Readings: Capital II, ch. 15-17
“If we were to consider a communist society in place of a capitalist one, then money capital would immediately be done away with, and so too the disguises that transactions acquire through it. The matter would be simply reduced to the fact that the society must reckon in advance how much labour, means of production and means of subsistence it can spend, without dislocation, on branches of industry which, like the building of railways, for instance, supply neither means of production nor means of subsistence, nor any kind of useful effect, for a long period, a year or more, though they certainly do withdraw labour, means of production and means of subsistence from the total annual product.” (390)
The question is often posed as to why Marx never gave a detailed exposition of what a communist society would look like. The reason why he did not do this is because his method is dialectical, not utopian. The nature of Marxism is that its criticism of capitalism is simultaneously a blueprint for how to construct a socialist society. His mission in Capital is to understand the capitalist economy in the same way an engineer understands a complex machine that constantly breaks down and produces sub-optimal results. He does not want to do away with the machine itself, but transform its fundamental operations into an improved machine. In this sense, a workers state can be thought of as a social formation in which the working class has seized control of a flawed machine and has to transform its operations along the lines Marx lays out in this book. While a workers revolution overturns the fundamentals of society, the working class would need to make use of many of the same tools used by capitalism, e.g. banks and credit, but with the aim of reproducing socialist relations of production. Capital can be seen as a manual for the transformation of a capitalist society into a communist society—a close reading of capitalist production, circulation and distribution with an eye toward revolutionizing all of these processes.
In an earlier post, I quoted Trotsky’s description of the Soviet Union as a “preparatory regime transitional from capitalism to socialism.” (The Revolution Betrayed; 50) The task of the Soviet workers state was to implement the transition Marx lays out in Capital. Trotsky continues, “The state assumes directly and from the very beginning a dual character: socialistic, insofar as it defends social property in the means of production; bourgeois, insofar as the distribution of life’s goods is carried out with a capitalistic measure of value and all the consequences ensuing therefrom.” (56) In this context, Marx’s quote indicates that the problems of long-term capital investment do not simply disappear with a workers revolution. On the contrary, this is only the start of building a rationally-planned society. A workers state enables this re-engineering of the still-existing capitalist social relations along socialist lines. How should the workers state convert the anarchic capitalist credit system into a legible, democratic, centrally-planned mechanism for making rational long-term investments that raise the workers’ standard of living and reproduce socialist relations of production, gradually doing away with bourgeois right? The answer to this lies in understanding how workers states have struggled over the question of financing socialist development. The abolition of money is one of the end goals (so perhaps Marx was overeager in saying that money would be “immediately” abolished); the immediate task is how to manage that transition away from bourgeois value.
Drilling down to this series of chapters, Marx’s argument in the above quote is that the anarchy of production in capitalism makes it impossible to rationally plan long-term investments for the benefit of society. The mass of money accumulated in capitalist society erases the social conditions of production by way of its anonymity. In order to build a planned communist economy, such anonymity of transactions would have to be exposed through the abolition of money in order to make fully legible the amount of surplus available and the options for reinvesting that surplus in expanded reproduction (reproduction of communist social relations in this case).
Under capitalism, the money market serves as the repository for capital that is “set free” as its turnover period is shortened (assuming it is not reinvested in expanded reproduction). The supply of money grows as the volume of capital set free grows. Later in chapter 15, Engels de-emphasizes the significance that Marx attributes to the turnover period in influencing the amount of capital set free, but he does not dispute that this is a factor. Engels’ point is that, on a general level, there is always a portion of capital that is set aside during circulation as “latent capital.” The fluctuations in the supply of capital on the money market affect the rate of interest.
But the money market makes long-term investment a crapshoot and its capitalistic structure ensures speculation is the norm. As more surplus is set free and placed on the money market, interest rates come down and speculation runs rampant. Nobody really knows what surplus is invested in what project. A semblance of rationality only emerges when the speculation leads to crisis as the credit system seizes up, as happens routinely. Marx argues for exposing this surplus that is hidden by its money fetish so that it can be rationally invested.
Later, Marx points out that the formation of hoards is largely the result of circumstances emerging from the circulation process. One such circumstance is stagnation of circulation. As I write this, a massive hoard has formed in the U.S. banking system, part of which is sitting on the money market. For all of its efforts in quantitative easing, the Federal Reserve has been unable to free up this hoard of capital for investment in production. It is a testament to the power of the money fetish that the capitalist class can be deluded into thinking the central bank can universally loosen credit conditions across a multitude of private banks simply by buying assets. Can the Fed lower interest rates by providing a source of ongoing demand? Probably yes. Can the Fed force banks to lend money to finance productive investment? Absolutely not. This is anarchy of production. If the banks do not want to lend, they will hoard.
World of Lenidzky 