Marx's Theoretical Foundations in 'Capital'

NB. I here insert some draft material from my research on a critical comparison between Marx and modern orthodox neoclassical economics.

 

Marx bases his account of capitalism on the underlying social structure of capitalism. The make-up of this social structure is a particular social power relation of production between capitalists and wage labourers. But why does Marx do this?

In any economic system, as pointed out by Schweickart (2^nd ed., 2011), human beings will interact with the nonhuman aspects of nature in order to produce the various things they desire or want (2011: 24). Specifically, this involves human labour utilising the nonhuman aspects of the means of production in order to make products for their own immediate consumption (Schweickart 2011: 24). However, for this to happen, then there must be in place a specific type of economic structure, which means a set of customs and laws which govern the actual relationships of these three basic elements of any economic system – its (1) human labour, (2) means of production and (3) products aspects (Schweickart 2011: 24). So, for Schweickart, the governing aspect of any economic system is its particular underlying economic structure. The way any economic system operates in terms of how its human labour component utilises its nonhuman means of production aspect in order to make the various products desired by the human beings of a given society is, therefore, dependent upon its particular economic structure.

So, in a capitalist society, the way in which the relationships of its three basic elements of human labour, means of production and products will be governed, is reflected in the following three defining institutional features or structures which, as Schweickart points out, it possesses (2011: 24-6). Firstly:

The bulk of the means of production are privately owned, either directly or by corporations that are themselves owned by private individuals. (Schweickart 2011:24)

In other words, it possesses the institutional feature or structure of concentrated private property. Secondly:

Most products are exchanged in a “market.” That is to say, goods and services are bought and sold at prices determined by competition and not by some governmental pricing authority. Individual enterprises compete with one another in providing goods and services to customers, each enterprise trying to make a profit. (Schweickart 2011: 24)

In short, it contains the institutional feature or structure of markets. Finally:

Most of the people who work for pay in this society work for other people who own the means of production. Most working people are “wage labourers.” (Schweickart 2011: 24)

A key institutional feature or structure of capitalism is thus wage labour.

As can be seen here from Schweickart’s characterisation of the three basic institutional features or structures of a capitalist society in terms of (1) concentrated private property, (2) markets and (3) wage labour, its economic structure is basically one in which the human labour of such a society, which is provided by wage labourers (the wage labour component), is utilised by those who own the bulk of the means of production of such a society, the owners of individual enterprises (the concentrated private property component), to make products which can then be exchanged in the market for a price and so make a profit, if possible (the market component). Accordingly, this economic structure is the basis of the economic system of a capitalist society and as such it has its own specific laws and customs which govern the relationships amongst its three basic elements in human labour, means of production and products.

While the economic structure of a capitalist economic system is so constituted, in terms of concentrated private property, markets and wage labour, these three institutional aspects of the economic structure do not hold equal weight for Marx. Of them, it is the institutions of concentrated private property and wage labour that have priority for Marx. This is because it is Marx’s view that although the market, as one of the institutions of a capitalist society, is an essential component of its economic structure, a capitalist society cannot be what it is without the other two institutions which comprise its economic structure in concentrated private property and wage labour. For example, in a society of simple commodity producers, such as one which consists of small farmers and artisans, the simple commodity producers of such a society will trade their various products with one another in a market-place for money or its equivalent. In such a society there will be no concentrated private property or wage labour because all such simple commodity producers, like simple farmers and artisans, will be working for themselves and selling their own products directly to other simple commodity producers in the market in exchange for a certain amount of money or its equivalent. Thus, in such a society, it will have the institution of the market and the institution of private producers who work for themselves, but it will lack the other two institutions of concentrated private property and wage labour. However, for a capitalist society, if it is to be a capitalist society in terms of Schweickart’s characterisation, it must possess in addition to the institution of the market the two other institutions of concentrated private property and wage labour. Since this is so, it would appear that these two institutions in concentrated private property and wage labour are the distinguishing features of such a market-type society: they are what essentially distinguish a capitalist market society from other non-capitalist market societies, such as a socialist market society wherein there will be a genuine lack of concentrated private property or a merchant market society wherein there will be little wage labour. So, for Marx, if we want to understand the essential distinguishing nature of a capitalist society or the capitalist economic system then we must focus on these two defining institutional features or structures of its underlying economic structure.

In doing so, however, it is Marx’s contention that the theoretical focus of a scientific analysis of capitalism should be on the actual social relationship between these two key institutional features or structures of its underlying economic structure. This is why, as pointed out by Palermo (2007: 551), Marx singles out these two institutional features of the economic structure from its market institution. For Marx, the theoretical focus should be on how the owners of the means of production (concentrated private property) and those who work for them in exchange for a living wage (wage labour) are actually socially related or connected. In Marx’s view, the theoretical focus of capitalism should be on what he takes to be an actual social relation of production, which, as pointed out by Hunt (1993: 105), is a relation over who owns and controls the means of production. Thus, for Marx, this social relation of production between concentrated private property and wage labour constitutes for him the social structure aspect of the underlying economic structure of capitalism, to distinguish it from the market structure aspect of the underlying economic structure of capitalism.

This particular social relation of production is a social power relation of production. This is essentially because wage labourers, who do not own the means of production, are consequently forced to sell in the market to those who do own the means of production (capitalists), their only productive asset, labour-power or the capacity to labour, as a commodity in exchange for a living wage. As a result, they come under the direct control or authority of the capitalist within the production process.  As such, they find themselves in a social relationship with the capitalist in which they are subordinate to the latter.

It is, accordingly, on the basis of this social power relation of production between capitalists and wage labourers that capitalists are able to generate profits: they are able to do this because within the production process they are able to extract surplus labour out of wage labourers without any compensation (hence capitalist exploitation of wage labour). Furthermore, it is on the basis of this social power relation of production that the actual class relation between capitalists and wage labourers is reproduced on an ever-expanding scale. The mechanism for this is the industrial reserve army of capitalism, a permanent pool of unemployed wage labourers who, through their existence, put downward pressure on those wage labourers who have employment to work harder for a minimal amount of wages. As a result, the social power of capitalists increases at the expense of wage labourers, who in turn become progressively more powerless. In short, it is how capitalists perpetuate their dominance over wage labourers and continue to exploit them. Most importantly, however, this is how the capitalist economic system (or the capitalist mode of production) continually reproduces itself on an ever-expanding scale: its very existence as a particular economic system or mode of production is dependent on it. In short, it is the very essence (causal mechanism) which drives the entire capitalist economic system.

So, the underlying social structure aspect of the capitalist economic structure is its fundamental feature. And so, for Marx, if we want to produce a scientific account of capitalism then we must theoretically base it on its underlying social structure: the social power relation of production between capitalists and wage labourers. For this is, according to Marx, the causal foundations of capitalism (its essence).