1.1 Part Seven in the German and English editions

The most general theoretical conclusions that Marx draws in Capital I on the process of accumulation of capital can be found in Chapter 24, Section 4 (the factors determining the extent of accumulation of capital) and the first four sections of Chapter 25 (‘The general law of capitalist accumulation’). These will be discussed in §2–§3 below. The corresponding chapters in the German edition are 22 and 23 – the difference is due to a reordering by Friedrich Engels for the English edition (1886) of the book. With some reluctance I follow this English convention for my chapter references – with apologies to those who read Das Kapital or its other language translations.

Engels also broke up the German Part Seven into two parts: Part Seven encompassing the systematic chapters 23–25 (German 21–23) and Part Eight the historical chapters 26–33 (German 24–25). When I refer to ‘Part Seven’ I mean the three systematic chapters – with the same apologies.

1.2 A cursory survey of Part Seven

“Earlier we considered how surplus-value arises from capital; now we have to see how capital arises from surplus-value. The employment of surplus-value as capital, or its reconversion into capital, is called accumulation of capital” (725).² In Part Seven of Capital I, from which this quote is taken, Marx first sets out the elementary shape of accumulation: extension or growth of capital. Next he shows how this growth accelerates in combination with the development of the productive forces of labour (§2 below). And finally he introduces another accelerator: the technical composition of capital (§3 below). All along his focus is on the dynamic consequences of this triple interaction on the capital–labour relation, and particularly on their propagation of a reserve army of unemployed labour which is a necessary condition for continuous accumulation of capital.

1.3 The assumptions delineating the level of abstraction

Since around 1990, Marx scholars have increasingly come to appraise Marx’s Capital as a systematic-dialectical work (to be distinguished from historical dialects – both of these different types of dialectics find their modern roots in Hegel).³ Relevant for this essay is not so much the dialectic (I will not stress that) but the systematic, which is a systematic of, in principle, rigorous levels of abstraction running both in terms of the terrain analysed and synthesised (see below) and in terms of the movement from simple determinations to complex ones (both within and across these terrains).

In considering the meaning of Marx’s statements about the effects of the accumulation of capital – including cyclical aspects – it is of preeminent importance to list the assumptions on which these statements are based, assumptions that delineate Marx’s level of abstraction. Here I list the assumptions relevant for the Part Seven chapters.⁴

1. Earlier (Part Four) Marx explicitly considers an average capital (thus abstracting from intra- and inter-branch differences, including differing production periods and compositions of capital – dealt with in Volume III, Parts One and Two). In Part Seven, however, he deals with average changes in the composition of capital. Although much of Part Seven can still be read in terms of the average capital the analysis leans, and sometimes explicitly, towards a macroeconomic treatment.⁵

2. In the introduction to Part Seven Marx indicates that he assumes capital to pass “through its process of circulation in the normal way”.⁶ The ‘normal way’ implies that commodities produced are sold “at their value” (709–10). (This again implies that production and sales are carried out at the normal profit, or the normal surplus-value.) ‘Normal’ also implies, as Marx states, abstraction from any supply/demand discrepancies of the commodities produced. (He will explicitly introduce changes in the reserve of labour though, without considering their effect on the demand for commodities.)

3. Marx also abstracts from differentiations of capital into industrial capital, commercial capital, finance and banking and from landed property. Hence abstraction is made from the “various mutually independent forms” into which surplus-value is fragmented, “such as profit, interest … rent” (709–10).⁷

Immediately following this, Marx makes a formal methodological statement:

“Hence we initiate the accumulation abstractly, that is, merely as moment of the immediate process of production” (my translation of the German text p. 590).⁸

Both of the English translations miss the term “moment” and (therefore) its reference to the subject matter of Volume I; that is, its level of abstraction.⁹ A ‘moment’ is a systematic-dialectical notion, referring to a type of analysis. First, it is the analysis of a constituent (in this case accumulation) that is not yet fully constituted (indeed, in the abstract perspective posited by, and extending through Volume I, we cannot yet grasp accumulation concretely). Second, a moment can have no isolated existence (it obviously cannot be isolated from everything presented so far in Volume I but, more importantly in the current context, it also has no existence in isolation from the presentation still to come in the following Volumes). Indeed it is the analysis of something abstract.¹⁰

