Internationalist Perspective and the Tradition of the Communist Left
Part 2: Understanding the Trajectory of capital

This is an expanded version of the article which appeared in the print version of Internationalist Perspective 58-59.

10. The first world war was a watershed moment in the trajectory of capitalism. Not that war was anything new, of course. Men had fought each other since the dawn of history. With the advent of capitalism, wars had increased in frequency and scope, and thus also in their murderous and destructive impact. They were essentially waged for the expansion of capitalism: against the ancien regime, the old system and all its obstacles to the commodification of labor power and to bourgeois rule; for the transformation of Europe’s political landscape, with its heterogeneous empires and myriad of little kingdoms and duchies, into modern capitalist nation-states; for the subjugation and plundering of weaker civilizations; for the conquest of colonies, but also, once the presence of capital had engendered a local bourgeoisie with distinct interests, for national independence; for the removal of all obstacles to the progress of industrialisation.

The consequences of these wars were horrible, especially for indigenous populations. The proletariat of the developed countries too suffered greatly, and the more so as industrialisation impacted warfare. The bigger the canons, the more canon-fodder is consumed. In the American war against secession in the 1860’s, more than 600 000 people perished. It was a harbinger of things to come. Yet horrible as they were, these wars generally served the purpose of capitalism’s expansion. WW1 did not.

In WWI capital did not violently expand, but devoured itself. For the first time, all developed capitalist countries engaged in a common cannibalistic destruction of capital on a massive, global, scale, and most of all of variable capital, of workers: tens of millions of them. And almost all the mass organizations that had emerged from the working class struggle, the socialist parties and the trade unions, helped them do it. Their role was crucial in leading the proletariat to the killing fields.

There had been signs before of the old workers movement’s gradual osmosis with the capitalist state but its role in making possible this proletarian holocaust was the definitive proof. When after years of slaughter, revolutionary struggle broke out, again the parties of the Second International and most unions (1) sided with capital, against the working class.

For communists, grounded in traditional Marxism, it seemed clear that these social convulsions were signs of an historic shift. An era of wars and revolution had begun, and that could only mean, according to the traditional Marxist stage-theory, that capitalism had completed its “historic mission” of preparing the way for communism. Since Marx had written (in 1859) that “No social order is ever destroyed before all the productive forces for which it is sufficient have been developed, and new superior relations of production never replace older ones before the material conditions for their existence have matured within the framework of the old society” (2) , it had to mean that now the point had been reached at which the productive forces could no longer develop in capitalism, and their further development required revolution. It had to mean that the ascendant, “progressive” phase of capitalism had ended, that its decadence had begun.


11. Both the Italian and the German-Dutch branches of the communist left strongly identified with the first congress of the Third International, whose principal theoretical document, the Manifesto to the Workers of the World, drafted by Trotsky, was the first text to develop the concept of the decadence of capitalism as a historical period distinct from its “ascendance.” The onset of this period was invoked to explain the imperialist character of all developed national capitals, the world war and the betrayals of the parties of the Second International and of the trade unions associated with them.

The Manifesto spoke of the “general death crisis” of capitalism, of a new “epoch of crisis” that opened with WWI, and of the “epoch of final, decisive struggle” of the world working class. (3) One year later, the Program of the KAPD (4) claimed: “the Twilight of the Gods of the bourgeois-capitalist world order is nigh.” And: “Capitalism is experiencing its definitive failure, it has plunged itself into the abyss in a war of imperialist robbery; it has created a chaos whose unbearable prolongation places the proletariat in front of the historic alternative: relapse into barbarism or construction of a socialist world.” Both of these fundamental documents of the revolutionary workers’ movement had an apocalyptic tone to them, speaking of a global capitalist system in ruins, incapable of any further development, and thus also incapable of conceding any economic benefits to the working class, rendering the reformist means of struggle of the previous period of relatively peaceful growth and development impossible, and so necessitating the taking up of revolutionary means of struggle, and the new organizations for waging that struggle that had been formed in workers’ revolutionary uprisings in Russia and Germany: the soviets or workers’ councils.

In the inter-war years, left communists had to accept that the revolutionary wave had been defeated, that Russia remained a capitalist state. But the deep global depression confirmed their view that capitalism was collapsing. In 1937, the Belgian Fraction of the International Communist Left (ICL), basing itself programmatically on the positions of the Italian Fraction (Bilan), in its founding Declaration of Principles, claimed that: “The communist fractions can only forge the theoretical weapons that are vital to the success of the revolution if they understand the internal workings of capitalist society in its stage of historic decline and if they link their analysis of events directly to the significance of this epoch.” The significance of this epoch was that “the productive forces as a whole can no longer develop within the framework of the capitalist system because they have attained the maximum that is possible with the nature of this system.” (5)

Unlike the parties of the Third International, whose positions soon were dictated by the needs of the Russian capitalist state, the Left Communists, vilified by Lenin and excluded from the International, drew the logical political conclusions from this analysis: since capitalism had concluded its historic mission and global revolution was on the agenda, all forms of collaboration with the class enemy had to be rejected. So no support for nationalism under any form, no common fronts with parties loyal to capital, no participation in the power structures of the capitalist state, rejection of the methods and organizational forms (parliamentary parties, trade unions) based on (now illusionary) reformism.

The depression of the 1930’s followed by an even more devastating world war seemed to confirm the validity of the decadence-theory. Better than before, because now there was an obvious causal link between capitalism’s economic crisis and the orgy of destruction that followed. Left Communists theorized that the trajectory of capitalism in decadence must consist of repeated cycles of crisis-war-reconstruction, every time more horrible, until proletarian revolution puts an end to this madness.

But the gigantic post-war growth of capitalism put a big question mark on the decadence theory. By no stretch of the imagination could this vast expansion be portrayed as a mere reconstruction. For a quarter century capitalism enjoyed almost continuous strong growth that also brought a substantial improvement of the material conditions of the working class, which bought a relative social peace. But that peace was shattered in 1968.

The following years, marked by the return of global economic crisis, massive working class struggles, radicalisation, war resistance, and heightening tensions between the two imperialist blocs, gave new life to the decadence theory. The crisis kept deepening, and the arms race between the blocs was accelerating; confirming the hypothesis that crisis must lead to world war unless world revolution intercedes. A new generation discovered the ideas of the Left Communists, who by then had dwindled to a few tiny groups. New organisations popped up, basing themselves on the Left Communist tradition. The largest of these was the International Communist Current (ICC), which succeeded in regrouping Left Communists in several countries.

12. The concept of decadence was (and is) the lynchpin of the platform of the ICC. It is invoked at every step in order to explain why forms of struggle that the proletariat was able to utilize prior to WWI are henceforth not only no longer possible but positively opposed to the advancement of that struggle. Decadence is also invoked to explain imperialist war, fascism and state capitalism. All of the ICC’s basic positions and analyses of contemporary capitalism rest on its productivist understanding of decadence –the impossibility of further development of the productive forces -- and without it those positions and analyses have no foundation. (6) Even if other tendencies within the contemporary communist left milieu may not be quite so extreme in this dependence on the concept of capitalist decadence, the general trend holds for them as well. (7)

IP originated as a split from the ICC in 1985. The reasons of the split had more to do with the suffocating climate that resulted from the organization’s relentless focus on its own growth, seen as the key to revolutionary success than with disagreements over the platform. In fact, at first IP continued to defend the ICC-platform, calling itself for that reason, the ‘External Fraction of the ICC’. It quickly became apparent, however, that what was wrong with the ICC was not just organizational, but programmatic; that its capacity to grasp the trajectory of capital was woefully deficient. We had to face the fact that the decadence theory just didn’t square with the undeniably strong development of the productive forces in the second half of the 20th century.

Furthermore, our theoretical investigation made it clear to us that the ICC’s understanding of decadence rests on a faulty theoretical basis. Yet at the same time we were still in agreement with the main political positions which the ICC and other Left Communists derived from this productivist decadence theory. We saw confirmation of them in reality: in the anti-working class nature of national liberation struggles and state capitalism, in the sabotage of workers struggles by the unions, in the phoniness of the democratic circus and so on. We realized that we needed a more solid theoretical understanding of the trajectory of capital and its implications, if we wanted to be more than cheerleaders for radicalization.

We stopped calling our group “External Fraction of the ICC” when, in the course of our evolution, we came to reject core elements of the platform of the ICC, and its theoretical underpinnings: its vision of the accumulation process and its contradictions based on the theory of Rosa Luxemburg on the disappearance of pre-capitalist markets as the cause of capitalism’s crisis; its concept of the decadence of capitalism as a halt, or at least a dramatic slackening, of the growth of the productive forces; its concomitant vision that capitalism in its phase of decadence precluded an increase in the standard of living of the working class; its vision of state capitalism based on the model of Stalinist Russia (seen as the mirror in which the whole of the capitalist world could view its own future); its insistence that aside from short periods of reconstruction, decadent capitalism, in the absence of proletarian revolution, was condemned to live through a cycle of crisis/world war/crisis/world war. It’s understandable why, during and after the Second World War, Left Communists might see the history of the 20th Century in cyclical terms. But looking back from our vantage point in the 21st Century it is untenable. More than just an error of economic analysis, the Cyclists’ perspective became a straitjacket for the analyses of Left Communists of the capitalist trajectory throughout last Century and into this. (8)

A Marxist theory adequate to the demands of the present time must grasp both the progress of capitalism in the present epoch, its capacity and imperious drive to develop the productive forces as a condition for its own survival as a mode of production, and its social retrogression, its devastating consequences for the human species and the very real danger that its continued existence represents for the world. What the ICC denied, the possibility that capitalism could progress even in an epoch of social retrogression (decadence), is the reality in which we live. And if we are to politically confront the capitalist Moloch, it is vital for Marxists to understand the transformations, the reshaping of the social, political, cultural, and class, landscape that it has wrought.

13. In developing this understanding, the concepts which Marx used in “Results of the immediate production process” (9) of formal and real subsumption of labor, or formal and real domination of capital (10) were crucial to us. They position the ways in which value expands and the value-form spreads at the heart of the trajectory of capitalism.

Formal domination

Capitalism was born in a world in which all wealth resulted from the combination of natural resources and human labor power and in which the surplus product was appropriated by the ruling classes. It did not change that. But under capitalism the submission of the producer became only economic, arising from the specific content of the sale (value-creating labor) and not from fixed political and social relationships of supremacy and subordination. And the producer was separated from his work instruments and his land and from the products of his labor, so that both his means of production and his means of subsistence confronted him as capital. (11)

Capitalism, as a mode of production, was born when the value-form went inside the production process, and turned labor power into a commodity. The unique capacity of this commodity to create more value than what it costs, is what launches and drives the accumulation of capital. Capitalism developed a great hunger for this commodity, destroying the pre-capitalist social relations, the bonds of producers to their means of production, in order to create a steady supply of exploitable proletarians. The essential goal of the capitalist was to control the labor process to squeeze as much surplus labor from it as he could, by employing as many workers, including even small children, as he could, and extending the duration of the labor day as much as possible. Adding more hours to the labor day does not change its value, which remains determined by the value of the means of subsistence of the worker, but it expands the value created in that day and thereby increases the surplus value, and thus profit. Marx called the surplus value obtained in this way – through the extension of the labor day -- “absolute surplus value”, in contrast to “relative surplus value”, resulting from the declining value of the paid part of the working day (relative to the value of the whole day). For him, the production of absolute surplus value is what characterizes the formal subsumption of labor in the first place.

The subsumption was “formal”, because the commodification of labor did not immediately change the content of the labor process. It went on as before, except now it was wage-labor. That does not mean that there was no technological evolution under formal domination. There were continuous improvements of the instruments of labor but they did not yet essentially change the labor process as such; labor power remained at the center of the production process. The focus on absolute surplus value reflected the external relation of the value-form to the labor process.

Likewise, the domination of capital over society in general remained formal. Capitalism controlled the state but the state, while serving capitalism’s political interests, largely remained outside the economy. The value-form had not yet penetrated society beyond the immediate process of capitalist production. That means that its impact on the realms of education, science, culture and other aspects of civil society remained external, so that they continued to have a considerable degree of autonomy. That was true too for the life of the working class outside of the work environment. This gave the class the space to create its own social, cultural and political organizations, including the trade unions and mass parties. The need for these was great, given the constant conflict of interests between capital seeking to lengthen the work day and the working class, seeking to shorten it; and given capitalism’s tendency to push the price of labor under its value, to push the wage under the costs of living.

Yet despite the horrors the formal domination of capital inflicted, it also brought a slow, but steady, improvement of the standard of living, even for the working class. Productivity increased, not yet driven by technology, but by the fact that labor, subordinated to capital, became far more continuous, intensive and far more economically employed. Even though it was still low compared to the productivity which would be achieved under real domination, there was a harmony between what the accumulation of value required and what capitalism was doing. The value-form was not as absurd as it has become today. The commodity as the form of social wealth made sense because its two sides, use-value and (exchange) value, followed the same growing curve. The growth of profit and employment went hand in hand, as did the expansion of real wealth and value-wealth. That doesn’t mean that there were no crises. But these were caused by uneven development (causing over- and underaccumulation) or by external factors such as bad harvests. There was not yet a conflict between what capitalism was doing – its ways of chasing profit -- and the value-form, the social construct or “objective abstraction”, on which it is based.

Real domination 14. Capitalism shifted its focus from the extraction of absolute surplus-value to relative surplus-value because it had to and it could. It had to, because of the physical limit to the extension of the work day. At some point, the capitalist had to take into consideration that he was destroying the very labor power on which he depends, if he was not yet forced to backtrack under the pressure of the resistance of his workers. But it also could, because of technological change. The prime mover of technological progress in capitalism is the possibility of surplus profit that a capitalist rakes in when he can bring the individual value of his product under its social (or market) value (on which its price is based). Thirst for this surplus profit spurs on every capitalist to seek technology that reduces the labor time-content of his commodity. It is not a matter of choice: those who don’t, lose their ability to compete, and perish. Technological innovation became the primary method of chasing profit. This revolutionized the production process and unleashed the productivity of labor. The value of labor power fell considerably (even though increasing in use values), while the intensity of the labor process increased, both factors yielding relative surplus value for capital.

Real domination does not alter the essential innovation brought about by formal domination (the direct submission of the labor process to capital), “but on this foundation now arises a technologically and otherwise specific mode of production -- capitalist production -- which transforms the nature of the labor process and its actual conditions.” (12)

What does this mean? Nothing less than the greatest transformation of the labor process since man fashioned the first tool: a complete subject-object reversal in the relation man-technology. “In handicrafts and manufacture, the worker makes use of a tool; in the (modern) factory, the machine makes use of him. There, the movements of the instrument of labor proceed from him, here, it is the movements of the machine that he must follow. In manufacture the workers are part of a living mechanism. In the factory we have a lifeless mechanism which is independent of the workers who are incorporated into it as its appendages”. (13)

This allows a deep penetration of the law of value into the labor process. Whereas under formal domination, the labor day as a whole is a commodity with a value smaller than the value it creates and the gap can only be widened by lengthening the whole day, in real domination, the uniform motion of the machine is the measuring rod that quantifies every segment of the labor process and thereby subjects that every segment, even every motion, to pressure to squeeze more relative surplus value from it.

The transition to real domination opens the door to mass production, to an acceleration of the tendency towards an unceasing enlargement of the scale of production that already existed under formal domination. It extended from industry to industry, and made it not only possible for capitalism to spread geographically but compelled it to, since it requires an ever larger market for specifically capitalist products. One can discern different phases within the transition to real domination, from its ‘primitive period’ started by the so-called first industrial revolution, to its maturation in assembly line Fordist mass production and on to post-Fordist, information technology-based production. While the transition to the real domination of capital over society began in the industrial metropoles in the nineteenth century, its triumph, consolidation, and global spread, has been a twentieth century phenomenon, one that has transfigured the social landscape particularly over the past half-century and that continues now into the twenty-first century. It is not finished and will never be finished so long as capitalism exists. What prevents such a totality shaped by the law of value being a totalization from which there is no escape is that the law of value has its own internal contradictions that provide the bases for its overcoming.

15. Our view of the transition from the formal to the real domination of capital rests not just on Marx’s distinction between the extraction of absolute surplus-value and the extraction of relative surplus-value. The dynamic it describes, not only entails the law of value’s deep penetration of the production process but also its expansion from the economy to society as a totality; from the process of production to the processes of reproduction – the reproduction of the capitalist social relations, the core of which is the value-form. What that means, is that every pore of society is invaded and transformed by the operation of the law of value; that all the domains of social existence are tendentially reshaped by the value-form. From its original locus at the point of production, the law of value has systematically spread its tentacles to incorporate not just the actual production of commodities, but their circulation and consumption too.

Moreover, it has come to preside over the spheres of the political and ideological, including science and technology. In its most developed phase, there is no longer any non-economic sphere, everything is tendentially integrated into the market and operates on the basis of the law of value (that does not mean of course that every activity is productive, is valorizing capital). This inevitably changes both the content and form of all institutions that previously were standing outside the market and occupied a relatively autonomous space. Today, despite all their particularities, all political parties, trade unions, churches, cultural institutions, hospitals, universities, schools, foundations, interest groups, media, entertainment providers, services of all kinds, operate more or less like capitalist companies or subsidiaries thereof, with the corresponding structures, layers and divisions of labor, competing for their share of their respective markets, conquering or protecting their niche in the global market the world has become.

The process also entails the emergence of state capitalism, the integration of the state in the market in which it came to play the central, organizing role, which again changed both its function and form. This osmosis of state and economy is a ‘natural’ product of real domination. This process, by which the previously non-economic spheres of society are invaded by the law of value, unfolded gradually over time and unevenly, faster here, slower there. Tragically but inevitably, it conquered also the mass organizations that originated from within the working class, organs of struggle and self-defense as well as expressions of a relatively autonomous proletarian cultural and social life.

