Capital Volume 1 Chapter 1 Notes

This is part 1 of a series in which I'll be summarizing the framework of Marx's Capital, Volume 1. For this series I am using the translation by Ben Fowkes, © 1990 & published by Penguin Classics.

All numbered and lettered lists are as they appear in the literature; further organization is my own doing. Occasionally, notes appear outside of the section they are sourced from in the book. This was done to improve the organization and flow of the notes.

I. The Two Factors of the Commodity: Use Value and Value (Substance of value; Magnitude of Value)

-There are two kinds of value applicable to commodities:

Use-value (substance: subjectively represents usability to consumer, represents wealth)

Depository for exchange value

Exchange Value (magnitude: realized by way of market exchange)

Since magnitude of value is our subject, ‘value’ and ‘magnitude of value’ are often used interchangeably.

-…and two creative factors for value:

Labor Value (prerequisite, subsumed into commodity, creates commodity value)
A value or quantity of labor is the common denominator among commodities
Resources (See Section II)

Economic Liberals Admit it: Capitalists Own Us

"Don't tax the rich, as they create jobs," so the mantra goes. However, this line of thinking betrays the underlying structure of production: namely, that the capitalist class has executive control over the means of production - control which is a concern of public policy, as Cato and the Heritage Foundation admit by requesting policy that regards its standing. Despite that fact, policy proposals argue for diminished public input. Indeed, history shows us that such control has always underlined this graft:^1,2,3,4

• Today, the Capitalist creates jobs by allowing the working class to use the means of production and sell their labor to him.
• Before that, the Lord created jobs by allowing the working class to use the means of production and give part of their labor to him.
• Before that, the Slaver created jobs by having the working class use the means of production and he (and it was always a man - patriarchy and all that) provided basic subsistence to them.

It has always been the narrow control over the means of production that allowed the interests of a group of oligarchs to consistently stand as a barrier to the production process. Interestingly, when these power structures shifted, it was always by diminishing the returns that older systems could replicate. The oft-revered Mises agrees: it is by diminishing the surplus value on capital investment that the same is disincentivized.² Is calling for safer structures for capitalism simply another incarnation of the tactical perpetuation of power? And does this activity fit the theoretical model of consumer-driven capitalism?

India, Liberalization and Real Wages

VoxEU has a report arguing that liberalization has increased the productivity of industries in India:

• First, from 1985 to 1990, average productivity rose by over 8%, while the reallocation component actually fell by more than 6%, indicating that more productive firms lost market share to less productive firms.

The Credit Crisis as a Valorization Problem

Naked Capitalism has a great guest post today which exposes the incentivization process at work in the credit system:

"One source of credit market friction arises from coordination failures among lenders (see for example Gorton and He 2008). In these models, banks are heterogeneous and their behaviour strategic. The individually rational actions of heterogeneous lenders can generate collectively sub-optimal credit provision in both the upswing (a credit boom) and the downswing (a credit crunch). This is a collective action, or co-ordination, problem among banks.

...

"In the face of stiffening competition, banks were increasingly required to keep pace with the returns on equity offered by their rivals – a case not so much of “keeping up with the Joneses” as “keeping up with the Goldmans”."

So we see that the underlying cause of the expansion of credit is the valorization of capital. Not only the simple valorization, but the competition for capital (which I hope to cover soon on its own right) serves as an important ossifying process for companies which cannot necessarily sustain this model: