short essay questions

Chapter 2

Crisis

Through the making available of idle funds, not only is the accumulation of individual industrial capitals accelerated; once the accumulation of industrial capital passes through the so-called creation of credit (shinyō no sōzō) that anticipates an expansion of the scale of production, the social reproduction process is expanded to the highest degree. This represents nothing other than a method by which the accumulation process of private, individually separated, and independent capitals is socially advanced as much as possible, but at the same time, it always points to an excessive expansion of production which, through the work of a peculiar method (hōshiki), becomes a self-regulating movement. Such an excessive expansion of production, which overcomes, as it were, the limitations set by capital’s relationship to workers, is regulated by capital through the form of loan capital, which opposes capital against capital. In actuality, since this takes place primarily with speculative purchasing by merchant and commercial capital, the impetus for this self-regulation is provided when merchant and commercial capital fall into bankruptcy, and while commodities that cannot be sold create the cause of crisis, this is, as I have described above, little more than a distorted expression of industrial capital’s excessive accumulation. In the midst of the period of prosperity, however, all industrial capital—which in actuality is constantly advancing by merchant and commercial capital’s buying—will invariably experience an excessive expansion of production to a greater or lesser degree, thereby generally upsetting the reproduction process. Consequently, there comes to exist, on the one hand, a plethora of means of production and means of subsistence in the form of commodities and productive capital, and, on the other, a growing number of unemployed workers. The reproduction process cannot continue uninterrupted when these two things are brought together. At the same time, the relationship between so-called excess capital and surplus populations makes its appearance here. In this way, within the stagnation of the reproduction process, capital loses value as capital, making it impossible for capital to continue production with the relations of production from before. Crisis, in addition to socially motoring the productivity of capitalist methods of production, thus appears as the sudden process by which capital, in overcoming its own limits and in organizing the reproduction process on an enlarged scale, experiences a loss in the value of capital itself.

1. The collision between the profit rate and the interest rate

The process that advances accumulation, which takes as its goal the acquisition of larger and larger profits by individual capitals, is not merely a process of transforming into capital the surplus value obtained through an individual capital’s production process. Moreover, as I have already discussed, nor is the transformation of portions of surplus value into accumulation funds something that can be spent, inevitably and directly, in the expansion of individual capital’s own production process. Rather, capitalist methods of production cannot avoid using these funds for the social character of the capitalist expansion of the accumulation of capital. At the same time, this expansion already exhibits an excessive expansion, and thus the first point that must be clarified is the question of what accompanies this excessive expansion.

A. The fall in the rate of profit that accompanies the accumulation of capital

Generally speaking, the development of capitalist methods of production— understood as the conditions for the advancement of productivity, and as that which, as a result of this advance in productivity, accompanies the growth of capital’s organic composition— is unavoidably accompanied by the tendency of the profit to generally fall. Not only is the basis for this general tendency provided for with the advance of accumulation in the period of prosperity, but due to the mobilization of labor power in the form of the so-called industrial reserve army and an attendant rise in wages, the profit rate cannot avoid declining (teika) in a way that differs from the general, tendential fall (teiraku). In other words, despite an enlargement of capital, the fall in the profit rate also decreases the amount of profit, meaning that larger and larger quantities of capital are only able to increase the mass of profit in smaller and smaller amounts. Thus, the general tendency of the profit rate to fall that accompanies the development of capitalism has a totally uneven relationship to the rise in the mass of profit.[footnoteRef:1] [1: [Transl. Note : For further theoretical context on Uno’s comparison between the rate and mass of profit, see Vol. 3 of Capital, Part Three, Chapters 13-15. In Chapter 13, Marx writes, “If we take a given working population, of 2 million for example, and further assume that the length and intensity of the average working day is given, as well as wages, and hence also the relationship between necessary and surplus labour, then the total labour of these 2 million workers always produces the same magnitude of value, and the same thing is true of their surplus labour, as expressed in surplus-value. But as the mass of constant (fixed and circulating capital) set in motion by this labour grows, so there is a fall in the ratio between this magnitude and the value of the constant capital, which grows with its mass, even if not in the same proportion. This ratio falls, and with it the profit rate, even though capital still commands the same mass of living labour as before and absorbs the same mass of surplus labour. If the ratio changes, this is not because the mass of living labour falls but rather because the mass of already objectified labour that it sets in motion rises. The decline is relative, not absolute, and it has in fact nothing whatsoever to do with the absolute amount of the labour and surplus labour set in motion. The fall in the rate of profit does not arise from an absolute decline in the variable component of the total capital but simply from a relative decline, from its decrease in comparison with the constant component.” (Penguin edition, 323)]]

For example, let us suppose that, for all industrial sectors, there is a 10% increase in profits on a total capital of 100 million. Now, when there is an increase in capital of 20 million, and if we were to suppose an 8% fall in the profit rate due to a rise in wages, the mass of profit will be reduced from 10 million to 9.6 million. From the perspective of capital, the accumulation of capital of this 20 million thus becomes something meaningless; it becomes excess capital. In any case, it is safe to say that, up to 100 million, even with a decline in the profit rate, the mass of profit would continue to rise to 10 million. But supposing that capital could somehow be increased, and that the only profits that could be made was less than 10 million; if that were so, then capital would inexorably become excess capital. Even capital could somehow increase its products, the mass of profit would fall against the increase in capital, and capital would become, unmistakably, excess capital. This is nothing other than the phenomenal appearance of a peculiar contradiction of the capitalist mode of production, which is based on the particular commodity of labor power. If labor power could be produced directly by capital like any other commodity, we can be certain that this phenomenon would never appear, and yet, despite this, the particular commodity of labor power nonetheless constitutes the basis for the survival of capitalism itself. If things were produced simply by means of other things, then that which we call society would not have come into existence. The labor power of human beings, by working on nature, produces things, things by which labor power is then reproduced in the so-called metabolic process between nature and man, a process that is certainly found in all societies, but that in capitalist society passes through the commodity form and takes place as the production process of capital. And here dwells the form of capitalism’s peculiar and formal impossibility (tokuyūna, keitai-teki na muri ga aru). It is precisely on this point that capital, as it takes this form, will be incapable of continuing, despite its efforts, the infinite accumulation that it naturally aspires towards. The expansion of value, as well as the demand for the infinite expansion of value, can only take place by transforming into a commodity that which is not, properly speaking, a commodity, namely labor power, but it is also because of this that the expansion of value cannot avoid turning into its opposite.