Value and consciousness

16. With respect to science and technology, the penetration of the law of value occurs not just through the transformation of scientific and technological research (and the institutions in which it takes place) into commodities, but especially through the infiltration of the value-form, and its concomitant quantification, into reason itself (the triumph of a purely instrumental reason), and the reduction of all beings, nature and humans, to mere objects of manipulation and control.

The value-form penetrates consciousness too. It conquers the vast realm of ideology, understood not simply as false consciousness, illusion, or mystification, but rather as the complex of ideas, beliefs, and representations of the world, which shape the minds and behavior of individuals and social classes. As an imaginary relation to actual social relations, ideology cannot be separated from the material existence of human beings.

With the formal domination of capital, the law of value does not yet directly provide the bases for the subjectivation of the worker. Instead, capital simply takes the worker as he has been subjectivated in the pre-capitalist world, and merely adds the discipline of the factory, the foreman, and the bourgeois to the human subject as it has historically found him. The transition to the real domination of capital entails new modes of subjectivation in which the law of value and its quantification of all social relations are directly implicated. Not the pre-capitalist ideologies of crown and pulpit, or even the specifically proletarian ideologies (themselves linked to the pre-capitalist ideologies of artisan and citoyen), but specifically capitalist ideologies now shape the worker’s representations of the world. More on this in the next part of this text.

17. There is another aspect of the dynamic of the real domination of capital that must be mentioned here because of its impact on workers’ consciousness: the increasing socialization of the labor process. The more or less individual labor processes of formal domination gave way to a collective labor process with technology at its center so that, as Marx wrote , “the real lever of the overall labor process is increasingly not the individual worker” but “labor power socially combined”. (14) The production process becomes increasingly complex as technology fragments and recombines the labor process, creating many different functions. Today, it has become a global process. Many, if not most commodities result from labor done in several countries. Labor done by machine operators, engineers, researchers, programmers, truckers, cleaners, cooks and so on: together they form what Marx called the ‘gesamtarbeiter’, or ‘collective worker’ who creates through his combined labor the social wealth and the surplus value for capital. Because of the socialization of the whole process, “it is quite immaterial whether the job of a particular worker, who is merely a limb of this collective worker, is at a greater or smaller distance from the actual manual labor” [Ibid]. From the point of view of the workers, it’s also immaterial whether the particular job one is assigned to is productive labor (labor that creates surplus value for capital) or not. For the accumulation of capital, the difference remains essential of course but the worker’s condition does not change when he is moved from a productive to an unproductive task. Capitalism needs unproductive work done too, to manage society, and increasingly so. The collective worker therefore is not just the commodity- (and thus surplus value-) producing part of the working class but the whole class of proletarians (productive and unproductive, employed and unemployed) submitted to capital, in this age of hyper-socialized production and international connectivity. Only a material social force can revolutionize society. It is from the material existence of the collective worker that the possibility of communist revolution arises (See part 3 of this text).

Understanding Crisis

18. The transition to the real domination of capital brought the internal contradictions of capitalism, latently present during formal domination, to the surface. Following the path of value, the changes in the ways value is created and consumed, the extension of the value-form over society and over the world, we can see how these contradictions lead to crises, both cyclical and systemic. We can see why recurring massive loss and destruction of value through crisis and war became necessary for the value-system to survive. But we can also understand why in this period, the development of the productive forces not only continued but accelerated.

The Communist Left on the other hand, situated its crisis-analysis within the theoretical framework of traditional Marxism with its stage-ist, teleological view of history. Crisis-theory thus had to explain why capitalism had reached the point at which it could no longer develop the productive forces. The two theories that were most influential in the communist left were those developed by Rosa Luxemburg and Henryk Grossmann. Luxemburg sought the cause of the crisis in the contradiction between the conditions in which value is produced, and the conditions of its realization. She claimed that capitalism needs extra-capitalist markets to obtain the value to finance its expansion, so that it could no longer expand once those extra-capitalist areas have become capitalist themselves. Then, accumulation would become impossible. Grossmann, whose analysis was popularized in the communist left and expanded upon by Paul Mattick sr, based his theory on Marx’s view that the rising organic composition of capital – the decline of labor power relative to means of production -- gives rise to a tendential fall of the rate of surplus value extraction, and therefore also of the rate of profit. Grossmann tried to prove that this tendency would bring capitalism to the point at which the total mass of surplus value would become insufficient for accumulation to continue.

The latter-day Luxemburgists of course had to recognize that capitalism hadn’t permanently collapsed and thus added the thesis that capitalism’s shortage of buyers could be alleviated temporarily by war and the demand generated by the need to reconstruct afterwards. And Grossmann recognized that crisis devalorizes capital and thereby sets the stage for a cyclical upturn, but he thought those upturns would become ever smaller until “the final crisis” ends it all.

On the nearness of this “final crisis,” both camps agreed. Yet despite their common conclusions, the debates on crisis-theory in the communist left in the 1970’s were often acrimonious. Some even claimed that those who didn’t agree with their version, were outside the revolutionary camp. But it’s quite obvious that both theories suffer from a disconnect with reality. The history of the 20th century and beyond gives no indication of the existence of a point X at which accumulation stops. What it shows us is the simultaneous development of capitalist horror – social retrogression-- and of the productive forces. Both theories captured a part of the real picture. But they are like blind men, each touching one part of the elephant and trying to describe the animal.

19. We need to see the whole beast. The whole process of value becoming more value, becoming more value and so on. What makes it possible, and what disrupts it. The process can be represented as: M - C - C’ - M’- C2 - etc. Money (M) buys commodities(C), labor power, raw materials, infrastructure, whose productive consumption results in a mass of commodities (C’) whose value is greater than C because surplus value is added, so that their sale results in M’, a greater quantity of money than M. That’s not the end. For the accumulation to continue, the transformation must continue, M’ must transform into C2 and so on.

The universal form in which value is created is the commodity. What all commodities have in common besides the fact that they have a value (15) , is that they have a use-value, that they are wanted, because of their concrete characteristics, by people possessing the equivalent in money to buy them. For the capitalist, the use-value is but the vehicle to the goal of more value. But he can’t get rid of the use-value requirement, value remains chained to it. A commodity that loses its use-value, loses its value as well. So the accumulation process requires that value and use-values grow in tandem, develop as a unified process. But real domination causes use-value and value, the two sides of the commodity, to become unhinged. Use-values grow exponentially while value’s growth becomes more difficult. The hunt for profit through technification is what causes these growing curves to diverge more and more. Real domination tells the capitalist to seek profit by replacing labor power with technology, while for capital as a whole, accumulation requires the growth of living labor, since it is the only source of surplus value and thus ultimately, of all profit. Meanwhile the giant leaps in productivity bring the productive capacity into conflict with the narrow basis on which the conditions of consumption in capitalism rest.

The result is a growing obsolescence of the value form, in the sense that its very characteristics increasingly become obstacles, both to the pursuit of profit and to the reproduction of society. A growing contrast appears between what can be and what is. With the progress of its real domination, capital, "on the one side, calls into life all the powers of science and of nature ... in order to make the creation of wealth (relatively) independent of the labor time employed on it. On the other side, it wants to use labor time as the measuring rod for the giant forces thereby created, and to confine them within the limits required to maintain the already created value as value." (16)

This measuring rod has become absurd. This absurdity is plainly visible in the existence side by side of a vast oversupply of food and of widespread hunger, of a vast oversupply of housing and of massive homelessness, and on and on. On the one hand, the real domination of capital creates a global, intensely social, knowledge-based economy, with an immense capacity to create use values. On the other, all production must jump through the hoop of the value form and real domination narrows that hoop. The production must be profitable in value-terms, contain a large enough quantity of unpaid labor time, even though the quantity of labor time is no longer what determines the productiveness of the production process. The creation of real wealth no longer depends on surplus value. According to Marx, “As soon as labour in the direct form has ceased to be the great well-spring of wealth, labour time ceases and must cease to be its measure, and hence exchange value [must cease to be the measure] of use value”. (17)

Well yes, logically it must, but that doesn’t mean it will happen “as soon as….” A revolution is required. Still, the impact on consciousness of the growing absurdity of the value form is a material factor in the maturation of the conditions for revolution.

The value-cycle

20. When we look at how the divergent growth curves of use values and value impact the whole process of capitalist accumulation, it becomes clear that contradictions arise, not just in one, but in several of the transformations that value must go through.