Next, Marx makes a second methodological remark, this time relating to the content of his particular abstractions. He says that we can nevertheless consider accumulation merely as moment of the current level of abstraction; in other words, it is adequate to do this provisionally (vorläufig), since dropping the assumptions 2 and 3 would hinder a pure (reine) analysis of accumulation:

A pure analysis of the process, therefore, demands that we should, provisionally, disregard all phenomena that conceal the workings of its inner mechanism. (F, 710 amended; G, 590)

Fowkes has ‘exact’ instead of ‘pure’ for reine; and he has ‘for a time’ instead of ‘provisionally’ for vorläufig (and Moore has the same). The “inner” here refers, in my view, to the ‘immediate process of production’, that is, the capital–labour relation in general. In reference back to the first methodological remark, this does not mean that the “inner mechanism” can have an isolated existence, nor that ‘the inner working’ would be unaffected (qualitatively or quantitatively) by the successive introduction into the presentation of additional phenomena (cf. the inner–outer pair in Hegel’s Logic).¹¹

In other (non-dialectical) words, Marx’s assumptions here are not negligibility assumptions, but heuristic assumptions.

2.1 The drive for and the force for accumulation

Accumulation of capital is the reconversion of surplus-value into capital. Its degree thus depends, ceteris paribus, on the part of surplus-value accumulated as capital. On the one hand this is the capitalist’s “act of will” and “drive towards self-enrichment” (738–9). On the other hand, Marx indicates (739), with

the development of capitalist production … competition subordinates every individual capitalist to the immanent laws of capitalist production, as external and coercive laws. It compels him to keep extending his capital, so as to preserve it, and he can only extend it by means of progressive accumulation.

Nevertheless, “with the growth of accumulation and wealth, the capitalist ceases to be merely the incarnation of capital”; “there develops in the breast of the capitalist a Faustian conflict between the passion for accumulation and the desire for enjoyment” (740–1).

2.2 The dynamics of accumulation introduced: productive forces and accelerated accumulation

In this and the following section I summarise a number of Marx’s statements in a formal way. At the same time, I try to stay as close as possible to Marx’s text; of course, any reading and summarising is necessarily interpretative. Although I use a mathematical form (equations), what I do is not mathematics but rather the adoption of a shorthand notation for purposes of precision and logical consistency checking.

I keep the equations as simple as possible, that is in so far as Marx’s text allows. Marx is not always explicit about whether the relations he posits are linear or non-linear. Whenever that is unclear I just phrase the relation as a function (A = f(B)). Determination should be read from right to left; if no determination is posited I use a ≡ sign. An unspecified change in a variable is indicated by the prefix Δ. Thus ΔA = A_t  – A_t-1. Rates of growth are indicated by a circumflex. Thus  = ΔA/A_t-1.

In this essay all capitalised symbols refer to values in monetary terms (thus calculated in a monetary dimension, e.g. £). All time indices have been suppressed; thus, for A read A_t (unless otherwise indicated). Time refers to a calendar period (t), for example a year.

Marx introduces the dynamics of accumulation of capital in the fourth section of Chapter 24. Without always being very explicit about this, he now introduces fixed capital (i.e., capital that is only in part ‘consumed’ within the production period). I use the symbol K for capital. In order to keep transparent the connection with Marx’s concepts and symbols as used in the middle part of Capital I (see Reuten 2004a) [ch. 8 of the current book], I adopt as simplification the total constant capital (K_c) to be a multitude (μ) of the circulating constant capital C.¹² Note that μ may be taken as a temporary constant, but it is in fact variable and part of Marx’s dynamics.

K ≡ μC + V    [μ > 1] [definition] (1)

Marx starts (747) by taking the accumulation of capital (ΔK) to be a given fraction (å) out of surplus-value (S):

ΔK = åS    [0 < å ≤ 1] [determination] (2)

The magnitude of surplus-value depends on the rate of surplus-value (e) and on the magnitude of the initial capital:¹³

S = f(e; K)    [f'> 0]¹⁴ [determination] (3)

Or also:

S = f(Δe)    [f'> 0] [determination] (3′)

(Marx is not explicit about time – the focus of Volume II. Nevertheless, it should be noticed that if we consider a production period, S is an ‘end of period’ result, K a ‘begin of period’ stock and e a process variable, conditioned by the value of labour-power and the labour process. Having analysed the latter we may, for the sake of heuristic simplicity, take e each time again as a given. Being a process variable, there is nevertheless also a result for e (in the magnitude of surplus-value S). A difficulty in Marx’s text is that he sometimes switches between these two notions of e without notification.)¹⁵