Of course, as I have already referred to with some frequency, the commodification of labor power provides the basic condition by which a relative surplus population is formed by the growth of capital’s organic composition. In this regard, we can say that capital itself produces labor power, albeit indirectly, and is able to provide itself, by itself, its own basic conditions. Now, are to therefore think that, with accumulation in the period of prosperity, the composition of capital constantly grows, that a surplus population will be formed while it is simultaneously mobilized and absorbed, and that, through such a method, the general profit rate of capital will fall tendentially while the mass of profit, by virtue of the advance in productivity stemming from the growth of capital, will also progressively grow as well? In fact, however, the accumulation of capital decidedly does not proceed in this manner. For accumulation in the period of prosperity, as I have already discussed, the tendency is for production on an increasingly expanded scale to proceed with a fixed and given composition, which naturally means that the increase in demand for a definite mass of labor power will inevitably lead to a rise in wages.

However, when we consider excess capital, it is not something that appears necessarily and directly, as such, to individual capitals. Properly speaking, the basis for the general profit rate is attained by distributing the surplus value, first obtained in the production process of individual capitals, as an average between individual capitals in the process of realizing this surplus value. Socially, this is nothing but the formation of a general, average rate of profit as it passes through the competition of capitals that are pursuing industries with higher profits. In truth, not only are there always variations between differing industries, there are differences in the conditions of production between individual capitals even within the same industrial sector, which consequently leaves differences in rates of profit. That profit rates fall because of high wages does not necessarily mean that all profit rates fall in the same way. Then again, even if such a decline, for example, were to become generalized, individual capitals attempting to avoid such a fall would not be capable of stopping the accumulation of capital. Just because a profit of 10% was obtained in the case of a capital worth 100 million, while only 8% was obtained on a capital worth 120 million, does not mean that a capital worth 20 million can be set aside and left idle. Even if that 20 million is not invested (tōshi), a fall in the profit rate would be unavoidable due to a rise in wages accompanying the advance of other capital’s accumulation. In any case, it will not be possible to maintain a 10% profit rate. The profit rate will fall as something given from the outside, irrespective of whether the accumulation of this capital will take place, or not, for individual capitals. 20 million must be added to the total social capital, which is not something that can be said to arise out of the “private character” of capitalist production. Quite the contrary, even in this example, individual capitals would do all they could to compensate for a falling profit rate by increasing the mass of profits stemming from an increase in the magnitude of capital, and by working towards the maintenance of the power to accumulate (chikuseki ryoku). Thus, socially speaking, insofar as capital is always already falling into a condition of excess, the competition between individual capitals will not be able to regulate (seigen) the accumulation of this excess on its own. It is precisely here that the social function of loan capital is fully exhibited, but it is concealed, to a certain extent, by the speculative rise in prices during the period of prosperity, which energetically advances accumulation beneath an assumed profit rate, and ultimately, this excess can only be clarified by this relation to loan capital.

B. The sudden rise in the interest rate at the highest point in the period of prosperity

The funds that are supplied by banks, let us recall, represent nothing more than funds that were originally turned into idle funds by the work of industrial capital itself. Therefore, with the funds created along with the advance in capital’s accumulation in the period of prosperity, there is a rise in the funds accumulated by banks, on the one hand, and an increasing rise in the funds that need to be absorbed for the practical purpose of investments, on the other. This means that during periods when an expansion of the scale of production leads to an anticipation of higher profit rates, a demand for these funds naturally tends to exceed their supply. As I have described earlier, more than anything else, insofar as banks can reliably expect an expansion of industrial capital’s reproduction process, banks can increase the issuance of bank notes and form funds on its own. Moreover, just as the funds concentrated in the hands of the banks are decidedly not limited to the idle funds of industrial capital, so too are the users of these funds not limited to industrial capitalists, but are extended to merchant and commercial capitalists as well, who, in their demand for these funds, become important users themselves. This points to an extremely complicated relationship, but what constitutes the fundamental basis of the credit system is nothing more than the relation through which the making available of social, capitalistic funds is carried out by individual capitals in the social reproduction process. This is a relation, moreover, that fundamentally regulates the extent to which banks are capable of increasing the issuance of bank notes.

It goes without saying that the interest paid on the elasticity of these funds comes from a portion of the profit of capital as industrial capital. For individual industrial capitals, however, the use of not only their own capital, but also of the funds of others, allows them to pay interest from increased profits, and so long as profits can be left over after paying the interest on borrowed funds, profit rates for individual capitals will rise suddenly. Unlike the profit rate, the interest rate does not have a fixed standard (kijun), and because of this, the interest rate moves in completely different directions than the movement of the profit rate. The truth of the matter is that, in the period of prosperity, even when confronted by falling profit rates stemming from a rise in wages, industrial capital puts into action methods to maintain the advance of individual rates of profit as much as possible, even by means of borrowing funds with rising interest rates. On the one hand, this is the case because capital has already been invested in the production process, which cannot refrain from incessantly continuing production. But this is not all. Even with a decreased rate of profit, for example, an increase in the mass of profit, obtained by an increase in capital, can, up to a certain limit, not only pay off interest but also leave an additional profit, thereby compensating for a fall in the profit rate on one’s own capital. In this way, however, this relation inevitably points to a decrease in the funds themselves that must be borrowed. Not only are the idle funds of industrial capital decreased; the banks—which supplied funds by increasing the issuance of bank notes on the assumption that the reproduction process will expand—now also face difficulties because the formation of these funds, as far as the reproductive process goes, contributes directly to a decrease in the mass of profits accompanying the fall in profit rates, or else indirectly, to the piling up of overstocked commodities, created by speculative buying, which delays a recovery. In any case, a continuation in the expansion of credit becomes impossible. While a rise in the profit rate initially witnessed a rise in the interest rate, here the opposite is the case: a fall in the profit rate is now accompanied by a sudden rise in the interest rate.