-in M -C- C’. In this transformation, value grows. The commodities C’ that result from production, have more value than the capital M invested in their production (in the commodities C), because in the transformation C-C’, surplus value is added. Real domination creates a pull in opposite directions. On the one hand, it increases the unpaid part of the working day (relative surplus-value), on the other, it decreases living labor in production, from which the surplus-value can never be more than a part. Which force is stronger? In the long run, the downward pull dominates, because there is no immanent limit to the degree in which the value of a commodity can fall, in which production processes can be run on past labor with ever less living labor. For the rise of relative surplus-value however, "its barrier always remains the relation between the fractional part of the day which expresses necessary labor and the entire working day. It can only move within those boundaries." (18)

Confronted with a falling rate of profit, the incentive for the capitalist to lower the individual value of his product below the social value by reducing living labor in production becomes even greater. In doing so, he improves his own profit-rate but also executes the tendential fall of the profitability of capital. What to the individual capitalist appears to be the cure makes capitalism sicker over time.

As long as labor power is consumed in production, surplus value is extracted and profit can be made. But not any amount of profit suffices. Real domination also continuously raises the threshold of capital formation. To set in motion additional labor power, ever more past labor is required. The upstart costs not only involve technology but also the many unproductive expenditures (marketing, etc) that become indispensable to compete. The rising threshold thus implies a tendency to a growing concentration of capital and the destruction of the incentive for production on a smaller scale.

With a falling rate of profit and a rising threshold for capital formation, the incentive to accomplish M – C falls: crisis results. It devalorizes the components of production and thereby raises the rate of profit. It destroys the weakest competitors but creates opportunities for the stronger ones. It explains the cyclical pattern of capital’s trajectory. But by itself, it does not explain why crisis, at some point, becomes a global breakdown of the capitalist economy.

21. In C’ – M’. In this stage, the value of the commodities produced must be transformed back into money, to make the exchange between them possible, so that the value of C’, through becoming M’, can transform in C2 and continue the accumulation process. Rosa Luxemburg was wrong when she thought that this requires extra-capitalist demand. The intra-capitalist demand, the purchasing power of capitalist society, expands together with (and is bound by) the creation of value in production. But the presence of sufficient purchasing power is not the only requirement for the transformation of C’ into M’. The commodities must also correspond to the demand for use values that society, confined within the capitalist relations of production, generates. And those use values must correspond to the concrete needs of the next phase of expanded reproduction, of value creation.

If the diverging growth curves of use values and value cause the value of 1 knife to be spread over 100 knives, this does not imply that the demand for knives grows accordingly. The demand will grow, because the falling value of a knife means that more people can afford to buy more knives. But in the end, the demand is not determined by the value-content of the commodity but by its actual usefulness for potential buyers. So there is an intrinsic finality of demand for each commodity due to its use value, and likewise for the combination of commodities that are the components of production. This is not a static finality, but it is real nevertheless.

On the other hand, the very mechanism of hunting relative surplus value that characterizes real domination, brings with it that “instead of the scale of production being controlled by existing needs, the quantity of products made is determined by the constantly increasing scale of production dictated by the mode of production itself.” (19) This is not a matter of choice. The capitalist is pushed to do so to remain competitive, “since the capitalist who produces on too small a scale puts more than the socially necessary quantum of labor into his products.” (20) While the market punishes overcapacity, the diverging growth curves are causing it. This makes capitalism increasingly wasteful. More and more means of production are discarded, long before they have transferred all their value into new commodities. Just like direct overproduction, this is a failure of value to accomplish C – M’.

Can the finality of demand for the commodities that become forces of production be compensated by the growth of demand for commodities that are consumed unproductively? The growth of unproductive consumption does indeed accelerate together with the progress of real domination. It has to, given the expanding productiveness. But that’s not the only reason. The transition to real domination is not only an expansion, extending the realm of value and absorbing into it the whole world, it is also a process of expulsion of living labor from production. As it integrates, it throws out. Today it has thrown out two billion potential workers from the labor market. The unproductive cost that comes with managing this excess population, containing social explosions, pandemics, etc, constantly grows. And that’s but a small part of the total unproductive cost that capitalism must spend on controlling, punishing, isolating, lullebying, deceiving, guarding, shooting, destroying and so on. The more the contradiction between value and use-values exacerbates, the more the tendential fall of the profit-rate and the finality of productive consumption comes to the fore, the more capitalism must spend unproductively, to maintain its grip on society. And the more capitalists must spend on unproductive costs like marketing and insurance. However, "if accumulation is to take place, part of the surplus product must be transformed into [productive] capital. But short of a miracle, only those things can be transformed into capital which are utilisable in the labour process and in addition such articles which are suitable for the maintenance of the worker (…) In a word, surplus-value is only convertible into capital because the surplus product whose value it is, already contains the material constituents of new capital." (21)

This doesn’t mean that the whole surplus product must be productively consumed, but that the growth of unproductive consumption is bound by the growth of productive consumption, which makes the former possible. Therefore its growth cannot compensate for the exhaustion of demand for the latter.

Capitalism isn’t ‘built’ to cope with abundance. The value-form itself is based on conditions of relative scarcity and makes no sense without it. That’s why the possibility of abundance of goods, created by its own productiveness, translates into overproduction and crisis and causes capitalism to seek to restore conditions of relative scarcity by any means possible.

22. In M’ – C2. In this phase, the value of commodities C’, having been transformed into money M’, must now be transformed back into commodities, so that it can return to the production process and continue to grow. But it doesn’t have to. In the phase C- M, the transformation is imperative, the commodities must be sold or they lose their value. But having become M, the value is not under the same obligation to be transformed. It can stay as money, turn its back on the circulation of commodities, without losing its value. As Marx put it, “all commodities are perishable money”, but money appears “the imperishable commodity”.

The ability of money to step out of the circulation of commodities and be stored for its own sake is absolutely essential for capitalism. There must be a "hoard" of financial capital which functions as latent productive capital. While not operating as a means of exchanging commodities, it remains a means of payment that flows into the sphere of production when accumulation requires it and withdraws when overaccumulation occurs. As the provider of credit to the sphere of production, its role becomes increasingly important the more real domination enhances the scale of production and raises the threshold of capital formation.

But the hoard of financial capital is more than a functional necessity for capitalism. Its expansion is the very goal, the reason for the whole undertaking, while production is merely the means. To accumulate as much abstract value as possible is what drives capitalist civilization. This rests on the belief that abstract value and real wealth are the same thing. In capitalist society, they are. That gives money, as a particular commodity competing with all others for the total demand, the inherent advantage, because it "satisfies every need, in so far as it can be exchanged for the desired object of every need, regardless of any particularity. The commodity possesses this property only through the mediation of money. Money possesses it directly in relation to all commodities, hence in relation to the whole world of wealth, to wealth as such." (22)

For all other commodities, the demand is limited by the need for their specific use values, while for money, the demand seems limitless, since the desire for more money is inexhaustible. But the belief that money in itself has the power to maintain the value that is realized in it as value, expresses the fetishism on which the value concept is based.

The commodity money, stored for its own sake in the hoard, does have value –the value of commodities transformed in it. It also needs to have use-value: a commodity can not keep value without it. But in contrast to other commodities, money generally does not have any use value that is based on its concrete, sensuous characteristics. Its use value is based on its capacity to represent, to symbolize, exchange value. But this capacity only remains real, in so far as "real exchange value constantly steps into the place of its representative, constantly changes places with it, constantly exchanges itself for it." (23) So how can money that is kept for its own sake, stored in the hoard instead of circulating commodities, maintain this capacity? Because it serves as latent capital, setting new forces of production in motion over time. That is its use value, which allows its value to remain value. The value of the hoard is the value that has been realized in it in the past but its use value is restricted by its function as latent capital that remains connected to the creation of value. So the expansion of the total quantity of money is bound by the expansion of the value (of the commodities in circulation and the latent capital) whose representation it is.

Here too then, a contradiction between value and use value arises. If the quantity of money grows faster than the value it represents, it is overproduced as a use value and its exchange value must fall. If the overproduction manifests itself in the circulation of commodities, this means inflation. If it manifests itself in the hoard, as an overabundance of financial assets, interest rates tend to fall. Money becomes cheaper, less profitable as a particular commodity, so it will tend to flow away from the hoard into productive investment. The movements of financial capital tendentially equalize the general rates of interest and of profit.

But this does not happen if M – C is discouraged because of a falling rate of profit and saturation of productive demand. The incentive then for M is to stay M. Capital flees production to seek shelter in the hoard. The rising demand for money as a particular commodity pushes its price upward. On the one hand, this seems to confirm the wisdom of refraining from M-C and the possibility of accomplishing M –M’, money breeding more money, without the mediation of production. This process, in Marx’s view, is the perfect illustration of the fetishism that lies at the heart of the value system. (24) On the other, it depresses the demand for other commodities further and thus discourages production, new value creation, even more.

So the contradiction between value and use value sharpens. As more capital flees productive investment, more and more exchange value flows into the hoard. But at the same time, the need for it as a use value decreases. Financial capital overaccumulates. Its increasing mass becomes a crushing burden on the economy as a whole. It has to devalorize. It has become impossible “to maintain the value that is already realized as value”. (Marx)

It is the devalorization of the hoard that brings all the crisis tendencies together and makes it general because it affects all aspects of capitalist society’s reproduction. The crisis is even existential: with the collapse of the hoard, society loses its rudder and its purpose. Therefore, preventing this collapse becomes the state’s main objective. Yet the continuation of value accumulation demands devalorization. The more is done to avoid it, the more the underlying contradictions build.