Next, in refocusing his conclusions from Parts Three to Five towards the accumulation of capital, Marx considers the effect of changes in the productive forces of labour (pfl)¹⁶ that press down commodity prices (indicator Π):¹⁷

ΔΠ = f(Δpfl)    [f'< 0] [determination] (4a)

Increasing productive forces have a twofold effect on accumulation. First, because the physical surplus product increases, capitalists ‘may’ buy the same consumption basket with a smaller “consumption-fund”, hence the “accumulation-fund” may increase. Thus the fraction å in equation (2) is turned into a variable depending on the development of the productive forces (‘may’ depending on the ‘drive’ and force for accumulation, which I abbreviate as dfa):¹⁸

å = f₁(dfa) + f₂(ΔΠ)    [f₁'> 0; f₂'< 0] [determination] (5)

Thus:

å = f(dfa; Δpfl)    [f'> 0] [reduced form of 4 & 5] (A)

The second effect is on the rate of exploitation. Let us first simply translate the value of labour-power per day (VLP) into the wage rate per hour (W) given some length of the working day (h).

W ≡ VLP / h [definition] (6)

Thus to the extent that the working day is a constant, we can use the wage rate and the VLP interchangeably.¹⁹ Marx posits:

Δe = f(ΔW)    [f'< 0] [determination] (7)

Of course we know that this determination is defective and represents merely one factor (Marx ‘freezes’ changes in the labour process, including the intensity of labour). The value of labour-power (and the wage rate) is made up of a given ‘real’ component (some basket of commodities w) and a price component.

W ≡ wΠ [definition] (8)

Thus:

ΔW = f(Δpfl)    [f'< 0] [reduced form of 4 & 8] (B)

Therefore the change in productive forces similarly affects the value of labour-power (or W) – the production of relative surplus-value, treated in Parts Four and Five. Hence the nominal wage is pressed down, and the rate of surplus-value up. All this ceteris paribus, we should add (see the next sections).

Taking (1)–(8) together we see how, ceteris paribus, the accumulation of capital (ΔK) depends on, first, K and the initial C/V division (eqn. 1) – to which we will return in §3 – and second on the development of the productive forces (Δpfl). Or, more precise, starting from an initial rate of growth of accumulation (K), a change in that rate depends on changes in the productive forces:²⁰

ΔK̂ = f(Δpfl)    [f' > 0] [reduced form of 2–8] (C)

Marx calls this “accelerated accumulation” (e.g. 753; this terminology became fashionable in mainstream economics around 1935). Therefore:

science and technology are formative [bilden] to a potential expansion of capital, independent of the prevailing magnitude of the functioning capital. (F, 754; translation amended, cf. G, 632)²¹

In the next pages Marx clarifies that changes in the productive forces also impact on the replacement investment (and that it has depreciative effects); thus the change in pfl spreads gradually over the existing capital (753–4).

3.1 Interdependency of wage rate and rate of exploitation – ‘the law of capitalist production’

I now turn to Chapter 25 of Capital I, “The General Law of Capitalist Accumulation”: the investigation of “the influence of the growth of capital on the fate of the working class”. Its “most important factor”, Marx writes, “is the composition of capital, and the changes it undergoes in the course of the process of accumulation” (762). Since Marx, for the purposes of his first section, takes the ‘composition of capital’ as constant, I just present two definitions and postpone their discussion until later (§3.2). The ‘value composition of capital’ (vcc) is the ratio of constant capital (C) to variable capital (V).

vcc ≡ C / V [definition] (9)

(In terms of equation (1): vcc = {(K/V) − 1}{1/μ}.)

The ‘organic composition of capital’ (occ) is the ratio of the value of the means of production (C) to the labour working up those means of production (l) – the latter measured in hours.

occ_l ≡ C / l [definition] (10)

(In terms of equation (1): occ_l = {(K − V)/l}{1/μ}.)