While the source of profit and interest is found in the surplus value produced from within the movement of industrial capital, profit distributes this surplus value directly in relation to capital, whereas interest, which forms one part of profit, does not take a direct relationship to the movement of industrial capital, but rather exists at this movement’s outermost extremity, where it receives a share of the profits. Whereas profit possesses a substantial standard for distribution that is fixed, interest simply possesses an external allocation standard (bunyo kijun). However, when we view the rate of distribution (bunpai-ritsu), these relationships are completely reversed. For individual capitals, the profit rate, as a social standard, exists as a general profit rate that is simply created as an average of various and different rates of profit. Unlike the interest rate, therefore, it does not appear as a fixed, concrete rate of profit. This averaging out of the profit rate, however, is in fact realized by socially passing through the form of loan capital, and by becoming mediated by the idle funds used by industrial capital. While explaining the realization of this averaging out, as an effect of the competition by industrial capital to seek out more profitable industries, does not have to presuppose the transformation of funds into loan capital; and while, in other words, the mediation itself of this averaging out stemming from loan capital is nothing but an externalized dimension of the competition between capitals, the social restriction on capital is such that it ineluctably pursues this mediation externalized by capital. Thus, in the same way that the exchange of commodities must be socially mediated by money, the movement of individual capitals, as it takes place within each particular industry, is restricted in the way of use value (shiyôkachiteki seiyaku), and is thus unable to migrate directly from one sector to another simply because there exists a more profitable industry. Similarly, just because an owner of capital wants to invest additional capital in a more profitable industry does not mean that this owner can make such an investment directly. Of course, capital itself is not something that experiences this restriction of use values, as commodities do, for it is nothing more than a value that creates more value. The self-expansion of value could not take place, however, if it did not experience such a restriction, that is, if capital was not invested in a certain, fixed industrial sector, and just as the value of a commodity can only become realized by being sold through the mediation of money—which is itself a commodity emerging from within the circulation of commodities—so too does capital come to restrict (kisei) itself, by itself, through a mechanism in which payments on interest clearly make capital operate more advantageously in becoming social. In cases in which individual capitals have already, socially, become excess capital, individual capitals are not only powerless to regulate this excess capital; on the contrary, they exacerbate this tendency. It is precisely in such a relationship, however, that loan capital appears as something that regulates this excess socially. Unlike the profit rate of industrial capital, it does not possess a definite magnitude of surplus value to serve as a substantial standard vis-à-vis a definite magnitude of capital. Based on the movement of industrial capital, but existing without a direct relationship to it, loan capital, as an opposition between capital and capital, socially regulates excess capital on the exterior of this movement. This represents nothing other than a peculiar, socially regulatory method corresponding to capital’s anarchic production. In short, by being able to transform its own funds into capital at any time by commodifying these funds, capital’s anarchic production of commodities is regulated (kisei) by the so-called anarchy of the commodity form itself.

C. The so-called shortage of capital

When, by a rise in wages, the profit rate falls—the tendency of which is concealed, as I have already described, by the prices speculatively envisioned for the accumulation of overstocked commodities—and when interest rates suddenly rises, industrial capital falls into a situation in which it cannot make payments on interest, let alone on principal loans, and must borrow more money to pay off interest. Of course, the expansion of capital’s reproduction process in the period of prosperity does not proceed evenly throughout every industrial sector. Rather, it is guided in a speculative way as a result of the uneven rise in prices that is itself based on the uneven development between industrial sectors. Now, the aid provided by the banks, in the form of funds to industrial and commercial investment, assumes the burden neither of falling profit rates resulting from higher wages, nor of the difficulties in selling-off the accumulated stocks of commodities that express the distortion of this fall in profit. While the aid extended to the industrial capitals that have defaulted on payments certainly represents a loss for the banks themselves, the banks naturally do not assume the direct burden of falling profit rates. Interest rates do not fall simply because profit rates fall. In fact, interest rates increasingly rise in such a situation, industrial capitals progressively experience difficulties paying back loans, defaults on payments steadily become facts of calculation by the banks, and even a concentration of capital is even brought about. For industrial capitals that continue, more or less, to speculatively expand and purchase, it is clear that a fall in the anticipated prices of commodities does not take place along with the sale of commodities and a fall in wages, but rather in a situation in which a sudden rise in wages cannot but expose a decline in the profit rate. In this way, by its own doing, industrial capital falls into defaulted payments while becoming saddled with an enormous amount of capital in the form of means of production and commodities, and by this point this capital is already incapable of continuing its operations. In actual practice, however, through the interventions of merchant and commercial capital, the form of this capital is assumed by an accumulated stock of commodities, and thus defaults on payments similarly appear in relation to merchant and commercial capital. While this counteracts the reproduction process of industrial capital and leads to a crisis, the basic relationship is found in the opposition between the movement of industrial capital, and the loan capital providing aid for the rapid expansion of this movement.

The essence of the phenomenon of crisis will never grasped so long as this basic relationship, which is distorted by the superficial facts of reality, is not clarified. Even when we consider speculative expansion, this is not something that can take place groundlessly. This ground is not simply the peculiar form of the development of capitalist methods of production, it is provided by the very materials with which expansion becomes possible. Increasingly larger and larger means of production and articles of consumption (shōhi shiryō) come to be produced, and so long as labor power is given, the means of production and articles of consumption will be able, as capital, to continue the self-expansion of value, thereby producing increasingly more and more means of production and means of consumption, and expanding the scale of production. Similarly, the ability of banks to create funds through an increased issuance of bank notes is also only possible on this basis. Therefore, at the same time, this possibility is inevitably reversed when the production of means of production and articles of consumption becomes restricted by labor power. We cannot say, therefore, that banks simply finance the physical materials of capital.

