The Pacific Capital A Cyberpunk Story

Karl Marx made a contribution of lasting service to the theory of economics when he drew attention to the problem of the reproduction of the entire social capital. It is significant that in the history of economics we find only two attempts at an exact exposition of this problem: one by Quesnay, the father of the Physiocrats, at its very inception; and in its final stage this attempt by Marx. In the interim, the problem was ever with bourgeois economics.

Yet bourgeois economists have never been fully aware of this problem in its pure aspects, detached from related and intersecting minor problems; they have never been able to formulate it precisely, let alone solve it. Seeing that the problem is of paramount importance, their attempts may all the same help us to some understanding of the trend of scientific economics.

What is it precisely that constitutes this problem of the reproduction of total capital? The literal meaning of the word 'reproduction' is repetition, renewal of the process of production. At first sight it may be difficult to see in what respect the idea of reproduction differs from that of repetition which we can all understand-why such a new and unfamiliar term should be required. But in the sort of repetition which we shall consider, in the continual recurrence of the process of production, there are certain distinctive features. First, the regular repetition of reproduction is the general sine qua non of regular consumption which in its turn has been the precondition of human civilisation in every one of its historical forms. The concept of reproduction, viewed in this way, reflects an aspect of the history of civilisation. Production can never be resumed, there can be no reproduction, unless certain prerequisites such as tools, raw materials and labour have been established during the preceding period of production. However, at the most primitive level of man's civilisation, at the initial stage of man's power over nature; this possibility to re-engage in production depended more or less on chance. So long as hunting and fishing were the main foundations of social existence, frequent periods of general starvation interrupted the regular repetition of production. Some primitive peoples recognised at a very early stage that for reproduction as a regularly recurring process certain measures were essential; these they incorporated into ceremonies of a religious nature; and in this way they accepted such measures as traditional social commitments. Thus, as the thorough researches of Spencer and Gillen have taught us, the totem cult of the Australian negroes is fundamentally nothing but certain measures taken by social groups for the purpose of securing and preserving their animal and vegetable foodstuffs; these precautions had been taken year by year since time immemorial and thus they became fossilised into religious ceremonials. Yet the circle of consumption and production which forms the essence of reproduction became possible only with the invention of tillage with the hoe, with the taming of domestic animals, and with cattle-raising for the purpose of consumption. Reproduction is something more than mere repetition in so far as it presupposes a certain level of society's supremacy over nature, or, in economic terms, a certain standard of labour productivity.

On the other hand, at all stages of social development, the process of production is based on the continuation of two different, though closely connected factors, the technical and social conditions-on the precise relationship between man and nature and that between men and men. Reproduction depends to the same degree on both these conditions. We have just seen how reproduction is bound up with the conditions of human working techniques, how far it is indeed solely the result of a certain level of labour productivity; but the social forms of production prevailing in each case are no less decisive. In a primitive communist agrarian community, reproduction as well as the whole plan of economic life is determined by the community of all workers and their democratic organs. The decision to re-engage in labour-the organisation of labour-the provision of raw materials, tools, and man-power as the essential preliminaries of labour-the arrangement of reproduction and the determination of its volume are all results of a planned co-operation in which everybody within the boundaries of the community takes his part. In an economic system based on slave labour or corvée, reproduction is enforced and regulated in all details by personal relations of domination. Here the volume of reproduction is determined by the right of disposal held by the ruling élites over smaller or larger circles of other people's labour. In a society producing by capitalist methods, reproduction assumes a peculiar form, as a mere glance at certain striking phenomena will show us. In every other society known to history, reproduction recurs in a regular sequence as far as its preconditions, the existing means of production and labour power, make this possible. As a rule, only external influences such as a devastating war or a great pestilence, depopulating vast areas of former cultural life, and consequently destroying masses of labour power and of accumulated means of production, can result in a complete interruption of reproduction or in its contraction to any considerable extent for longer or shorter periods. A despotic organisation of the plan of production may on occasion lead to similar phenomena. When in ancient Egypt Pharaoh's will chained thousands of fellaheen for decades to the building of the pyramids; when in modern Egypt Ismail Pasha ordered 20,000 fellaheen to forced labour on the Suez Canal; or when, about two hundred years before Christ, the Emperor Shi Hoang Ti, founder of the Chin dynasty, allowed 400,000 people to perish of hunger and exhaustion and thus sacrificed a whole generation to his purpose of consolidating the Great Wall at China's northern frontier, the result was always that vast stretches of arable land were left fallow and that regular economic life was interrupted for long periods. In all these cases the causes of these interruptions of reproduction obviously lay in the one-sided determination of the plan of reproduction by those in power.

Societies which produce according to capitalist methods present a different picture. We observe that in certain periods all the ingredients of reproduction may be available, both labour and means of production, and yet some vital needs of society for consumer goods may be left unfulfilled. We find that in spite of these resources reproduction may in part be completely suspended and in part curtailed. Here it is no despotic interference with the economic plan that is responsible for the difficulties in the process of production. Quite apart from all technical conditions, reproduction here depends on purely social considerations: only those goods are produced which can with certainty be expected to sell, and not merely to sell, but to sell at the customary profit. Thus profit becomes an end in itself, the decisive factor which determines not only production but also reproduction. Not only does it decide in each case what work is to be undertaken, how it is to be carried out, and how the products are to be distributed; what is more, profit decides, also, at the end of every working period, whether the labour process is to be resumed, and, if so, to what extent and in what direction it should be made to operate.[58]

In capitalist society, therefore, the process of reproduction as a whole, constitutes a peculiar and most complicated problem, in consequence of these purely historical and social factors. There is, as we shall see, an external characteristic which shows clearly this specific historical peculiarity of the capitalist process of reproduction. Comprising not only production but also circulation (the process of exchange), it unites these two elements. Capitalist production is primarily production by innumerable private producers without any planned regulation. The only social link between these producers is the act of exchange. In taking account of social requirements reproduction has no clue to go on other than the experiences of the preceding labour period. These experiences, however, remain the private experiences of individual producers and are not integrated into a comprehensive and social form. Moreover, they do not always refer positively and directly to the needs of society. They are often rather indirect and negative, for it is only on the basis of price fluctuations that they indicate whether the aggregate of produced commodities falls short of the effective demand or exceeds it. Yet the individual private producers make recurrent use of these experiences of the preceding labour period when they re-engage in reproduction, so that glut or shortage are bound to occur again in the following period. Individual branches of production may develop independently, so that there may be a surplus in one branch and a deficiency in another. But as nearly all individual branches of production are interdependent technically, glut or shortage in some of the larger branches of production lead to the same phenomenon in most of the others. Thus the general supply of products may alternate periodically between shortage and surplus relative to the social demand.

Herein lies the peculiar character of reproduction in a capitalist society, which differs from all other known forms of production. In the first place, every branch of production develops independently within certain limits, in a way that leads to periodical interruptions of production of shorter or longer duration. Secondly, the individual branches of reproduction show deviations from social requirements amounting to all-round disparity and thus resulting in a general interruption of reproduction. These features of capitalist reproduction are quite characteristic. In all other economic systems, reproduction runs its uninterrupted and regular course, apart from external disturbance by violence. Capitalist reproduction, however, to quote Sismondi's well-known dictum, can only be represented as a continuous sequence of individual spirals. Every such spiral starts with small loops which become increasingly larger and eventually very large indeed. Then they contract, and a new spiral starts again with small loops, repeating the figure up to the point of interruption. This periodical fluctuation between the largest volume of reproduction and its contraction to partial suspension, this cycle of slump, boom, and crisis, as it has been called, is the most striking peculiarity of capitalist reproduction.

It is very important, however, to establish quite firmly and from the very outset that this cyclical movement of boom, slump, and crisis, does not represent the whole problem of capitalist reproduction, although it is an essential element of it. Periodical cycles and crises are specific phases of reproduction in a capitalist system of economy, but not the whole of this process. In order to demonstrate the pure implications of capitalist reproduction we must rather consider it quite apart from the periodical cycles and crises. Strange as this may appear, the method is quite rational; it is indeed the only method of inquiry that is scientifically tenable. In order to demonstrate and to solve the problem of pure value we must leave price fluctuations out of consideration. The approach of vulgar economics always attempts to solve the problem of value by reference to fluctuations in demand and supply. Classical economists, from Adam Smith to Karl Marx, attack the problem in the opposite way, pointing out that fluctuations in the mutual relation between demand and supply can explain only disparities between price and value, not value itself. In order to find the value of a commodity, we must start by assuming that demand and supply are in a state of equilibrium, that the price of a commodity and its value closely correspond to one another. Thus the scientific problem of value begins at the very point where the effect of demand and supply ceases to operate.

In consequence of periodical cycles and crises capitalist reproduction fluctuates as a rule around the level of the effective total demand of society, sometimes rising above and sometimes falling below this level, contracting occasionally even to the point of almost complete interruption of reproduction. However, if we consider a longer period, a whole cycle with its alternating phases of prosperity and depression, of boom and slump, that is if we consider reproduction at its highest and lowest volume, including the stage of suspension, we can set off boom against slump and work out an average, a mean volume of reproduction for the whole cycle. This average is not only a theoretical figment of thought, it is also a real objective fact. For in spite of the sharp rises and falls in the course of a cycle, in spite of crises, the needs of society are always satisfied more or less, reproduction continues on its complicated course, and productive capacities develop progressively. How can this take place, leaving cycles and crises out of consideration? Here the real question begins. The attempt to solve the problem of reproduction in terms of the periodical character of crises is fundamentally a device of vulgar economics, just like the attempt to solve the problem of value in terms of fluctuations in demand and supply. Nevertheless, we shall see in the course of our observations that as soon as economic theory gets an inkling of the problem of reproduction, as soon as it has at least started guessing at the problem, it reveals a persistent tendency suddenly to transform the problem of reproduction into the problem of crises, thus barring its own way to the solution of the question. When we speak of capitalist reproduction in the following exposition, we shall always understand by this term a mean volume of productivity which is an average taken over the various phases of a cycle.

Now, the total of capitalist reproduction is created by an unlimited and constantly changing number of private producers. They produce independently of one another; apart from the observation of price fluctuations there is no social control-no social link exists between the individual producers other than the exchange of commodities. The question arises how these innumerable disconnected operations can lead to the actual total of production. This general aspect of our problem indeed strikes us immediately as one of prime importance. But if we put it this way, we overlook the fact that such private producers are not simply producers of commodities but are essentially capitalist producers, that the total production of society is not simply production for the sake of satisfying social requirements, and equally not merely production of commodities, but essentially capitalist production.

Let us examine our problem anew in the light of this fact. A producer who produces not only commodities but capital must above all create surplus value. The capitalist producer's final goal, his main incentive, is the production of surplus value. The proceeds from the commodities he has manufactured must not only recompense him for all his outlay, but in addition they must yield him a value which does not correspond with any expense on his part, and is pure gain. If we consider the process of production from the point of view of the creation of surplus value, we see that the capital advanced by the capitalist is divided into two parts: the first part represents his expenses on means of production such as premises, raw material, partly finished goods and machinery. The second part is spent on wages. This holds good, even if the capitalist producer does not know it himself, and in spite of the pious stuff about fixed and circulating capital with which he may delude himself and the world. Marx called this first part constant capital. Its value is not changed by its utilisation in the labour process-it is transferred in toto to the finished product. The second part Marx calls the variable capital. This gives rise to an additional value, which materialises when the results of unpaid labour are appropriated. The various components which make up the value of every commodity produced by capitalist methods may be expressed by the formula: c + v + s. In this formula c stands for the value of the constant capital laid out in inanimate means of production and transferred to the commodity, v stands for the value of the variable capital advanced in form of wages, and s stands for the surplus value, the additional value of the unpaid part of wage labour. Every type of goods shows these three components of value, whether we consider an individual commodity or the aggregate of commodities as a whole, whether we consider cotton textiles or ballet performances, cast-iron tubes or liberal newspapers. Thus for the capitalist producer the manufacture of commodities is not an end in itself, it is only a means to the appropriation of surplus value. This surplus value, however, can be of no use to the capitalist so long as it remains hidden in the commodity form of the product. Once the commodity has been produced, it must be realised, it must be converted into a form of pure value; that is, into money. All capital expenses incorporated in the commodity must shed their commodity-form and revert to the capitalist as money to make this conversion possible so that he can appropriate the surplus value in cash. The purpose of production is fulfilled only when this conversion has been successful, only when the aggregate of commodities has been sold according to its value. The proceeds of this sale of commodities, the money that has been received for them, contains the same components of value as the former aggregate of commodities and can be expressed by the same formula c + v + s. Part c recompenses the capitalist for his advances on means of production that have been used up, part v recompenses him for his advances on wages, and the last part, s, represents the expected surplus, the capitalist's clear profit in cash.[59]

