Michael Heinrich’s “Introduction to the Three Volumes of Karl Marx’s Capital” is a fascinating short introduction to Marx’s ‘critique’. There are a number of key insights which I want to capture here.
Chapter three goes into detail on the nature of value. Heinrich draws a distinction between what he calls a traditional Marxist ‘substantialist’ view and value as developed as a social relation through the act of exchange. In the ‘substantialist’ view value is understood as a property of each individual commodity, created during production. In Heinrich’s view this is not what Marx is getting at. Instead value is determined by “socially necessary” labour time, and what is socially necessary can only be determined in exchange where the individual labour of producers is compared to the total labour of society.
“abstract labour is a relation of social validation existing only in exchange… value is not at all a property that an individual thing possesses in and of itself.”
“The substance of value… is something only obtained by things when they are set into relation with one another in exchange.”
(Heinrich 2012, p.53)
“this social relationship between people appears as a relationship between things: it is no longer people who stand in a specific relationship with one another, but commodities.”
(Heinrich 2012, p.73)
This emphasis on value as a social relation and not an eternal property of individual commodities chimes well with Marx’s statement that under capitalism, commodities represent:
“the definite social relation between men themselves which assumes here, for them, the fantastic form of a relation between things.”
(Marx 1990, p.165)
Heinrich defines the substantialist view as a ‘pre-monetary’ theory of value, one which sees value as part of the commodity and money as a passive practical way to simplify the process of exchange. Marx’s theory is rather a ‘monetary’ one. Commodities cannot be related to each other without the value form that is money.
In chapter 7 Heinrich touches on the equalisation of the rate of profit, something which I felt I didn’t really understand on a first reading of Marx, defining the link between the amount of surplus value generated and the actual profit received by an individual capitalist. If commodities actually exchange at or near their true value then different rates of surplus value must mean that capitalists in different branches of production receive differing rates of profit.
As explained by Heinrich rates of profit are equalised in process similar to “supply and demand”. Assuming that capital is able to move between different branches of production, then individual capitalists will gravitate away from areas with lower rates of profit and towards those with higher rates. As supply increases in the areas with higher profit rates, prices will fall and vice versa. The result establishes an average or general rate of profit. To the individual capitalist this process disguises surplus value as the actual source of profit, making it appear that profit is a premium added to the cost of producing it.
“The actual profit of an individual capital… thus seems on the one hand to depend upon objective conditions (market prices) and on the other hand on the subjective skill of the capitalist in producing at a low cost of production. The fact that profit rests on the appropriation of surplus value is not apparent.”
(Heinrich 2012, p.147)
Most importantly of all, this transition from value to price is a transition from one level of description to another. To see the dialectic whole from a different angle. Value mediates the relationship of individual labour to the labour of the whole of society. Price and profit mediate the relationship of individual capital to the total social capital. They are different poles of the same social relationship.
Heinrich argues that Marx has not proven that the rate of profit is bound to fall over the long term (Heinrich 2012, p.151) on the basis that while it is likely that the organic composition of capital is increase, Marx assumes that the rate of surplus value will remain at least stable thereby leading to a falling rate of profit. In fact it is possible that the rate of surplus value may increase, or at least fall more slowly than the organic composition of capital rises either one of which will mean that the rate of profit does not fall.
On crises Heinrich outlines an “underconsumptionist” view. The unrestricted nature of production struggles to realise value in a world where the income of most people is constrained.
“The tendency for an unlimited extension of production confronts an ability to consume in society that is limited in a variety of ways.”
(Heinrich 2012, p.172)
“a potentially unlimited reproduction confronts a limited consumption… The consequence is a tendency towards the overproduction of commodities… and the over-accumulation of capital.”
(Heinrich 2012, p.173)
This leads to crisis as value cannot be realised in the market, leading to the destruction of social wealth but also conversely an increase in the rate of profit for the remaining capitals and a eventually a renewed upturn often driven by technological changes which improved profitability.
In the final chapter, Heinrich offers some thoughts on how Marx envisaged a communist society working. This is of interest as a rule Marx did not write much about what would come after capitalism. For Heinrich there are two key differences. First that society is no longer based on exchange. Capital, commodities, and money no longer exist. Second humanity is emancipated from a social structure that develops a life of it’s own and impose itself upon each individual. The social relations which generate fetishism must disappear with society organised as an “association of free men”.
Heinrich contrasts this with traditional Marxism-Leninism based on changing distribution patterns which remains dependent on a central authority, with the people becoming a passive object of the party’s policies.
“emphasises the massive development of productivity on the basis of science and technology, as well as the comprehensive development of the abilities of the workers as essential preconditions for the transition to a communist society.”
(Heinrich 2012, p.223)
Heinrich, Michael An Introduction to the Three Volumes of Karl Marx’s Capital (Monthly Review Press, New York, 2012).
Marx, Karl Capital, A Critique of Political Economy (Penguin, London, 1990)