It is here that the phenomenon, commonly known as the shortage or lack of capital, makes its appearance. This emphatically does not mean a shortage of capital as means of production or commodities. Quite the contrary, the very superfluity and excess (ariamaru) of so-called capital goods (iwayuru shihonzai) makes the self-expansion of value, as capital, inoperable. This relationship, which cannot be expressed by capital directly, is rather indirectly displayed by a depletion of funds in the form of loan capital. We could say that this points to how capital is not, properly speaking, a mere thing, but a relationship between human beings that passes through things. Here, however, the relationship is such that capital, in taking on the form of a lack of loan capital, cannot avoid appearing as a relationship between things. As long as capital appears as a thing, so, too, will its lack appear as a thing, not in the lack of actual materials of means of production and articles of consumption, but in a lack of funds-as-things. Of course, even funds are not simply things. As an independent existence of the value created by labor, funds differ from means of circulation and do not simply exist within circulation; rather, as something that is released from circulation, funds stand in opposition to commodities by being able to purchase commodities at any time, but not simply as mere money (tan naru kane) as a thing possessing a definite use value. Rather, we could say that it possesses the quality of what Marx called money as money (Geld als Geld in German; kahei toshite no kahei, in Japanese), money as an independent thing of value (kachi mono) that stands in opposition to commodities within the circulation process.[footnoteRef:2] Moreover, so long as it exists like money as an independent existence of value in opposition to commodities, there is no necessity for this money as money to exist physically as money (genbutsu no kane) within the social reproduction process. This points precisely to the relation whereby banks are able to extend loans, as funds, by increasing the issuing of bank notes on the assumption that future funds will be created when the reproduction process operates favorably and expands; it is a relation, in other words, in which the lending of bank notes creates, along with the value of the purchased means of production and labor power, the formation of funds as newly formed value. At the same time, these funds cannot be formed apart from the social reproduction process, no matter an increase in the issuing of bank notes. For the same reason, during times of crisis, the production of funds cannot be taken as a given simply because unsold commodities have been sold off. Rather, the capitalist commodity economy proceeds through a kind of social restriction in passing through funds as loan capital. Insofar as this is all based on the value created by labor in the social reproduction process, it cannot possibly be something that exists apart from the social relation between capitalists and workers. In the production process, if the production of surplus value is not able to pay the value of the interest, then the capital, in the form of means of production, will already be lacking. The means of production and articles of consumption that exist as commodities cannot be sold as commodities. On an international level, these funds as a rule need to exist as physical money, and in the actual process of crisis, the reserves of money needed for foreign payments even restricts the magnitude of these funds. However, on the domestic level, this restriction most certainly is not due to the magnitude of money. This point was greatly confused in England’s Peel Act of 1844, and is the reason why, during the time of crisis, a suspension of this restriction could not be avoided.[footnoteRef:3] [2: [Trans. Note: Uno’s emphasis on the category of “money as money” is crucial to Marx’s exposition of the law of value in Part 1 of Vol. 1 of Capital. “Money as money”, which logically derives from forms of value originally determined by the circulation of commodities, and which comes to represent all “earthly” and particular commodities from a transcendental, universalizing perspective, this “money as money”, which Uno ties so closely to idle funds and loan capital that banks monopolize, represents a material incarnation of what is essentially the most metaphysical and even theological dimension of the value of capital. Uno’s detailed analysis of capital and its “lack”, its paradoxical embodiment in things (as funds and loan capital), its relation to the schizophrenic absence and presence of capital that is mediated by excess production of industrial capital, which leads ultimately to the destruction of capital in the phase of recession; this rigorous exposition of capital’s self-negating process is undoubtedly one of the most powerful features of Uno’s theory of crisis.]] [3: Regarding the Peel’s Law, Engels provides a clear account: “The Bank Act of 1844 divides the Bank of England into an issue department and a banking department. The former receives securities — principally government obligations — amounting to 14 million, and the entire metal hoard, of which not more than one-quarter is to consist of silver, and issues notes to the full amount of the total. In so far as these notes are not in the hands of the public, they are held in the banking department and, together with the small amount of coin required for daily use (about one million), constitute its ever ready reserve. The issue department gives the public gold for notes and notes for gold; the remaining transactions with the public are carried on by the banking department. Private banks in England and Wales authorised in 1844 to issue their own notes retained this privilege, but their note issue was fixed; if one of these banks ceases to issue its own notes, the Bank of England can increase its unbacked notes by two-thirds of the quota thus made available; in this way its issue was increased by 1892 from £14 to £16½ million (to be exact, £16,450,000). “Thus, for every five pounds in gold which leave the bank treasury, a five-pound note returns to the issue department and is destroyed; for every five sovereigns going into the treasury a new five-pound note comes into circulation. In this manner, Overstone's ideal paper circulation, which strictly follows the laws of metallic circulation, is carried out in practice, and by this means, according to the advocates of the Currency Theory, crises are made impossible for all time. “But in reality the separation of the Bank into two independent departments deprived its management of the possibility of freely utilising its entire available means at critical times, so that situations could arise in which the banking department might be on the verge of bankruptcy while the issue department still had intact several millions in gold and, in addition, its entire 14 million in securities. And this could take place so much more easily since there is a period in almost every crisis when heavy exports of gold take place which must be covered in the main by the metal reserve of the bank. But for every five pounds in gold which then go abroad, the domestic circulation is deprived of a five-pound note, so that the quantity of circulating medium is reduced precisely at a time when the largest quantity is most needed. The Bank Act of 1844 thus directly induces the entire commercial world forthwith to hoard a reserve fund of bank-notes at the outbreak of a crisis; in other words, to accelerate and intensify the crisis. By such artificial intensification of demand for money accommodation, that is, for means of payment at the decisive moment, and the simultaneous restriction of the supply the Bank Act drives the rate of interest to a hitherto unknown height during a crisis. Hence, instead of eliminating crises, the Act, on the contrary, intensifies them to a point where either the entire industrial world must go to pieces, or else the Bank Act. Both on October 25, 1847, and on November 12, 1857, the crisis reached such a point; the government then lifted the restriction for the Bank in issuing notes by suspending the Act of 1844, and this sufficed in both cases to overcome the crisis. In 1847, the assurance that bank-notes would again be issued for first-class securities sufficed to bring to light the £4 to £5 million of hoarded notes and put them back into circulation; in 1857, the issue of notes exceeding the legal amount reached almost one million, but this lasted only for a very short time. (Capital, volume 3, International Publishers, NY, [n.d.] The Peel Act’s original consideration of money was guided by the so-called Currency Theory, which was based on the mistaken assumption that the entirety of gold was something that had to become converted to money. As Engels writes, however, during times of crisis, while on the one hand this brought profits to banks from high interest rates, it also led to difficulties for the accounting of the banks themselves, on the other. That this Act sufficed “to overcome the crisis” most definitely does not mean that industrial and commercial capital was able to avoid being hit by the crisis and continue their operations. The crisis that was unnecessarily intensified by the Act was merely alleviated. Domestically, even when gold is not held in reserve, so long as securities are guaranteed, banks can meet demand during times of crisis by increasing the issuing of bank notes. Of course, for banks that make loans whose payments are not secured, bankruptcy is unavoidable, even for a bank such as Bank of England. Moreover, this point equally reveals, it can be said, how money that is provided for domestic payments must basically be treated as an independently existing thing of value in a way that is similar to gold’s relationship to commodities. The biggest error committed by the Peel Act is that it attempted to restrict the demand for domestic funds by actual gold in the same way that it did for foreign payments, and probably also for the securing of foreign payments. This stems from the fact that funds do not necessarily have to exist as gold. Bank notes can be substituted for these funds as an independent existence of value so long as banks can expect to create funds whose payments can be made with certainty. Gold, as that which can always, and at any time, provide for the purchasing of commodities, is also money. ]

In practice, with the speculative expansion that occurs with speculative purchasing, insofar as excess capital appears as an excess of commodities—that is, in a form in which the speculatively anticipated prices cannot be realized— not only does money appear as the sole thing possessing value; forming the basis of this appearance is the fact that capital, as commodities and as means of production, already is incapable of expanding surplus value as profits. Of course, while it goes without saying that the capital that exists in the money form cannot obtain surplus value from the surplus labor of workers so long as it remains in this form, capital can, however, obtain high interest as loan capital, and with this point loan capital becomes the sole, existing capital during this period insofar as industrial capital, which has now become incapable of functioning as the capital to pay this interest, can already no longer be said to be capital. In this way, a concentration of capital that has sacrificed industrial capital comes into existence. In these times, however, banks themselves often cannot avoid insolvency. It is in conditions such as these that the common observation of a lack of capital is in fact born out of an inability to grasp the true meaning of capital. This is not to say, however, that a lack of capital has no meaning, or that we’ve lost a definition of its excess. Actually existing excess capital appears as a lack of capital in the form of money, and it is this relation that gives meaning to what is called a lack of capital.