This conversion of capital from its original form, from the starting point of all capitalist production, into means of production, dead and living, such as raw materials, instruments, and labour; its further conversion into commodities by a living labour process; and its final reconversion into money, a greater amount of money indeed than at the initial stage-this transformation of capital is, however, required for more than the production and appropriation of surplus value. The aim and incentive of capitalist production is not a surplus value pure and simple, to be appropriated in any desired quantity, but a surplus value ever growing into larger quantities, surplus value ad infinitum. But to achieve this aim, the same magic means must be used over and over again, the means of capitalist production-the ever repeated appropriation of the proceeds of unpaid wage labour in the process of commodity manufacture, and the subsequent realisation of the commodities so produced.

Thus quite a new incentive is given to constantly renewed production, to the process of reproduction as a regular phenomenon in capitalist society, an incentive unknown to any other system of production. In every other economic system known to history, reproduction is determined by the unceasing need of society for consumer goods, whether they are the needs of all the workers determined in a democratic manner as in an agrarian and communist market community, or the despotically determined needs of an antagonistic class society, as in an economy of slave labour or corvée and the like. But in a capitalist system of production, it is not consideration of social needs which actuates the individual private producer who alone matters in this connection. His production is determined entirely by the effective demand, and even this is to him a mere means for the realisation of surplus value which for him is indispensable. Appropriation of surplus value is his real incentive, and production of consumer goods for the satisfaction of the effective demand is only a detour when we look to the real motive, that of appropriation of surplus value, although for the individual capitalist it is also a rule of necessity. This motive, to appropriate surplus value, also urges him to re-engage in reproduction over and over again. It is the production of surplus value which turns reproduction of social necessities into a perpetuum mobile. Reproduction, for its part, can obviously be only resumed when the products of the previous period, the commodities, have been realised; that is, converted into money; for capital in the form of money, in the form of pure value, must always be the starting point of reproduction in a capitalist system. The first condition of reproduction for the capitalist producer is thus seen to be a successful realisation of the commodities produced during the preceding period of production.

Now we come to a second important point. Under a system of private economy, it is the individual producer who determines the volume of reproduction at his discretion. His main incentive is appropriation of surplus value, indeed an appropriation increasing as rapidly as possible. An accelerated appropriation of surplus value, however, necessitates an increased production of capital to generate this surplus value. Here a large-scale enterprise enjoys advantages over a small one in every respect. In fine, the capitalist method of production furnishes not only a permanent incentive to reproduction in general, but also a motive for its expansion, for reproduction on an ever larger scale.

Nor is that all. Capitalist methods of production do more than awaken in the capitalist this thirst for surplus value whereby he is impelled to ceaseless expansion of reproduction. Expansion becomes in truth a coercive law, an economic condition of existence for the individual capitalist. Under the rule of competition, cheapness of commodities is the most important weapon of the individual capitalist in his struggle for a place in the market. Now all methods of reducing the cost of commodity production permanently amount in the end to an expansion of production; excepting those only which aim at a specific increase of the rate of surplus value by measures such as wage-cutting or lengthening the hours of work. As for these latter devices, they are as such likely to encounter many obstacles. In this respect, a large enterprise invariably enjoys advantages of every kind over a small or medium concern. They may range from a saving in premises or instruments, in the application of more efficient means of production, in extensive replacement of manual labour by machinery, down to a speedy exploitation of a favourable turn of the market so as to acquire raw materials cheaply. Within very wide limits, these advantages increase in direct proportion to the expansion of the enterprise. Thus, as soon as a few capitalist enterprises have been enlarged, competition itself forces all others to expand likewise. Expansion becomes a condition of existence. A growing tendency towards reproduction at a progressively increasing scale thus ensues, which spreads automatically like a tidal wave over ever larger surfaces of reproduction.