechanism for the centralisation of capitals.
Commensurately with the development of capitalist production and accumulation there develop
the two most powerful levers of centralisation – competition and credit. […] Whether this latter result is the consequence of accumulation or centralisation, whether centralisation is accomplished by the violent method of annexation – when certain capitals become such preponderant centres of attraction for others that they shatter the individual cohesion of the latter and then draw the separate fragments to themselves – or whether the fusion of a number of capitals already formed or in process of formation takes place by the smoother process of organising joint-stock companies – the economic effect remains the same. Everywhere the increased scale of industrial establishments is the starting point for a more comprehensive organisation of the collective work of many, for a wider development of their material motive forces – in other words, for the progressive transformation of isolated processes of production, carried on by customary methods, into processes of production socially combined and scientifically arranged.
Marx, Capital, Volume 1 (Progress Publishers, 1887), p.441
Considering the social capital in its totality, the movement of its accumulation now causes periodical changes, affecting it more or less as a whole, now distributes its various phases simultaneously over the different spheres of production. In some spheres a change in the composition of capital occurs without increase of its absolute magnitude, as a consequence of simple centralisation; in others the absolute growth of capital is connected with absolute diminution of its variable constituent, or of the labour power absorbed by it; in others again, capital continues growing for a time on its given technical basis, and attracts additional labour power in proportion to its increase, while at other times it undergoes organic change, and lessens its variable constituent; in all spheres, the increase of the variable part of capital, and therefore of the number of labourers employed by it, is always connected with violent fluctuations and transitory production of surplus population, whether this takes the more striking form of the repulsion of labourers already employed, or the less evident but not less real form of the more difficult absorption of the additional labouring population through the usual channels. […] The labouring population therefore produces, along with the accumulation of capital produced by it, the means by which it itself is made relatively superfluous, is turned into a relative surplus population; and it does this to an always increasing extent.
Marx, Capital, Volume 1 (Progress Publishers, 1887), p.443
This is the secret of the “general law”: labour-saving technologies tend to generalise, both within and across lines, leading to a relative decline in the demand for labour. Moreover, these innovations are irreversible: they do not disappear if and when profitability is restored (indeed, as we shall see, the restoration of profitability is often conditioned on further innovations in new or expanding lines). Thus left unchecked this relative decline in labour demand threatens to outstrip capital accumulation, becoming absolute.
[…]
What Marx is here describing is not a “crisis” in the sense usually indicated by Marxist theory, i.e. a periodic crisis of production, consumption or even accumulation. In and through these cyclical crises, a secular crisis emerges, a crisis of the reproduction of the capital-labour relation itself. If expanded reproduction indicates that workers and capital pushed out of contracting industries will try to find places in new or expanding lines, the general law of capital accumulation suggests that, over time, more and more workers and capital will find that they are unable to reinsert themselves into the reproduction process. In this way the proletariat tendentially becomes an externality to the process of its own reproduction, a class of workers who are “free” not only of means of reproduction, but also of work itself.
For Marx this crisis expresses the fundamental contradiction of the capitalist mode of production. On the one hand, people in capitalist social relations are reduced to workers. On the other hand, they cannot be workers since, by working, they undermine the conditions of possibility of their own existence. Wage-labour is inseparable from the accumulation of capital, from the accretion of labour-saving innovations, which, over time, reduce the demand for labour: “The working population ... produces both the accumulation of capital and the means by which it is itself made relatively superfluous; and it does this to an extent which is always increasing” [Marx, Capital, vol.1 (MECW 35), p. 638]. It might seem that the abundance of goods, which results from labour-saving innovations, must lead to an abundance of jobs. But in a society based on wage-labour, the reduction of socially-necessary labour-time — which makes goods so abundant — can only express itself in a scarcity of jobs, in a multiplication of forms of precarious employment.
Endnotes, Misery and Debt, On the Logic and History of Surplus Population and Surplus Capital, Endnotes #2 (2010), https://endnotes.org.uk/articles/misery-and-debt