2. The Excess of Capital and the Surplus of Populations

The excessive accumulation of capital in the period of prosperity ultimately brings forth an opposition between a population of workers, and an excess of capital in the form of means of production and means of consumption. From the workers’ perspective, however, the means of production and means of consumption are not in excess absolutely. For even though a rise in wages in the period of prosperity expands workers’ consumption, this only takes place though an increase that has a definite limit. Even if it can be said that the means of consumption have been overproduced, the meaning of this excess is not that it is beyond the workers’ ability to consume. In a capitalist society, the rise in workers’ wages is limited. It is this fact that simultaneously produces an excess of capital and a surplus of workers.

A. The limit to the rise in workers’ wages

Generally speaking, in a capitalist society, the wages of workers, as the price of the commodity of labor power, fluctuates around the value determined by the labor time necessary for the reproduction of labor power. In this sense, the commodity of labor power is similar to other commodities in a capitalist society. However, as I have already mentioned numerous times, labor power differs from other commodities insofar as it cannot be produced directly by capital itself. Therefore, even if the value of labor power can be determined by the labor time necessary for the production of labor power, for capital, it is still not something that capital can produce on a constant basis simply by harnessing this labor time. Its value is determined indirectly by little else than the labor time required for the production of the workers’ means of subsistence (seikatsu shiryō). These means of subsistence, however, are produced by workers themselves in capital’s production process; as products of capital, they are turned into capital, which guarantees for the capitalist that labor power will always stand in relation to the means of production. While economics frequently treats the workers’ means of subsistence as capital precisely for this reason, it goes without saying, however, that for the capitalist, production does not take place on the basis of means of production and the worker’s means of subsistence. Means of subsistence, in itself, never exists as capital within the production process. In truth, the workers’ means of subsistence represents, for the capitalist, commodities that must be sold; for workers, they represent nothing more than commodities that must be bought with money obtained as wages. Workers will not be able to buy these commodities unless they receive these wages. Capitalists, moreover, will not escape a drop in the prices of these commodities if they cannot sell them to workers.

In short, as a product of capital, means of subsistence are no different from capital that has taken on the commodity form, and thus exist as no more than capital, as a thing, that can be sold as a commodity. So long as labor power is not purchased as a commodity, and so long as wages are not paid to workers, it will be impossible for means of subsistence to be sold as commodities. That both the means of subsistence and means of production exist as excess capital, however, does not merely signify a direct relationship in which, for example, a surplus of foodstuffs stands in relation to the working population. It is an excess is born out of the advance of capital’s accumulation, in which an increased demand for labor power raises wages while decreasing the amount of surplus value as profit, and out of an inability to advantageously invest, as capital, the means of production and means of subsistence that are produced on an increasingly larger and larger scale. This is an excess completely unique to capitalist society.

The wages of workers are such that, on the one hand, they are never decreased to the point where the life of workers are threatened by an inability to purchase the means of subsistence required for the reproduction of labor power. (In actuality, the limits imposed on the reproduction of labor power are determined socially, historically, and even to a certain degree physiologically, and are never fixed or definite. Moreover, labor power is never actually supplied exclusively by the dispossessed workers that we are theoretically presumed here, for in actuality it is possible that wages even fall below the value of labor power.) On the other hand, however, wages are never raised so far as to prevent capital, in its accumulation process, from obtaining larger masses of profit. Wages rather fluctuate in accordance with limits that are bound to definite class relations. Unlike other commodities, the supply of labor power cannot be increased simply because an increase in the demand for labor power takes place, its supply as a commodity can only be adjusted by the so-called industrial reserve army. At the same time, even if there is no guarantee that an increase in demand can directly raise the price of labor power above its value, this rise in price is not something that the capitalist can suppress. Of course, while it can be said that capitalists will strive in all cases to buy as cheaply as possible, this is certainly not a result of the efforts of individual capitalists’ to drive down prices voluntarily. With the advance of capital accumulation in the period of prosperity, a rise in wages is unavoidable. This is not all, however. Even if the profit rate falls because high wages accompany the advance of accumulation—a fact that is actually concealed by a rise in speculative prices—there is still no stopping accumulation’s advance.

To say, however, that the rise and fall of wages is determined simply by the opposing relationship between capitalists and workers is undoubtedly insufficient. Properly speaking, capital itself—and especially its accumulation—is nothing more than the transformation into capital of the surplus value that objectifies surplus labor as the so-called unpaid labor of workers, and thus the demand for labor power that capital creates is in fact nothing but a product of the workers’ surplus labor. Put differently, as Marx says, it is, “at bottom, only the relation between the unpaid and the paid labour of the same working population.” (Vol. 1, chapter 25, 771, Penguin) Marx continues:

If the quantity of unpaid labour supplied by the working class and accumulated by the capitalist class increases so rapidly that its transformation into capital requires an extraordinary addition of paid labour, then wages rise and, all other circumstances remaining equal, the unpaid labour diminishes in proportion. But as soon as this diminution touches the point at which the surplus labour that nourishes capital is no longer supplied in normal quantity, a reaction sets in; a smaller part of revenue is capitalized, accumulation slows down, and the rising movement of wages comes up against an obstacle. (ibid.)

In Capital, however, this definition is a matter that develops around the general and basic relationship between capitalists and workers; the “counter-acting force” described here does not appear, in other words, on the plane of competition between individual capitalists. The counter-acting force rather appears in passing through loan capital, as capital that socially opposes capital, as well as in passing through the contradiction and collision between falling profit rates and suddenly rising interest rates. This, however, is no more than a particular expression of “the relation between the unpaid and the paid labour of the same working population.” The contradiction that takes the shape of this expression would never have come into existence had the workers’ labor not passed through the form of capital. It is this particular form, moreover, that gives birth to the phenomenon that so many people cannot make sense of, namely of how the excessive work of workers leads to a loss of work. Marx’s statement that, “the real limit to capitalist production is capital itself,” must also be understood to pivot around this point.

B. Excess capital as an excess of commodities

In this way, when we speak of an excess of the means of production or the means of subsistence that are produced in progressively larger and larger quantities with the expansion of the scale of capitalist production, this is not an excess simply in opposition to the working population. Means of production or means of subsistence become excess insofar as they function as capital. There would be no such excess if they did not take on the form of capital, or if, to put matters differently, workers used and produced means of production by themselves, or if they used these means of subsistence in their everyday lives by themselves. The fact is that at the height of the period of prosperity, even with a rise in wages, this rise is circumscribed by definite limits. This does not mean that articles of consumption are produced in excess over and above the ability of workers, as human beings, to consume. In actuality, as a result of a rise in speculative prices, this excess appears as an accumulated inventory (taika), and while these prices do not rise to a great extent on a practical level, from the perspective of capital, this excess comes into being when investments of progressively larger amounts of capital yield decreasing rather than increasing magnitudes of profit. The same can be said even for means of production. The nature of capital’s production process is not something that developed by shortening the working day to correspond to advances in productivity.