When the term ‘composition of capital’ is used without further specification, Marx writes (762), the organic composition is meant. As indicated, in this section he sets these constant – the same applies for the productive forces. (Recall that a circumflex stands for rate of growth.)

vĉc = 0 [heuristic assumption] (11a)

oĉc = 0 [heuristic assumption] (12a)

ΔΠ = f(Δpfl) = 0 [heuristic assumption] (4b)

Marx notices (763):

If we assume that, while all other circumstances remain the same, the composition of capital also remains constant … then the demand for labour, and the fund for the subsistence of the workers, both clearly increase in the same proportion as the capital, and with the same rapidity.

Hence L̂ = V̂ = K̂. Next he sets out how this, and especially the proportional growth of the middle term, is unlikely. Marx takes the ‘value of labour-power’ to be a historical datum around which the actual price of labour-power fluctuates. w*Π stands for this datum and w’Π for the negative or positive fluctuation around it.²²

W ≡ wΠ ≡ (w* + w’)Π [definition] (13)

Therefore:

Ŵ = ŵ [reduced form of 4b and 13] (D)

Wages may fluctuate because the growth in K may outrun the growth of labour-power (i.e., the supply), so inducing rising wages (763,769). Accumulation then still goes on but at a lower rate (since the wage rise affects the rate of surplus-value and hence S). With the decreased rate of growth of accumulation, wages will decrease (770). Thus we have the relations (14) and (15a).

ŵ = f(l̂)    [f' > 0] [determination] (14)

where l̂ is the growth in the “demand for workers” (763). This relation, including its ‘right to left’ determination, is of key importance to all of Marx’s further reasoning in this chapter, including his critique of ‘Malthusian’ doctrines (§3.3 below). This cannot be stressed too much. Marx amplifies on it at the beginning of the next section, where he refers approvingly to Adam Smith (not only is he usually ‘moderate’ in tributes to Smith, it is also one of the scarce ‘in text’ references – i.e., instead of in a footnote):²³ it is not the absolute magnitude but “the degree of rapidity of that growth” in accumulation which is relevant for a rise of wages (772).

Marx posits in this section (763, indeed it is conditioned by 12a – cf. 772):

l̂ = K̂ [determination] (15a)

And hence:

ŵ = f(K̂)    [f'> 0] [reduced form of 14 &15a] (E)

Marx lays particular stress on this relation by his formulation: “To put it mathematically: the rate of accumulation is the independent, not the dependent variable; the rate of wages is the dependent, not the independent variable” (770).

Thus whereas the nominal wage is affected by the productive forces (equation B), the real wage is affected by the rate of accumulation (therefore also the nominal wage, ceteris paribus, the productive forces).

Hence we have, what Marx calls, the law of capitalist production (771), that is, the rate of growth of the real wage (ŵ) depends via the rate of growth in accumulation (eqn. D) and the ratio of accumulation (å in eqn. 2) on the rate of surplus-value (eqn. 3):

ŵ = f(Δe)    [f'> 0] [reduced form of 2–3, 4b, 9–15a] (F)

This is very interesting. We have the apparent paradox that an increase in the rate of exploitation generates an increase in the real wage rate. In fact it would seem (on the basis of the current conditions and ceteris paribus qualifications, especially 12a and 4b) that given some rate of exploitation, the real wage rate stabilises at some level at which its rate of growth has become zero (or oscillates around that point). “The rise of wages is therefore confined within limits that not only leave intact the foundations of the capitalist system, but also secure its reproduction on an increasing scale” (771); that is, most briefly, a positive rate of exploitation.

3.2 Increasing capital composition – the acceleration triple

In Section 2 of Chapter 25 Marx introduces the variation in the composition of capital, notably its increase.

Marx’s definitions of his three variants of the capital composition (we have talked about two of them) are not crystal clear. Their interpretation is of some importance to the interpretation of Capital III, Part Three – where the composition of capital reappears. However, for the general interpretation of the current Chapter 25, Marx’s specific definitions are not very important. He knows that each concept has its limitation, and he just shifts terms according to the state of his analysis (even if not always consistently).