23. So a general crisis hits value-accumulation at three points of transformation in its cycle: C – C’, C’ – M’ and M’ – C2. To overcome it and restore the conditions for accumulation, the value-form demands action on all three fronts. The components of production must devalorize to create more room for surplus value in the total value of production. Weaker competitors must disappear to restore conditions for relative scarcity. The hoard must be devalued to reduce its burden on the economy, its claims on new value.

If left unattended, the crisis by itself would accomplish these tasks over time. But the more the contradictions of the value form have developed, the more intolerable a social price this would entail. A laisser faire policy would be impossible to maintain because of the chaos, the massive social disruptions and the threat of revolutionary uprisings. Even the capitalist class resists it and demands protection from devalorization.

But there is a more “orderly” way to achieve these goals, on the condition that capitalism has a strong enough grip on the consciousness of the working class to impose it. Global war can finish the job that the crisis started. The states that wage global war are not conspiring to restore the conditions for accumulation; rather they want to escape devalorization by means of conquest, despoliation, control over markets and resources. But regardless of their intentions, they realize the massive destruction of value which the accumulation process requires. They all lose more than they win in a global war but the value system emerges triumphant.

There is no historic law that compels the capitalist class to react to general crisis with global war. Still, the very nature of the crisis explains the necessity of a massive destruction of value for the survival of the value system. But the forms that this destruction takes are not a given. Global war is not the only possibility. Today, it may even be unlikely. But a combination of destructive factors -- the direct effects of the crisis itself, regional wars, pandemics and massive ecological disasters -- could achieve the same results, and their consequences would be equally horrific, threaten the very survival of our species.

From World War I to the crisis today

24. Did this necessity of destruction exist when World War I broke out? It didn’t, or at least not yet urgently. There was no general crisis but there were signs that the transition to real domination was bringing the contradictions of the value-form to the surface. As a result of its progress, the rate of profit was declining where the transition to real domination had begun and was most developed, in Britain. This discouraged domestic investment: the productivity-growth of British industry fell to zero in the decades before the war. But this was more than compensated by the profit resulting from the export of capital to countries which were at a lower stage in the transition to real domination. There, productive capital, because it had a lower organic composition (was more labor-intensive), yielded a higher rate of profit. It also had a much lower productivity and would not have been able to compete with the cheaper production of more developed industrial countries. But global competition was limited, both by material obstacles such as high transportation costs, and political obstacles, protectionism. These limitations made it possible for real domination to emerge in country after country. When the advances of real domination diminished the material obstacles -- railroads and steamships were bringing transportation costs down dramatically -- increased protectionism raised the political obstacles. They shielded the profitable metabolism between the young modern industry and their environment of pre-capitalism and formal domination from intrusion and allowed the US in the 1880’s and Germany in the first decade of the 20th century to surpass the industrial capacity of Britain. When the scale enhancement of production brought on by real domination made the domestic market too narrow for the larger industry, protectionism became counter-productive. But it still had a grip on the mindset of the capitalist class and was not abandoned.

Competition imposes uniform market values and prices for the same commodity. The absence of uniform prices on the world market therefore reflected the limited international competition in global trade. But with the development of real domination and its growing need for wider markets, international trade had grown tremendously. Despite protectionism, in 1913 foreign trade per capita was more than 25 times higher than in 1800. At the turn of the century, for the first time in human history, international competition imposed uniform prices for the same commodities on the world market. And these prices were falling: the lower value-content of production under real domination imposed itself on the world. Real domination had conquered the globe, not in the sense that it was present everywhere nor that its development was completed, but in that it had fashioned an integrated worldwide system of production and circulation in which the different parts no longer were able to follow their own path to development but were conditioned by their place in the whole. That system would continue to grow but it would grow now as an integrated whole in which the least productive, least competitive, parts, were permanently forced to unfavorable specialization. This made the perspective of an autonomous path to development, of ‘national liberation’, objectively impossible.

Real domination was boosted by the wave of technological innovation (the internal combustion engine, electrification, chemistry, etc) at the end of the 19th century and the beginning of the 20th (the so-called second industrial revolution). This improved and cheapened transportation and commodities in general and thereby widened the market and allowed for its deeper penetration. A wave of new technology always means a return to surplus profits, as it creates ample opportunities to increase productivity, to bring the individual value of a commodity under its market value. The surge of surplus profits stimulated a powerful acceleration of the concentration of capital. But in a unified market, with many real domination- competitors, the movement of capital over time tends to close the gaps in productivity, thereby eliminating the surplus profits. In order to withstand the leveling effect of competition, then as now, the most developed capitals strive for monopolistic market positions, to hold on to their surplus profits, or for the formation of cartels, agreements between competitors to prevent prices from falling. In Germany the number of cartels grew from 4 in 1875 to almost 1000 by 1914. In this way, the most developed capitals made the rest of the economy pay for their own declining rate of value creation.

As the scale of production of real domination outgrew the market available to it, a global overcapacity began to build. While not yet dramatic, it led to falling prices on the world market and attempts to conquer a larger part of that market through dumping practices (selling cheaper abroad, even below costs, than at home), especially by Germany. In the US, Senator Albert Beveridge expressed the needs of capital in 1897 as such: “American factories are making more than the American people can use; American soil is producing more than they can consume. Fate has written our policy for us; the trade of the world must and shall be ours”. ‘Fate’, or rather, real domination, wrote the same policy for the other developed capitalist nations. A global war for “the trade of the world” was in the cards, as Engels had predicted.

The slowing pace of new value creation threatened to cut off a substantial part of capital from valorization. Therefore capital looked for a safe haven to escape the pressure to devalorize. So the deflationary trend of capital in its commodity-form went hand in hand with an inflationary trend of financial assets, as their prices were bid up. In the US, the paper value of non-agrarian companies doubled between 1900 and 1912, while the GDP had an average annual growth of 3,9%. A global bubble of fictitious capital was beginning to form.

So the three ways in which the contradictions of the value-form block the accumulation process, were far from absent at the eve of World War I, even though they had not yet provoked a global systemic crisis. But apart from necessity, we must also consider the possibility created by real domination: the possibility to apply mass production technology to military production, the possibility to make use of a vast supply of recruits, already subjectivated for their role by the collective discipline of factory-work, all of which allowed capitalism to wage war considerably more effectively than before. But to explain why World War I happened when it did, as well as how it developed, a great number of factors have to be taken into account, including the weight of the past on the capitalist class, of an entire history in which economic gains and territorial conquest went hand in hand, of the successes of protectionism which reinforced the idea that state power was the key to market expansion. Other contingent factors played a role. However, instead of seeing those as competing explanations, we should look at how these factors interacted within the context of a a slowly building need to devalorize, caused by the maturation of the contradictions of the value- form.

A systemic devalorization, a vast destruction of value, did not have to happen in 1914. But it did. It marked indeed the beginning of a new phase in the trajectory of capital, in which expansive growth would again and again lead to the necessity of massive value destruction. We no longer call this period “decadence”, since this term is derived from, and points to, traditional Marxism’s teleological stage-ist view of history. Instead, we have been using terms like “capitalism’s era of social retrogression”, which focuses on the fact that in this period, while capitalism continues to grow and develop the productive forces, a stark antagonism develops between capitalist needs and social needs , between the survival of the value form and the survival of humankind.

25. But why was the expansion following World War I so limited and short-lived? Several factors were important. A wave of working class struggle had played a decisive role in ending the war and put up strong resistance against the devalorization of labor power in the post-war period. Compared to World War II, the destruction of the value of constant capital had been limited. The same was true for the value of the hoard, its claims on new value. Indeed, new claims were created by the imposition of heavy reparation-debts on Germany. Then there was the mindset of the ruling class. In theory, wiser policies might have been chosen, but in reality, protectionism and monetary policies that thwarted the widening of the world market and an efficient division of labor based upon it, accelerated the arrival of a systemic crisis.

Value and War

26. With the krach of 1929 the “great depression” began, and it lasted until the war broke out. This time, the causal link between the contradictions of the commodity-form, the obstacles to accumulation they created, and the preparation for war was more obvious (even though it was not the sole cause of the war and does not explain all that happened in this darkest hour in human history). It is often said that the war ended the crisis. But that depends on how one defines “crisis.”’ If crisis is measured by the human suffering and the destruction of value it causes, then the crisis did not end but became much deeper. But the war did end mass unemployment and got the economy humming again. It made possible a (temporary and partial) suspension of the law of value, of market-enforced competition, as all the productive forces of society were mobilized for the war-effort. The voracious needs of the war-machine trumped everything. Military discipline ruled the factories, strikes equaled treason, everybody had to sacrifice. The plummeting consumption of the working class and the intensification of the labor process raised the rate of surplus value extraction. And the need to include in the war-driven production also less productive capital with a lower organic composition (more labor-based), which would normally be eliminated by competition, raised the average value of commodities and thus the rate of profit for the more advanced producers.