Therefore, the production of the means of production also fell within definite, capitalist restrictions. Similarly, the means of production that have become excess capital would not be found in such an excess if they were used by workers themselves, and while this, in itself, is perhaps insufficient, the point is that if these means of production could be produced as something workers themselves could use— for example, to shorten the working day, or to alleviate their labor—then the production of excess in the form of means of production would have never materialized in the first place. It would then be possible to especially devote increased production for articles of mass consumption (taishūteki shōhi shiryō), which is impossible to completely realize capitalistically.[footnoteRef:4] [4: Capitalistically, meaning that, if, in a given society, the means of consumption were ever given to workers over and above what is historically determined to be necessary for the reproduction of labor power, then workers might not work the next day as wage labor. Due to the definite limits of wages, workers are compelled to work and to live a worker’s everyday life. This, however, presupposes that the means of production exist as capital, and that workers buy back, with wages, means of consumption as products of capital. In short, it presupposes capitalist methods of production. This cannot be said, therefore, to take place generally for all human societies. In the aftermath of developments in social methods of production of the kind found in capitalism, the method by which workers can use means of production directly is thus found nowhere else except in what is called socialism. Even in this case, however, insofar as workers are treated in ways similar to wage laborers and are likely not to work if they are given means of consumption beyond their daily requirement for reproduction, it can be said that so-called socialism absolutizes the capitalist social relation. At the same time, it goes without saying that the socialist emphasis [on the method of workers using means of production directly] cannot be dismissed in an off-handed way merely because, in the long historical process, it never came about that workers themselves used the means of production to produce products for themselves. While this point cannot be resolved by thinking through it in an abstract way, the off-hand dismissal of so-called socialism reveals an extremely narrow minded conception—one that is dominated unconsciously by ideology—that claims that workers must, without question, exist as wage workers whose daily subsistence cannot be allowed to ever go beyond the daily requirement needed to reproduce labor power for one day. Scientifically, the formula for socialism is not something that can written down, of course, but this distinction must be clarified. At the same time, even if we were to suppose that the development of capitalism itself produces the basis for socialist methods of production along with the advance of capitalism’s social productive forces, it cannot be said that this takes place consciously for this very purpose, and it most certainly does not mean that the transformation to socialism takes place naturally and spontaneously, on its own. Put differently, capitalism also cannot avoid developing factors that work against the transformation to socialism. At the same time, in regards to the scope of research in political economy, the recognition of the possibility of socialism cannot be avoided. Insofar as the areas of economic research proceed from the principles of political economy to stages of economic development, and finally to the historical analyses of present conditions, this possibility shifts from a negative and passive problem to one that is positive and active. On the level of fundamental principles, however, the necessity of socialism is not something that can be demonstrated positively. For while the necessity of socialism can be emphasized by political economy and provide an important scientific basis for socialist movements, depending on the situation, this can also risk ignoring the practical meanings of movements. Indeed, the historical process is not the objectivity so often heralded, so conclusively, by scientific analyses. Such conclusions, it must be said, are born out of a mechanical understanding of necessity, and by theory that cannot be said to have analyzed the historical process as something that is in fact historical. This is not to deny, of course, various points emphasized on the level of socialist movements. I will return to this point in Chapter 5, “The Necessity of crisis in capitalist society”. ]

As capital, the excess of means of production and means of consumption, or the excess of means of consumption in relation to means of production, or even the excess of one part of the means of production in relation to another part of means of production; in all these cases, the meaning of this excess does not come from a surplus of commodities resulting from the so-called uneven development of productive sectors. As I have discussed earlier, capitalism possesses a mechanism that can adjust such an unevenness by passing through the movement of price. Of course, within the concrete processes of individual crises, uneven developments undoubtedly play an important role. Indeed, especially when crises are sparked off by frenzied, speculative buying by merchant or commercial capitals, as well as by the latter’s bankruptcies, it can often be thought that crisis is born out of such an uneven development. However, even in this case, the basis of crisis does not simply stem from uneven development. Crisis appears for the first time with the limits of capital itself. In fact, even if the outbreak of crisis stemmed from bankruptcies born out of such an uneven development, crisis is not something that can be explained by the adjustment of unevenness alone, or by the mere fact of falling prices of certain kinds of commodities, or even by the fact that the unevenness stemming from the complex unity of the production process upsets the totality. The process in which crisis is followed by recession simply points to the impossibility of controlling, as a problem of production, the unevenness found between commodities.

Likewise, even when we consider the unevenness between commodities, the problem here is the unevenness between commodities as products of capital, and commodities that are not products of capital. This is not merely an unevenness of the kind found in the case of commodities as products of capital. In other words, it is not an unevenness that can be adjusted through the movement of price. For this very reason, the emergence of the phenomenon of a general excess of commodities, as that which cannot be thought to abide by the commodity form, becomes possible.[footnoteRef:5] While capitalism transforms the entirety of society into a commodity economy by commodifying labor power and by mediating, through the commodity form, the relationship between capitalists and workers as the fundamental relationship of society, there now emerges, from the depths of this society, a point where the transformation into a commodity economy does not take place, a point that is left-over. This point exposes how the commodity form cannot serve as the absolute form for human society. No matter how much human beings are considered, commodity-economically, to be a human resource, workers are human beings, not resources. They are not things, nor can they be produced as mere things. Workers cannot be produced as things by capital itself either, and while workers may be viewed as a resource similar to nature, unlike nature they are not given externally, from the outside. Workers are rather reproduced annually by the means of consumption as products of labor, which, in a capitalist society, are products of capital. It is precisely because of this that capital is able to take a form that dominates a single society. As I have described above, the surplus or lack of a working population itself comes to appear as an internal factor to the development of capitalist production, constituting a contradiction immanent to capitalism. Not simply a contradiction between things, it is a contradiction born out of the form itself that turns human beings into things. [5: Marx discusses the relations between “excess capital” and “excess commodities”, and “partial excess” and “total excess”, in light of his critique of Ricardo, and in his clarification of the confusions of various theses after Ricardo (see Theories of Surplus Value (Kautsky edition), Vol.2, Part 2, Chapter 3, “The Accumulation of Capital and Crisis”, section 4). Here, Marx brings to a halt his primary consideration of the capitalist commodity economy in its commodity form dimensions, and does not directly clarify the fundamental cause of crisis. ]