Non-controversial is the value composition of capital (vcc), which is defined as (762):

vcc ≡ C/V [definition] (9)

Marx writes about the ‘technical composition of capital’ (tcc): “As material, as it functions in the process of production, all capital is divided into means of production and living labour-power. This latter composition is determined by the relation between the mass of the means of production [mp] employed on the one hand, and the mass of labour necessary for their employment on the other [l]” (762). Thus we can safely render:

tcc ≡ mp/l

Of course this is no more than an intuitive notion, as especially mp cannot be measured without prices. Controversial is the term ‘organic composition of capital’ (occ). Marx writes a bit cryptically: “There is a close correlation between the two [i.e., vcc and tcc]. To express this, I call the value composition of capital, in so far as it is determined by its technical composition and mirrors the changes in the latter, the organic composition of capital” (762). It seems to me that two interpretations square with Marx’s text:

occ_y ≡ C/(V + S) [definition] (16)

occ_l ≡ C/l [definition] (10)

Note that over time this occ_l does not reflect change in the tcc to the extent that productivity rise is translated in price decrease (of means of production). The vcc and the occ_y bear similar problems in different ways.²⁴

The differences are relevant in so far that each concept has its limitations. First, the vcc is not independent of wage changes (wage changes affect the ratio; and a wage change – as we will see – may be the effect of an initial change in the vcc). Thus it is no purely socio-technical ratio. Hence Marx evidently also needs another concept, which he reaches via the (intuitive) tcc. The occ_y seems useful to the extent that wage changes (and hence V) are directly translated into changes in surplus-value (S). However, Marx is concerned about another variable, namely the intensity of labour, and the occ_y is not independent of intensity changes, whereas the occ_l is (at least if l is measured in constant intertemporal clock hours – that is how I take it). Each of the concepts is relevant depending on the particular analysis.

Marx, throughout this chapter, is concerned with “the average … composition of the total social capital” (762–63).

Now that these terminological issues have been addressed, I return to Marx’s Section 2 where he introduces increase in the composition of capital. Thus:

vĉc > 0 [thesis] (11b)

oĉc > 0 [thesis] (12b)

… the development of the productivity of social labour becomes the most powerful lever of accumulation. … Apart from natural conditions … the level of the social productivity of labour is expressed in the relative extent of the means of production that one worker, during a given time, with the same degree of intensity of labour-power, turns into products. (F, 772–3; G, 650)

However, and as we will see in the next section in some more detail, this is not a linear process (774):

The relative magnitude of the part of the price which represents the value of the means of production, or the constant part of the capital, is in direct proportion to the progress of accumulation, whereas the relative magnitude of the other part of the price, which represents the variable part of the capital, or the payment made for labour, is in inverse proportion to the progress of accumulation.

From the remainder of the section (and the next) it is obvious that Marx takes these proportions as variable, thus:

Ĉ = φ'K̂    [φ' variable and φ' > 1] [determination]²⁵ (11c)

V̂ = φK̂    [φ variable and φ < 1] [determination] (11c')

(The implication is a modified version of equation (E).) On the same page Marx writes about “the variable part of capital … that this by no means thereby excludes the possibility of a rise in its absolute magnitude” (thus φ > 0). He also writes that these changes “provide only an approximate indication of the change in the composition of its material constituents” (i.e., the tcc) because of the price changes that go along with “the increasing productivity of labour” (774). (Thus implicitly he says that these price changes may unevenly affect the two components.)

This increasing productivity along with increasing productive forces and the changing composition of capital is the main theme of the rest of this section. Without deriving further conclusions, Marx connects the changing capital composition with the production of relative surplus-value (Part Four) and price decrease (Chapter 24, discussed in my §2.2). Recall the synthetical equation:

ΔK̂ = f(Δpfl)    [f' > 0] [reduced form of 2–8] (C)

First Marx posits the mutual dependency of these two factors, in fact already anticipated by the end of Chapter 24, Section 4. Because of this mutual dependency “it appears” [erscheint] – this is no delusion – that “All the forces of labour project themselves as forces of capital …” (F, 756 amended; cf. G, 634). Here he writes:

all methods of raising the social productive forces that grow up on this basis [capitalist production] are at the same time methods for the increased production of surplus-value, or surplus product, which is in its turn the formative element of accumulation. They are, therefore, also methods for the production of capital by capital, or methods for its accelerated accumulation. (F, 775 amended; G, 653)

Next he connects these methods for accelerating the accumulation of capital with the composition of capital (776):

These two economic factors [eqn. C] bring about, in the compound ratio of the impulses they give to each other, that change in the technical composition of capital by which the variable component becomes smaller and smaller as compared with the constant component.

Thus we have the triple accelerating growth of:

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The working out of this schema is postponed until Marx’s (and my) next section.