Both absolute and relative surplus value increased. The war stimulated the creation of new value. It restored, in the accumulation process, the phase M – C – C’. For the creation of value, it doesn’t matter whether the production results in cars or tanks, the retooling of Detroit went smoothly. In both cases, surplus-value is created in production, which, when sold, when C’ becomes M’, can flow into C2 and continue to create value.

But as a commodity, a tank, just like a car, must have a use-value. Its use-value is to destroy, or threaten to destroy, in order to defend or appropriate value. Military production can only be a field of accumulation of value if it produces commodities that are actually consumed and continually replaced. In that sense, the accelerated military production already contained the necessity of war within it.

But even when war maintains its use-value, military production is still consumed unproductively. The consumption of cars, in so far as they are needed in the general production process and needed by workers, is productive, it creates new value. But tanks do not create value, they destroy it. They can only be “productive” in the sense that they deliver more value for their owner, if they are used to appropriate someone else’s value. That is indeed what they are used for, but the end-result is that much more value is lost than is gained. Even for the vast majority of the capitalist class, this insane orgy of production for destruction was a giant loss. But for the conditions for accumulating value, that loss was exactly what was needed.

27. Massive destruction of infrastructure, technology and labor power, and with it, the elimination of the plethora of commodities that these productive forces would otherwise create; massive destruction also of financial capital, of debts and possessions to park value in, of claims on new value; all this created room for the surviving capital. With demand fueled by reconstruction needs, with the components of production devalorized, cheapened by the war, with opportunities to rake in surplus profits by applying the technological advances of the last four years in the military field to civilian production, starved by the war of investment, conditions were ready for take-off.

The New World Order

This time, the losers were not saddled with reparation debts but were showered with financial aid. The capitalist class had not become more magnanimous, but a little bit smarter. The Marshall plan was part of a grand reorganization that finally adapted the political and monetary framework of the world market to the needs of real domination. With the dollar as an expansive, yet (at least initially) stable international currency, and the sharp reduction of protectionism in the vast dollar-economy, the table was set for globalization (even though that word wasn’t fashionable yet). This was of course in the first place beneficial to American capitalism. As the most developed economy, with its industrial capacity unscathed by war, it was the most in need of global markets. The new world order rested on American power. American currency became the world’s currency, used both for international transactions and by the treasuries and finance ministries of every country. This gave the US extraordinary room for monetary expansion and the luxury to run continuous trade deficits with impunity. But it was also beneficial for the other developed capitalist countries.

There too, real domination accelerated powerfully after the war. The rising organic composition (technification) increased the scale of production, the exponential growth of use values, and thus the dependence of capital on a global market. The expansion of the global market resulting from the post-war reforms, allowed production to grow to the level required by the productive capacity of the technology employed. Furthermore, the globalization of the market and the extension of the scale of production led to a growing interaction between developed capitalism with its surroundings. Because of the superior productivity of developed capitalism, its exchanges with lesser developed capitals and with extra-capitalist producers are always to the advantage of the former. The exchange yields a surplus-profit to it because "there is competition with commodities produced in countries with inferior production facilities, so that the more advanced country sells its goods above their value (..) Just as a manufacturer who employs a new invention before it becomes generally used, undersells his competitors and yet sells his commodity above its individual value (..). He thus secures a surplus-profit." (25)

These beneficial conditions produced, for more than a quarter of a century, the strongest growth-figures capitalism had ever known. It was the apogee of Fordism, of mass production in giant, assembly-line based factories. This mass production not only made possible a rise in the standard of living of workers, it made it also necessary. It also made it possible for capital to subjectivate the workers as consumers and thereby enjoy a relative social peace as a result.

But the surplus profits began to erode when the Fordist production process spread throughout developed capitalism, homogenized the conditions of production there and consequently reduced the profitable metabolism of developed capitals with less productive producers, both within countries and on the global market. This was not only the result of the elimination of less competitive production, but also of the fact that, the more technified society becomes, the more the use-values it needs are themselves technified products of a complex production process; and consequently the less the products of non-capitalist producers and lesser developed capitalist production, fit into its market. The latter therefore also lost significance as a source of demand. The more developed capitalism was trading and competing with itself, and the more its organic composition increased, the less its tendential decline of the rate of profit was counter-acted, and the more difficult it became to expand its market to the level that its ever growing productivity required.

28. By the end of the 1960’s, and throughout the 1970’s, the three obstacles to the accumulation process re-emerged. Profit-rates declined, the demand for goods destined for productive consumption (value creation) declined and more and more money chose speculation over productive investment. Worst of all, for capitalism, the collective worker had awakened and put up strong resistance against the worsening of its conditions, at a time when the crisis demanded a devalorization of labor power.

There was another factor: the steep rise of oil-prices. In a sense, this was nothing more than a change in the distribution of surplus value among capitalists, a relatively minor shift in their rapport de forces. But it aggravated the crisis, because, by raising its cost, it made production less profitable and made value move away from production to the hoard (where most of the oil-profits ended up; especially in the American hoard). But the hike of the oil price had another impact. It was the first strong warning that the natural resources are finite, in contrast to capitalism’s voracity; especially fossil fuels, on which capitalism had become so dependent. It had never sought to develop an alternative, because that wasn’t profitable. Except for nuclear energy, an adaptation of war-technology, leading to the spread of potential nuclear bombs throughout the world, producing toxic waste nobody knows what to do with, but hey, our grandkids will figure out something. The oil-price hikes were possible because of this natural limitation, which allowed a cartel of oil-countries -- and seven multinationals -- to rake in surplus profits at the expense of their customers.

Faced with these threats to accumulation, developed capitalism tried to force M – C through increased direct state-intervention in the economy, and to stimulate C’ – M’, by pushing the pedal of money creation to the floor. The US flooded the world with dollars, ending for that reason the exchangeability of the dollar to a fixed amount of gold, which had been a foundation stone of the post-war new order (it worked well as long as it wasn’t tested). By the end of the '70s, these policies had led the world economy to the brink of hyper-inflation. Nothing was solved because whatever policies that were tried did not alter the behavior of capitalists. However much it was increased in circulation, money continued to turn its back on productive investment and to seek refuge in the hoard. The accelerating inflation made investment increasingly risky, much riskier than parking money in gold or other value-shelters. Hyper-inflation, especially of the dollar, by impairing its use value as means of payment, would have caused a deep depression. At the start of the 1980’s most left communists thought that this was about to happen. (26) As it turned out, they were mistaken.

Globalization 29. Instead, a new phase of growth began. It’s true that it was preceded by a sharp recession, triggered by the curtailment, to rein in inflation, of money creation and thus of credit. It’s also true that the growth-rate never recovered to the level of the three post-war decades. Nevertheless, overall it was clearly an expansive phase which lasted until 2007. Furthermore, it was a period of accelerated transformation and development of the productive forces – an impossibility, according to the dogma of decadence. How was this recovery possible without war or depression?

What happened was a confluence of factors, some resulting directly from the further development of the real domination of capital, others political in nature.

The change in strategy of the capitalist class since the 1980’s is often called “neo-liberalism”. The term is misleading because it suggests a return to laisser faire, a withdrawal of the state from intervention in the economy. That never happened. The fact that the state continued to consume a lions-share of the economy, in some countries more than half, says enough. But the state did pull back from trying to force C’ – M’. The money-growth declined in circulation, which cooled the inflation, but it increased in the form of public debt. The policies of privatization were a part of the de-concentration that was occurring in the production process in general. The Fordist concept of a vertically integrated concentration of production forces, shaped by continuous scale enhancement, gave way to the tendency to spread out production sites, outsource parts of the production process to different companies in different parts of the globe, develop redundant sources of supply, etc. This was done to economize, to increase efficiency and so on, but also to reduce capital’s vulnerability to workers’ resistance, which had been felt so sharply in the preceding decade. It served to reduce the paralyzing effect of interruptions of the chain of production. It served to break up the concentration of workers, the power that emerged when large numbers of workers come together against the same enemy, and the threat that this holds for capitalism. In the Eastern bloc, where class struggle opposed the workers immediately to the state, the same vulnerability appeared starkly, especially in Poland.

The same change also reflected capitalists’ desire to reduce their dependence on scale-enhancement. Given the chronic overcapacity of the world economy since the end of the post-WWII boom, and its drag on the profit-rate, the hunt for surplus-profit directed capital away from Fordism’s focus on increasing the volume of production, towards seeking a new relative scarcity by producing new commodities (producer and consumer goods), that give it a monopolistic or semi-monopolistic market-position and thus a surplus-profit. Developed capital became increasingly dependent on this way of obtaining surplus-value. Even though such market-positions are temporary, a brisk pace of technological innovation, or of market-campaigns that transform an ordinary sneaker into a highly desirable “Air Jordan”, assure the continuity of a competitive advantage.

