Part 7. The Accumulation of Capital

The conversion of a sum of money into means of production and labor-power, is the first step taken by the quantum of value that is going to function as capital. This conversion takes place in the market, within the sphere of circulation. The second step, the process of production, is complete so soon as the means of production have been converted into commodities whose value exceeds that of their component parts, and, therefore, contains the capital originally advanced, plus a surplus-value. These commodities must then be thrown into circulation. They must be sold, their value realized in money, this money afresh converted into capital, and so over and over again. This circular movement, in which the same phases are continually gone through in succession, forms the circulation of capital

The capitalist who produces surplus-value – i.e., who extracts unpaid labor directly from the laborers, and fixes it in commodities, is, indeed, the first appropriator, but by no means the ultimate owner, of this surplus-value. She has to share it with capitalists, with landowners, etc., who fulfill other functions in the complex of social production. Surplus-value, therefore, splits up into various parts. Its fragments fall to various categories of persons, and take various forms, independent the one of the other, such as profit, interest, rent, &c.

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.

If we look at capitalists as a class, and workers as a class, we see that the capitalist profits, not only by what he receives from, but by what she gives to, the laborer. The capital given in exchange for labor-power is converted into necessaries, by the consumption of which the muscles, nerves, bones, and brains of existing workers is maintained. The maintenance and reproduction of the working class is, and must ever be, a necessary condition to the reproduction of capital. But the capitalist may safely leave its fulfillment to the laborer’s instincts of self-preservation and of propagation.

The Roman slave was held by fetters: the wage laborer is bound to his owner by invisible threads. The appearance of independence is kept up by means of a constant change of employers, and by the legal fiction of an employment contract.

Hitherto we have investigated how surplus-value emanates from capital; we have now to see how capital arises from surplus-value. Employing surplus-value as capital, reconverting it into capital, is called accumulation of capital

Here’s an example. An original capital of $10,000 buys materials and hires workers and brings in a surplus-value of $2,000, which is capitalized, or rolled back into production to hire more workers. The new capital of $2,000 brings in a surplus-value of $400, and this, too, is capitalized, converted into a second additional capital, which, in its turn, produces a further surplus-value of $80. And so, the ball rolls on.

The original capital was formed by the advance of $10,000. How did the owner become possessed of it?

How the $2,000 originated we know perfectly well. There is not one single atom of its value that does not owe its existence to unpaid labor. The means of production, with which the additional labor-power is incorporated, as well as the necessaries with which the laborers are sustained, are nothing but component parts of the surplus-product, of the tribute annually exacted from the working class by the capitalist class. Though the latter with a portion of that tribute purchases the additional labor-power even at its full price, so that equivalent is exchanged for equivalent, yet the transaction is for all that only the old dodge of every conqueror who buys commodities from the conquered with the money he has robbed them of.

In every case the working class creates by the surplus labor of one year the capital destined to employ additional labor in the following year. And this is what is called: creating capital out of capital. The more the capitalist has accumulated, the more is he able to accumulate.

There are two parts of surplus value, what the capitalist consumes [perhaps he buys himself a personal jet] and what he capitalizes or puts back into production. Given the mass of surplus-value, then, the larger the one of these parts, the smaller is the other. The ratio of these parts determines the magnitude of the accumulation. The capitalist alone gets to decide. It is his deliberate act. That part of the tribute exacted by him which he accumulates, is said to be saved by him, because he does not eat it, i.e., because he performs the function of a capitalist, and enriches himself.

To accumulate, is to conquer the world of social wealth, to increase the mass of human beings exploited by him, and thus to extend both the direct and the indirect sway of the capitalist.

The capitalist gets rich, not like the miser, in proportion to his personal labor and restricted consumption, but at the same rate as he squeezes out the labor-power of others and enforces on the laborer abstinence from all life’s enjoyments.

Accumulate, accumulate! That is Moses and the prophets!

[Next, Marx looks at how this accumulation process exemplifies and affects social relations]

The rate of surplus-value depends, in the first place, on the degree of exploitation of labor-power. But if the laborers could live on air they could not be bought at any price. The zero of their cost is therefore a limit in a mathematical sense, always beyond reach, although we can always approximate more and more nearly to it. The constant tendency of capital is to force the cost of labor back towards this zero.

As capital accumulates, more and more of it is invested in dead labor, machinery and tools, and less of it in living labor (v, variable capital). Workers produce, along with the accumulation of capital, the means by which they are made relatively superfluous, and are turned into a relative surplus population. This is a law of population peculiar to the capitalist mode of production. It forms a disposable industrial reserve army, that belongs to capital quite as absolutely as if the latter had bred it at its own cost. The whole form of the movement of modern industry depends, therefore, upon the constant transformation of a part of the laboring population into unemployed or half-employed hands.

The number of laborers commanded by capital may remain the same, or even fall, while the variable capital increases. This is the case if the individual laborer yields more labor, and therefore his wages increase, and this although the price of labor remains the same or even falls, only more slowly than the mass of labor rises. Increase of variable capital, in this case, becomes an index of more labor, but not of more laborers employed. It is the absolute interest of every capitalist to press a given quantity of labor out of a smaller, rather than a greater number of laborers, if the cost is about the same. In the latter case, the outlay of constant capital increases in proportion to the mass of labor set in action; in the former that increase is much smaller. The more extended the scale of production, the stronger this motive. Its force increases with the accumulation of capital.

One category of the relative surplus population, the “stagnant,” forms a part of the active labor army, but with extremely irregular employment. Hence it furnishes to capital an inexhaustible reservoir of disposable labor power. Its conditions of life sink below the average normal level of the working class; this makes it at once the broad basis of special branches of capitalist exploitation. It is characterized by maximum of working-time, and minimum of wages. Another category of the relative surplus population is the unemployed poor.

The greater the social wealth, the functioning capital, the extent and energy of its growth, and, therefore, also the absolute mass of the proletariat and the productiveness of its labor, the greater is the industrial reserve army. The more extensive the industrial reserve army, the greater is official pauperism. This is the absolute general law of capitalist accumulation