The remainder of the current section is devoted to the ‘tendency to centralisation of capital’. In the face of Marx’s method it is rather surprising to find that here, as it is a phenomenon related to the competition between capitals, which should have been dealt with in or after Part Two of Capital III. Marx is aware of the limitations of his analysis (777): “The laws of this centralisation of capitals …, cannot be developed here. A few brief factual indications must suffice” (these are provided in about three pages).²⁶ I merely note that Marx (here) does not treat centralisation in reference to the cycle.

3.3 Progressive growth – a dialogue on limitations of the theory so far

It is obvious from the text of Chapter 25, and especially Section 3, that Marx struggles with the dynamics consequent on the rising composition of capital. In a dialogue-like fashion he moves from argument to counter argument (though in the sub-headings below I have made this process more explicit than it is in Marx’s presentation).

Before reporting on this ‘dialogue’ I should make a terminological point. Readers of Capital may wonder why Marx when addressing ‘unemployment’ apparently uses such bombastic terminology: ‘reserve army of labour’, ‘surplus population’, or ‘redundant working population’. He may have had his reasons for the particular choice, but the simple point is that in his day the term ‘unemployment’ (or its German equivalent) just did not exist.²⁷

A. Progressive growth. Marx begins by setting out the (general?) effect of a rising capital composition on labour:

the demand for labour … falls progressively with the growth of the total capital, instead of rising in proportion to it, as was previously assumed [Section 1]. … and at an accelerated rate … With the growth of the total capital, its variable constituent … does admittedly increase, but in a constantly [beständig: continuously] diminishing proportion. (781–2; G, 658)²⁸

Hence the ceteris paribus relation of Section 1

l̂ = K̂ [determination] (15a)

is modified into an exponential relation: l increases with K, but at a decreasing rate:

l̂ = K̂^φ    [φ variable and 0 < φ < 1] [determination] (15b)

Similarly:

V̂ = K̂^φ"    [φ" variable and 0 < φ" < 1] [determination] (11d)

B. Continuous accelerated accumulation with pauses. It is, however, more complicated, as the acceleration seems to occur with intervals: “The intermediate pauses in which accumulation works as simple extension of production on a given technical basis are shortened” (782). Apart from this, the “accelerated relative diminution of the variable component [of capital] … produces … a relatively redundant working population” (782). (Thus he implicitly assumes something near to constant population growth, or at least one that does not decelerate to the extent that accumulation accelerates.)

C. Periodic changes. Next he qualifies this (782–3, italics added):

If we consider the total social capital … the movement of its accumulation sometimes causes periodic changes (…); in all spheres, the increase of the variable part of the capital, and therefore of the number of workers employed by it, is always connected with violent fluctuations and the temporary production of a surplus population, whether this takes the more striking form of the extrusion of workers already employed or the less evident, but not less real, form of a greater difficulty in absorbing the additional working population through its customary outlets.

This sentence contains some cryptic elements, but the idea seems clear. In a half-page footnote he shows census figures of employment for 1851 and 1861, diverging branch-wise. Note that the periodic changes or fluctuations are not theorised but implanted into the presentation.²⁹

Thus under A (and next B) Marx posits a specified recapitulation of his theory of Section 2. The fluctuations (C), however, do not fit the theory developed so far.

D. Once again progressive growth. Then again he redresses (783–4, italics added):

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. This is a law of population peculiar to the capitalist mode of production …

E. Cyclical path as characteristic. But once more he shifts perspective (785–6, italics added; cf. G, 661–2):

The path characteristically described by modern industry, which takes the form of a decennial cycle (interrupted by smaller oscillations) of periods of average activity, production at high pressure, crisis, and stagnation, depends on the constant [beständigen: continuous] formation, the greater or less absorption, and the reformation of the industrial reserve army (…) Just as the heavenly bodies always repeat a certain movement, once they have been flung into it, so also does social production, once it has been flung into this movement of alternate expansion and contraction. Effects become causes in their turn, and the various vicissitudes of the whole process … take on the form of periodicity.

This is interesting, but in fact Marx appends an empirical phenomenon to the theory without explaining it, i.e., without theory (the metaphor is a phenomenal analogy, no analogous explanation). In particular, Marx does not tell how the phases of this ‘path’ relate to the development of capital composition or all of – what I have called – the ‘acceleration triple’. It is interesting because he posits the obvious limitations (empirically) of the theory so far (good scientific practice).