This was a mighty stimulus for technological development and especially for the spread of information technology (IT) which placed automatization, rather than mechanical technology, at the nexus of post-Fordist production. One of its consequences was a rapid decline of the costs of transportation and communication, lowering production costs and thus providing a growing potential to spread out production.

Meanwhile, the world market continued to broaden. Obstacles to ‘free trade’ and the international mobility of financial capital fell away. After the dissolution of the Eastern Bloc and China’s change of course, Russia, China and the countries they controlled were integrated into the world market.

These political and technological changes opened the door for what’s been called “globalization,” which expanded value creation because the rate of exploitation of labor power increased. Globalization not only made the capitalist world market more unified and thus wider and more efficient, but it also restructured production on a global assembly line. Its essential virtue for capitalism was the unprecedented potential for combining the technology and production methods of developed capitalism with labor power whose value is determined by the living conditions in underdeveloped countries. This raised the rate of surplus- value both directly and indirectly for other capitals, by lowering the value of the commodities their workers need and thus raising relative surplus value, thereby counter-acting the tendential fall of the rate of profit. Thus a large part of Fordist production (assembly-line work) moved to previously underdeveloped parts of the world, while the industry that remained in the advanced countries moved increasingly towards post-Fordism. Furthermore, the realistic threat to move production to other countries changed the rapport de forces between the classes and discouraged working class resistance to exploitation, which raised the rate of profit.

The new technology and political changes did not only make possible a geographical extension of the reach of the value-form, but also facilitated its much deeper penetration of the economy. This was most striking in the transformation of many services into surplus value producing, capitalist production, opening new fields of expansion for value accumulation.

The value of software

30. Every wave of technological innovation leads to a phase of homogenization, in which the new production methods spread and become the norm, determining the social value of commodities. Then, opportunities for surplus profits dwindle. The new norm implies a lesser role for living labor in production, and surplus value is but a part of that living labor. So the homogenization pulls the average rate of profit down. The IT-driven technological revolution expelled more labor power than it integrated. Furthermore, the fast pace of innovation accelerated “moral depreciation,” the need to replace the means of production by more advanced technology, long before the older one is worn out. This hidden overproduction of constant capital was also a major drag on the profit-rate.

Nowhere is the declining value of production more striking than in the most emblematic sector of post-Fordist production: digital commodities. There is no doubt that they play a crucial and ever growing role in the creation of use-values today. But, although they may yield high profits for the capitals that produce them, they create very little value. What Marx wrote about machines: “however young and full of life the machine may be, its value is no longer determined by the necessary labour-time actually objectified in it, but by the labour-time necessary to reproduce either it or a better machine” (27) is also true for them. Since the labor time required to reproduce them (to copy them) is close to nothing, they contain very little surplus-value. The profits made with their sale are surplus-profits, resulting from monopoly-positions, protected by patents and copyrights. If they wouldn’t be, they would fall like a stone. They are in effect abundant and can only be made profitable by sabotaging the law of value, by limiting competition to prevent the market from establishing their prices. Software therefore clearly expresses the absurdity of the perpetuation of the value-form. On the one hand, it can raise productiveness and the versatility of production and thus real wealth enormously, on the other hand, it makes value, capitalist wealth, decline. On the one hand, it is a means to obtain surplus-profits, enforced by the state rather than the market, and on the other, because of its social nature and its almost valueless reproducibility, it resists commodification and invites sharing; distribution no longer based on the value-form.

Not only in software, but in all sectors, capitalists try to escape from the tendentially declining general rate of profit by cheating the law of value, by obtaining exclusive market positions that shelter them from competition. What threatened their profits the most was the growing overcapacity resulting from the productiveness that the new technology made possible. So they seek an artificial recreation of scarcity that enables them to sell their commodities above their value. They seek monopolies and achieve them through a concentration of capital and/or through exclusive reproduction rights. This entails a shift in the focus of profit making, from the production of goods to the production of innovation, of new knowledge for the production of goods; from the economies of scale to the goal of constant adaptation, constant recreation of scarcity. As a result, the growth of patents, after following a slow but steady course since the late 19th century, exploded in the 1980’s. Intellectual property rights became a keystone in the international trade agreements concluded since, and both the US and Europe repeatedly lengthened their duration. There are patents on everything. Even a part of our genes now fall under patents and cannot be studied without paying a license to their “owner”. That is quite profitable for him and other patent-holders. Patents last on average 20 years and can be renewed, while it takes a pharmaceutical company typically 1 to 3 years to recoup the R&D costs of new products. But since these monopolists sell their commodities above their value, the bulk of their profit does not come from producing these goods but from elsewhere: it is paid by their customers. That’s why it is a fallacy to think that a global advanced economy based on artificial scarcity could function on a parallel level, sheltered from the general crisis. It sucks value from elsewhere and thus effectively taxes the rest of the economy. The more it takes in, the heavier the tax. It is therefore dependent on the capacity of the rest of the economy to pay that tax, and thus on its ability to create new value.

31. The cheap labor power in what used to be the periphery of the capitalist world, remains a strong tonic for the profit-rate. But by penetrating these lands, the value-form is changing them. And with this change, the value of labor power shoots up. The consumer goods seen as necessary for its reproduction inevitably expand in the context of life in a technified urban environment. Furthermore, the young proletariat in these countries has discovered the power of collective struggle. So wages are rising in China, Vietnam and other countries. And the working class there is also increasingly resisting other consequences of capitalism’s ruthless plunder for profit, such as unsafe working conditions and the poisoning of its environment. So capital's capacity to combine modern technology with ever-lower wages, has reached limits which erode this factors’ counter-acting effect to the decline of the general rate of profit.

The crisis today

32. Capitalism’s apologists hoped that globalization would generate its own expanding market. And indeed, to some extent it did that; it enriched and expanded the size of middle-income strata in many parts of the world, which encouraged a credit-expansion on the assumption of its continuation. But the Asian financial crisis in 1997 showed that much of the profit resulting from exploitation in low wage countries could not profitably be reinvested in those countries. Three years later, the implosion of the ‘ bubble’ revealed the limits of IT’s capacity to provide value an endless field for growth. In both cases, over-accumulation led to a sharp crisis, in which trillions disappeared. Deflation impoverished many countries. Yet the impact of these crises remained limited. The world economy was still expanding.

But its expansion was kept going by cheap credit in the advanced countries. It made them, and especially the US, the essential market of the last resort. A pattern had developed: the US economy every year lived more beyond its means, consuming more than it produced, paying by printing more dollars, backed by public debt notes bought by the countries who sell more to it than they buy from it. Neither side can withdraw from this relationship without devastating consequences. The US could do this because the world is trading in its currency, and is hoarding it in its banks for its own sake, as latent capital, means of payment for future use, a debt owed to the future.

Owners of capital in the weaker countries, confronted by the limitations of reinvesting their profits at home, and by the danger of devaluation of money hoarded in their own currency, increasingly moved their savings to safer places. In the mid-2000’s, 80 % of the net-savings of the world were flowing to the US. The combined demand of international capital for safety pushed up the price of all financial assets in the US, and to a lesser extent elsewhere. Thus, opportunities grew to accomplish M – M’, to make money grow by itself. In many creative ways, a great variety of financial “instruments” were invented to meet the demand for dollar-denominated carriers of value. It made it possible to continue the expansion for a few more years. The asset-inflation created a “wealth effect”, most notably in housing, encouraging their owners to consume more. It counteracted the tendential overcapacity, by giving money other destinations than productive investment, and counteracted inflation by sucking excess money out of general circulation. And it made the rich even richer -- especially the traders in money and everything that can be easily monetized. But inevitably, because the hoard is a debt owed to the future, the upward growth- curve of capital in the hoard met the downward growth-curve of the creation and productive realization of new value.

33. The current crisis was triggered by massive over-accumulation of financial capital. But the reason why it occurred runs deeper than the greediness of bankers or the shortsightedness of politicians (though there was plenty of both). It is the obsolescence of the value-form that explains this disconnection between symbolic value and real wealth. The value-form is the cause of is own obsolescence because it transformed the production process in ways that made the creation and realization of value increasingly difficult; that made the value-form increasingly incapable of representing real wealth. It is these obstacles that make money refrain from accomplishing M – C and stay in the hoard. The capacity of the hoarded value (regardless whether it takes the form of bank deposits, bonds, stocks, treasury notes, mortgages or gold etc.) to represent real wealth is, ultimately, a matter of collective belief; the belief that abstract value is in itself real wealth. It isn’t. But it is a claim on wealth and when the claim grows at an ever greater speed while the growth of wealth is stalling, because it must, but can’t grow in value, the belief begins to falter.

It falters first where the disconnection between the expanding value financial capital is supposed to represent, and the reality on the ground, is the most glaring. But once the belief is wavering, the danger of contagion is great, as one disconnect exposes another. Thus the crisis moves from housing to the banking sector, from the private sector to the state. The danger arises that the loss of faith in the permanence of abstract value leads to a collapse of the value in the hoard. When the money in the hoard loses its capacity to represent wealth, it cannot function in circulation either. That would make a global breakdown unavoidable. To prevent this from happening is, therefore, the greatest priority of capitalism.