If the excess of commodities, as an excess of capital—which in actuality frequently appears in the form of speculatively purchased inventories (taika) of commodities, but which can also be understood as mere things—if this excess were capable of being managed socially, then it goes without saying that it would not manifest itself as a crisis. As a commodity economy, however, the ability to manage this excess socially is already itself an impossibility. Capitalism is not something that can manage this excess-portion, exclusively and immediately, as an excess. The excess to be managed is rather expressed in a form in which virtually all commodities become an excess. Capital, therefore, cannot avoid bringing the production of these commodities to a complete standstill. Individual capitals mutually try, as quickly as possible, to sell off these commodities, and here the management itself of surplus products already proceeds by way of the commodity economy.[footnoteRef:6] This takes place by way of the commodity economy not because excess capital comes directly from fallen profit rates, but because it emerges indirectly from rising interest rates, and as a phenomenon corresponding to the sudden exposure of defaulted payments. In this way, the excess of capital appears, simultaneously and inexorably, as an excess of populations. This is neither simply an excess of capital in relation to populations, nor a relation of populations, as an excess, before capital. Rather, the excess of capital that appears in relation to populations transforms into a form in which an excess of populations stands in relation to capital, but this points to the how, beneath a given relation between capitalists and workers, capital becomes incapable of managing the things it has produced itself, as capital. The origin of this incapacity resides in the relationship in which the labor power of workers is not allowed to exist, as labor power, unless it is bought, sold, and turned into a commodity, unless, that is, it is given the form of capital. Capital is an excess as capital. This is also the reason why capital, as excess capital, is ineluctably expressed in the form of a relation between industrial capital and loan capital. [6: Along with the development of capitalism, foreign investments of capital take place, thereby allowing for the management of commodities as excess products to a certain degree. This, however, is completely different from the social management of excess products discussed here, for it takes place as investments that are made in the pursuit of higher profit rates. It is valid, of course, to note here how so-called monopoly capital is formed by the concentration and growth of capital, and in ways that reveal an intensely close connection to the state, and in this regard, it is not impossible to identify certain aspects of a movement towards a kind of social management. Foreign investment takes place, in other words, not only to pursue higher profits, but also to serve as a means by which to circumvent sudden falls in the profit rate. This point, however, requires special research and cannot be theorized here because it pertains to what is called finance capital, as a phenomenon accompanying the developmental stage of recent capitalism, wherein industrial capital is no longer opposed to loan capital. We should at least be quick to affirm here, however, that even in this case, the contradiction originating from the commodification of labor power and the subsumption of labor is not fundamentally resolved beneath the form of capital. Indeed, it can be said that the source of all of the problems, which have proven to be difficult to resolve in the era of so-called monopoly capitalism, remain as signs of this contradiction. The meaning of the unprecedented development of the military industry should also probably be clarified in relation to this point. ]

C. “Poverty in the midst of wealth”

In light of the foregoing, an excess of capital and a surplus of populations can hardly be said to be incompatible phenomena. In the development process of the period of prosperity, money simply appears as a means for the exchange of commodities, commodities appear as the sole thing possessing real value, and money, as that which enables the extraction of surplus labor from workers, resides in the hands of the capitalist. Now, however, commodities, instead of serving as a means to acquire more value, become incapable of being sold even as mere commodities. Money suddenly becomes the only thing possessing value, and every commodity desperately tries to transform into money. It is as if a certain outlook presented itself whereby the only form in which capital can exist, as capital, is in the money form of loan capital. Strictly speaking, loan capital was no more than a portion of profit allotted as interest, but now it has replaced industrial capital as the representative of capital. This expresses nothing short of an inversion (tentō) of the immanent contradictions detonated by capitalist methods of production. The activities of vast sums of capital, in the form of commodities and means of production, become blocked precisely because of the form of capital, and it is because of this that the aforementioned phenomena appear. Not only capital’s accumulation but its reproduction process itself, all across the board, falls into stagnancy. Workers are laid off, their labor time is reduced, or their wages are cut, and the money, needed by workers to purchase articles of consumption (shōhi shiryō) which they themselves have produced, does not come their way. All the while the means of consumption grow even to the point of being superabundant, yet the workers who have produced them cannot consume them. This is a phenomenon that corresponds with the impossibility of uniting the now excessive means of production, as capital, with labor power.

Thus, when we speak of workers laboring in the production process, it goes without saying that this is something that must pass through the sale and purchase of the commodity of labor power, whereby the wages— which are obtained in this sale and purchase and which allow workers to buy back the means of consumption that workers themselves have produced—represent no more than a helpful means towards the reproduction of labor power. If the reproduction process comes to a standstill and wages are not obtained, or if the only wages that can be obtained are smaller than before, then it is clear that the means of consumption, as products of capital, will not be capable of being sold. Workers can sell their labor power as a commodity only while definite magnitudes of surplus value are being produced. Completely different from general commodities, labor power is a commodity that is not useful as a use value for its owners, and while this is what makes it a commodity in the first place, if labor power is not sold, not only is it unusable as such, its use value also becomes lost. If the commodities, which workers must constantly buy back, are not produced along with other means of production with a definite profit, then workers will not be able to consume the commodities that they themselves have produced. With capitalist production, the general and basic economic process, whereby human beings labor upon nature and obtain means of subsistence of means of production, is given a particular form (tokushu na keishiki) that discloses a limit to the production of surplus value in relation to capital. Because in capitalist production the original (honrai no) relationship between human beings and nature is subsumed within the form of capital (shihon no keishiki no uchi ni sōkatsu serareru), workers cannot directly consume the things that they themselves have produced. If the production of surplus value cannot be planned in the next reproduction process, they won’t be able to make one portion of the products of past production their own. While labor power may become commodified, it is never exchanged, like general commodities, as a thing possessing a specific use value. It is on the basis of this relationship that there appears, simultaneously, an excess of capital as commodities, and a surplus of populations.

In this way, just when capitalist production exhibits its productive forces to its fullest extent within a given and fixed relationship, not only will it become unable to manage its products, it will become saddled with so-called overproduction (seisan kajō), on the one hand, and a multitude of mere human beings incapable of obtaining the necessary level of means of subsistence for the reproduction of labor power, on the other. Overproduction is not an excess over and beyond the needs and desires (yokubō) of this multitude of human beings. Rather, means of subsistence become excessive while the workers’ needs and desires, which are already restricted to an extreme degree, go unsatisfied. This excess has not the slightest relation to the workers’ needs, and thus we find here what is called poverty in the midst of wealth. Not only this, however. We also find that, despite the workers’ intentions to produce their own means of subsistence, production already is no longer capable of continuing on. The means of production, and the workers that are no longer useful for means of production, have themselves produced such a vast amount of means of consumption, as well as the means of production required to produce these means of consumption, that they have become incapable of consuming the means of consumption that have already been produced, and because of this it becomes impossible, with the labour power that has been reproduced, to use the means of production and to produce new articles of consumption and means of production. In other words, the demand for products is decreased precisely because products have been produced excessively; common sense then tells us that these products cannot be bought because there is no money. This, however, is not merely a matter of supply exceeding demand. All is fine and good as long as commodities are sold, even if it means reducing their prices—no, this is not the issue. The issue is that the reproduction process itself cannot avoid being shaken down to its foundations. The reproduction process cannot continue with same terms of the given and fixed relation between capitalists and workers. And while this does not signal an absolute deadlock for the reproduction process, it does reveal a condition in which capital cannot strike out anew without the destruction and reorganization of its own value relation.