F. Wages. A final issue enters the dialogue, namely wage increase.³⁰ Marx denies any relation between population growth and the decennial cycle (he cites Malthus: ‘From the nature of a population, an increase of labourers cannot be brought into market in consequence of a particular demand till after the lapse of 16 or 18 years …’ – 787). He also rejects the doctrine that ‘restraint’ on the part of the working population should be the remedy for the diminution of the ‘surplus population’ and so the impulse to (real) wage increase (798). Instead Marx posits: (1) the dynamic of capitalist production – with its main element of a rising composition of capital – creates a ‘relative surplus population’ (the ‘progressive growth’ thesis – A and D in the dialogue); (2) wage changes do not depend on the absolute level of the surplus population, nor on the absolute level, or state, of the accumulation of capital: they depend (Adam Smith’s insight) on the change in the demand for labour. Thus (790):

Taking them as a whole, the general movements of wages are exclusively regulated by the expansion and contraction of the industrial reserve army, and this in turn corresponds to the periodic alternations of the industrial cycle. They are not therefore determined by the variations of the absolute numbers of the working population, but by … the extent to which it is alternately absorbed and set free.

It may be tempting to read into this quote (and the following) – as many have done – a ‘labour shortage’ theory of the cycle (in which case, to begin with, the first sentence would have to be a tautology). No, the first part of the first sentence makes Adam Smith’s point, and the second part refers to the periodic cycle. Marx does not posit the wage rate mechanism to explain the cycle; the wage movements correspond to it (and if, instead, he believed wage movements to be causative he would certainly have said so). The second sentence combats the Malthusian doctrine.

The next quote (equally from page 790) follows the same pattern – ending with a reference to the generational (16 or 18 year lapse) versus the decennial issue.

The appropriate law for modern industry, with its decennial cycles and periodic phases … is the law of the regulation of the demand and supply of labour by the alternate expansion and contraction of capital … It would be utterly absurd, in place of this, to lay down a law according to which the movement of capital depended simply on the movement of the population.

Thus, wages are not determining for they are determined by the growth of accumulation of capital.

3.4 The final two sections

The final two section of Chapter 25 contain no new theoretical analysis. Section 5 (some 70 pages) provides empirical illustrations for the theses advanced in the chapter. Section 4 begins with a number of ‘surplus population’ distinctions (floating, latent and stagnant). Then Marx summarises the ‘general law’ – the cycle, though, does not appear in this summary. We have the one moment of the acceleration triple and their effect on the working population.

Marx sets out that on the one hand (for those employed), the worker is degradated to “an appendage of a machine” and alienated from “the intellectual potentialities of the labour process in the same proportion as science is incorporated in it as an independent power” (a conclusion from the middle part of the book). Therefore, “in proportion as capital accumulates, the situation of the worker, be his payment high or low, must grow worse”. On the other hand (for those not employed), we have “an accumulation of misery” for the surplus population (799).

Why does Marx, in this section, posit ‘the general law’ apparently unqualified? In the concluding section I expand on theory-systematic aspects; here I address but one theory-empirical aspect.

On the basis of the triple acceleration theory developed through into Section 3, the demand for labour should fall progressively with the growth of capital. However, Marx knows that empirically the development is cyclical. Thus his theory is incomplete (it might be wrong of course). This theoretical problem might have been overcome by combining his theory with, what was later called, a ‘labour-shortage’ theory of the cycle.³¹ He seems to have the material before him to posit such a theory, but he does not do it.³² Instead he makes an empirical reference to the cycle.

But this empirical attitude seems to work in two ways. On the one hand, Marx is aware of ‘a ten-year cycle’ (in fact, Marx was one of the first to put it on the economists’ research agenda). On the other hand, the empirical facts of his day all pointed in the direction of increasing degradation and increasing misery of the working population. Faced with this, the triple accelerator of increasing accumulation and increasing composition of capital together with increasing labour productivity (the reverse of Ricardo) seemed of great explanatory power.

Still, in Section 4 Marx inserts a, seemingly fairly weak, warning about the generality of the law: “Like all other laws, it is modified in its working [Verwirklichung] by many circumstances, the analysis of which does not concern us here [nicht hierher gehört]” (798; G, 674). Note that the warning in the German text is much stronger. In the latter it is not, say, the ‘precise working’ that gets modified, but its ‘reality’ its ‘actualisation’ (Verwirklichung).³³