Its strategy against the crisis -- austerity measures and stimulus measures -- is seemingly contradictory, expressing its lack of alternatives; indeed, the first aims to rein in the growth of debt, the second expands it. The second stimulates economic growth, while the first shrinks it. But both are designed to benefit the owners of capital and both are undertaken in the first place to defend the credibility of the hoard and therefore of value itself.

The concentration of capital to which real domination has led, implies the need for huge streams of capital in order to compete, to function as part of the world market, to finance the role of the state in the accumulation process. The loss of credibility in the hoard of a particular country – in its ability to maintain the value invested in it as value, in its ability to carry its debts -- leads to a flight of capital, crushing interest rates, paralyzing the economy. Therefore, the weaker players have no choice but to cut their spending drastically, at the expense of the working class, to make room for debt service, to remain able to attract capital.

But the stimulus-measures, by and large, have the same purpose: to defend the credibility of the hoard. Since 2008, the crisis has destroyed many trillions. This was, from the point of view of the need to restore the conditions for value-accumulation, a good start. But since then, many more trillions have been created. The US, the EC, China, Japan and the so-called emerging countries all launched into a mind-boggling monetary expansion, a gigantic increase of government debt. The aim of the stimulus measures was not to increase the spending power of the general population but to prop up the credibility of the hoard. The US, having the most leeway given the dollar’s position as the global currency and the safe haven-effect, has been taking the lead. Its central bank, the Fed, has bought , with money created out of thin air, trillions worth of bonds and other securities, including state-debt, in order to prop up their prices. It has forked over hundreds of billions to the banks and big companies. It has forced interest rates down to near zero, to inflate demand with cheap credit. The low return on bank deposits also chases household savings towards riskier financial assets. All this makes the stock markets rise, proof of a renewed confidence in the hoard, and makes the rich even richer. The “wealth-effect” stimulates consumption, enough for a feeble recovery.

But nothing is solved. The problem is shoved into the future in a way that guarantees its return with a vengeance. The law of value demands a massive devalorization from capitalism, and capitalism responded with the most massive expansion of money in its history. Meanwhile, nothing has improved in regard to the creation of value. Even without the specter of global depression, the prospect would be dire. The means of production continue to develop, to increase in productiveness and versatility, but all the cutting edge developments, such as robotics, biotechnology, 3-D printing, point in the direction of a further expulsion of living labor from production and therefore also of a further decline of surplus-value production. The ever-growing part of the world’s population that is excluded from the global assembly line is not an industrial reserve army but a human mass which becomes an insuperable burden to capital, one that it must maintain and control until or unless it can dispose of it.

The other crisis

34. The current economic crisis is converging with a devastating ecological crisis. Different as they are, they both have their roots in the value-form, in the progress of the real domination of capital, in the way it shapes production and consumption.

Half of all the fossil fuels ever consumed on earth, have been consumed since 1980. The poisoning of the atmosphere, and its impact on the climate, have been scientifically established. Yet this knowledge does not alter what capitalism does. On the contrary, its polluting practices worsen. Like a junkie searching his body for still usable veins, it searches wide and deep for the last veins of fossil fuel wealth. The tendential exhaustion of fossil fuels creates surplus profit opportunities which are eagerly seized, regardless of the consequences: such as heavily polluting shale oil extraction, gas fracking (poisoning drinking water), arctic drilling (releasing massive amounts of carbon into the atmosphere), a steep expansion of coal production (the worst polluter) and so on. Meanwhile, development of non- or less polluting energy yields much less profit so it remains an afterthought.

The tendential exhaustion is not limited to fossil fuels but threatens other resources too, even water. Its growing scarcity may well become a reason for war in different parts of the world. Just as the signs are crystal clear that capitalism can’t continue to pile on more debt without causing an economic catastrophe, the signs are crystal clear that it cannot continue its polluting ways of producing and consuming without causing an ecological catastrophe. And yet in both cases, it cannot stop. And so to catastrophes it drags the world.

Climate-change, rather than war, may be the instrument of destruction that the value form would “use” in the 21 st century to survive. Whether humankind would survive, and if so in what conditions, is another matter.

35. The convergence of those two crises is unprecedented. Yet the mortal danger that it represents to our species, the direct attack that it is on the working class, does not assure revolution. Even a global collapse of the capitalist economy would not automatically lead to the collapse of the capitalist system, or of the value-form. While the crisis itself is inevitable, its outcome is not. But the crisis will shatter the “normalcy” of economic growth, the faith in the benefits of science and technology, the self-evident nature of the value-form.


1. With a few exceptions, most notably the IWW in North America.

2. Marx, A Contribution to the Critique of Political Economy (Progress ed), p. 21.

3. While the term “decadence” does not appear in the Manifesto of the first congress of the CI., it does appear in documents of the CI’s second congress of the following year. Thus: “the period of capitalist decadence is the period of the direct struggle for the dictatorship of the proletariat.” It also appears in the Program of the KAPD. Thus: “In a State which carries all the symptoms of the period of the decadence of capitalism, the participation in parliamentarism is also part of these reformist and opportunist methods.”

4. The KAPD (Communist Workers Party of Germany) was probably the largest left communist organization, with 80,000 members in the early 1920’s.

5. See the ICC’s book The Italian Communist Left 1926-45, pp.179-180.

6. The ICC modified its prior view that decadence involves an absolute halt in the development of the productive forces by the time it adopted its platform (1975), which followed, after all, a period of unprecedented growth of the productive forces. So in the ICC-platform, decadence no longer means a halt in the growth of the productive forces, but rather a slackening in their growth, a permanent slowing down of their development. This is, of course, a view that is just as productivist as the previous one.

7. See, for example the Platform of the International Bureau for the Revolutionary Party (since re-named the Internationalist Communist Tendency) and its text “Refining the Concept of Decadence”, both of which can be found on its website

8. Given the cycle theory’s variance from reality, and thus the need to explain the absence of either world war or world revolution despite the crisis, the ICC tweaked its framework, claiming that the next step of the cycle was blocked, because neither of the two major classes was able to impose its perspective. As long as this stalemate continues, so it reasoned, the capitalist system increasingly decomposes. Hence, in the cycle, an additional stage was added: the era of decomposition. It was a attempt to save the broader mechanical framework but it was not mechanical enough for the ICT, who criticized it for abandoning orthodox cycle-theory (See Revolutionary Perspectives #37,).

9. This essential text of Marx was written to be included in ‘Capital’, vol 1. But (for unknown reasons) it wasn’t and remained unpublished until 1933 and little known until the 1960’s.

10. Both terms are valid. We tend to use ‘domination of capital’, because ‘domination’ is a more common term than subsumption, but also because we are talking about domination of more than labor, about the domination of the whole ‘civil society’.

11. See: Marx, Results of the Immediate production process,Capital, vol.1, p.1026, Penguin ed.

12. Marx, Results.., op.cit., p 1034

13. Marx, Capital, vol.1, p.548

14. Marx, Results.., op.cit., p 1040.

15. “ I do not divide it [the commodity] into use-value and exchange-value as opposites into which the abstract “value” splits, but rather the concrete social shape of the labor product, the commodity, is on the one hand use-value and on the other hand ‘value,’ not exchange-value, since this is merely appearance-form, not its own content.” (Marx, Notes on Wagner,)

16. Marx, Grundrisse, p.706 (Penguin ed)

17. Marx, Grundrisse, p. 703

18. Marx, Grundrisse, p. 340

19. Marx, Results… op.cit. p.1037

20. Idem

21. Marx, Capital,vol.1, p.726-727

22. Marx, Grundrisse, p.218

23. Idem, p.212

24. “Capital appears as a mysterious and self-creating source of interest – the source of its own increase. (…)The social relation is consummated as a relation of things (money, commodities) to themselves. (…) Thus we get the fetish form of capital and the conception of fetish capital. In M –M’ we have the most vacuous form of capital, the perversion and objectification of production relations in their highest degree. It is the capacity of money, or of a commodity, to expand its own value independent of reproduction which is a mystification of capital in its most flagrant form.” (Capital, vol 3, chapter 24, p.392 (Ed. New World Paperbacks)

25. Marx, Capital, vol.3, p. 238

26. At the beginning of the 1980’s, the ICC declared, in all is publications, that this would be “the Decade of Truth”, in which the battles would take place that would decide whether the world would move to war or to revolution. It later never recognized that this was a mistake.

27. Marx, Capital, vol. 1, p. 528

Internationalist Perspective and the Tradition of the Communist Left - Introduction

Internationalist Perspective and the Tradition of the Communist Left - Part 1

Internationalist Perspective and the Tradition of the Communist Left - Part 2

Internationalist Perspective and the Tradition of the Communist Left - Part 3

Home Issues of IP Texts Discussion IP's French site Links