3. The destruction of the value of capital

When capitalist production, in terms of individual capitals, makes use of loan capital to expand to the fullest extent—and I have already described how, practically speaking, this use of loan capital is unavoidable— capital exercises its productive powers to such an extent that it cannot carry on in terms of the given value relation. Commodities continue to be produced, but they are not sold. Commodities prices cannot fail to fall, but here, the fall in prices is not one by which the reproduction process, having regained an evenness, can be said to begin anew. Originally, the excess of commodities in the period of crisis is nothing more than one aspect of the excess of capital, and thus excess capital is not born out of an excess of commodities. Similarly, if an all-pervasive phenomena of excess of commodities exists, this is because it is born out of excess capital. There are excess commodities because capital is not able to continue the reproduction process, which is why even banks cannot provide relief through the creation of credit. If finance cannot be continued for commodities that cannot be sold, this is because reproduction itself cannot be continued. For example, even if reproduction were continued by the work of credit, it is not something that can simply switch, from an inability to pay for interest, to an ability to pay for production. In actuality, as I have made frequent reference to already, merchant and commercial capital intervenes here, which, while representing the development of a relationship that is much more complex than the mere use of loan capital for industrial capital’s speculative expansion, nonetheless reveals a basic relationship in industrial capital’s inability to continue the reproduction process advantageously and favorably. An accumulated inventory of commodities (taika), formed by merchant speculations, does nothing else except conceal this relationship and get bigger and bigger. The fall in commodity prices that appears in crisis does not merely represent a loss here, only to be gained elsewhere. This kind of relationship is included in the problem, but this in itself is not enough, for the problem is the loss of the value of capital, born out of the stagnancy and chaos of the reproduction process itself, of which the fall in commodity prices is but one of its factors.

The destruction of capital value (shihon kachi no hakai) resulting from crisis does not represent, therefore, a mere loss of value resulting from the chaos of the unevenness of the reproduction process, and the inability to sell commodities. Rather, it represents a loss of the value of capital itself—in the form of commodities and productive capital—that takes place in tandem with a fall in commodity prices, and as a result of the stagnancy of the reproduction process. For when the reproduction process stagnates, and when the production process also stagnates, partially or entirely, it goes without saying that the means of production are not going be of any use as means of production. Once the reproduction process is gradually able to get underway, however, the means of production will come into use once again, and because of this, its use value will contribute to the production of new use values, thereby transferring this value to new products. The value of capital, therefore, is not simply lost. Similarly, in terms of use value, when we look at fixed capital such as machinery, insofar as it contributes towards the formation of new use values, its value will be transferred to new products, and while it can be said that the only thing that will decrease here is its own use value, as long as it continues to be in use its use value will be preserved, thus allowing capital to profit from this use, free of charge, within the labor process. With the interruption of the reproduction process, however, if costs to maintain the means of labor power are not covered, a rapid loss of the value and use-value of these means of labor comes about. This is not a problem exclusively for means of labor such as machinery; the same can be said for raw materials and other circulating capital portions. For all of the things that do not decompose with the production of new products, once they fall into disuse in the production process there is no stopping the loss of use value. This is exactly what the destruction of capital means. And despite the fact that the unemployment of workers does not, in itself, represent the slightest loss for capital, capital will simply cease to be capital unless it destroys its own value. As I have discussed before, however, the truth of the matter is that it is the workers’ unemployment or semi-employment, as an effect of the cessation of the production process, that destroys capital value along with use value. The workers’ labor process itself is that which augments capital’s value while preserving it, thereby allowing capital to be capital; if capital does not increase its value, it will lose its value.

Strictly speaking, capital is a value in the form of a moving body (undōtai), which would suggest that it would lose its value, along with its use value, should its movement be interrupted. In fact, however, this movement itself is already mediated by human labor. This insight is completely lost when capital is understood as if it only existed like merchant capital, where the movement of capital reveals the transformation of commodities into money, and money into commodities, simple processes which do not add any new values—and which, even if it did so, would not amount to much except for incidental additions related to such things as storage or transportation. Even if this point is not completely overlooked, however, the tendency is to forget the essential core of this point because labor is consumed as a commodity of labor power in the process of production, and because, in other words, production can only take place through—and as— the labor of the other. It is safe to say, however, that crisis exposes this point in all of its nakedness. Capital is only capable of becoming a moving body of value through a production process that depends on the labor of human beings, thus allowing capital to proceed as a self-expanding value that simultaneously preserves its value. Similarly, the movement of commodities and money, in the form of so-called circulation capital, is also mediated, albeit indirectly, by the labor in the production process. If the labor process is interrupted, the movement of the circulation process also cannot avoid stagnating. The interruption of the labor process therefore cannot but destroy the value, as well as the use value, of capital.

Of course, the destruction of capital value that takes place in the wake of a fall in commodity prices does not occur uniformly in all industries. The prices for raw materials and semi-manufactured goods, which exhibit sharp increases in the period of prosperity, now do the opposite, exhibiting a sharp fall. Lagging behind the expansion of production, industrial sectors such as these realize this expansion for the first time by the heightened rise of prices during the period of prosperity, in which an acute increase in the mass of production (seisanryō) tends to exacerbate the fall in prices. By the time of crisis, a drastic destruction of capital value cannot be avoided. However, just as the differences in the prices of products from these industrial sectors cannot be said to have sparked off the development of the period of prosperity, in the period of crisis, these differing influences, in and of themselves, also cannot be said to restart capital’s reproduction process. Crisis, as a relation between capital and labor that appears as the manifestation of a contradiction internal to capital itself, is not something that results merely from the unevenness of prices. An excess of capital and a surplus of populations is born out, and on the basis of, a definite social productivity (ittei no shakaiteki seisanryoku). This result shows how capital advances to such a degree that it can no longer manage its own productive forces with the existing relationships between capitalists and workers. To put matters differently, while capital is able, by the productive forces, to progressively produce more and more means of production and means of consumption, if it does not change the labor time necessary for the reproduction of labor power, it will not be able to re-obtain profits and expand reproduction. In the period of crisis, the differing conditions of various industrial sectors, and the relationships between large capitals and small capitals, not to mention those between industrial capital and financial institutions such as banks, all bring about bankruptcies as well as concentrations of capital, and while the uneven development between capitals forms a basis for evenness, thereby representing, to a certain degree, a factor in the recovery of the reproduction process, all of these things alone cannot bring about a new relationship between capitalists and workers. Indeed, following the period of crisis, the period of recession appears as a preparatory process that develops this new social relationship.

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