Marx’s Capital, Volume 1, Chapter 26: A Critical Summary

by
Lord Keynes
My articles My siteAbout meMy booksMy videos
Follow on:Twitter

Chapter 26 of volume 1 of Capital is called “The Secret of Primitive Accumulation” and examines how capital was first accumulated before surplus value. In other words, this looks at the historical process by which feudalism was transformed into capitalism, and how peasants were stripped of any means of production and made into free wage-labourers.

Money and commodities per se do not function as capital, but need to be transformed into capital (Marx 1990: 874).

It is important to remember Marx’s definition of “capital” in this context. For Marx, money (M) in the formula M–C–M′ (where M′ = money plus an increment), describing the capitalist mode of production, is defined as capital (Marx 1990: 250). As Marx says, there is “a palpable difference between the circulation of money as capital, and its circulation as mere money” (Marx 1906: 166). Capital is a type of “value in motion” that is used by capitalists to create more value, but the “value in motion” can appear in the form of either money or commodities (Harvey 2010: 90). So, for Marx, capital is money or commodities (both with embodied labour value) used to create more value by employing labour-power to produce commodities, and in the process involving the extraction of surplus-value. That is, capital is a certain sum of value repeatedly “being transformed from money to commodities and back again” to produce more value (Brewer 1984: 35).

Marx explains:

“In themselves, money and commodities are no more capital than are the means of production and of subsistence. They want transforming into capital. But this transformation itself can only take place under certain circumstances that centre in this, viz., that two very different kinds of commodity-possessors must come face to face and into contact; on the one hand, the owners of money, means of production, means of subsistence, who are eager to increase the sum of values they possess, by buying other people's labour-power; on the other hand, free labourers, the sellers of their own labour-power, and therefore the sellers of labour. Free labourers, in the double sense that neither they themselves form part and parcel of the means of production, as in the case of slaves, bondsmen, &c, nor do the means of production belong to them, as in the case of peasant-proprietors; they are, therefore, free from, unencumbered by, any means of production of their own. With this polarisation of the market for commodities, the fundamental conditions of capitalist production are given. The capitalist system presupposes the complete separation of the labourers from all property in the means by which they can realise their labour. As soon as capitalist production is once on its own legs, it not only maintains this separation, but reproduces it on a continually extending scale. The process, therefore, that clears the way for the capitalist system, can be none other than the process which takes away from the labourer the possession of his means of production; a process that transforms, on the one hand, the social means of subsistence and of production into capital, on the other, the immediate producers into wage-labourers. The so-called primitive accumulation, therefore, is nothing else than the historical process of divorcing the producer from the means of production. It appears as primitive, because it forms the pre-historic stage of capital and of the mode of production corresponding with it.” (Marx 1906: 785–786).

“As a matter of history, capital, as opposed to landed property, invariably takes the form at first of money; it appears as moneyed wealth, as the capital of the merchant and of the usurer. But we have no need to refer to the origin of capital in order to discover that the first form of appearance of capital is money. We can see it daily under our very eyes. All new capital, to commence with, comes on the stage, that is, on the market, whether of commodities, labour, or money, even in our days, in the shape of money that by a definite process has to be transformed into capital.” (Marx 1906: 163–164).

Secondly, early Western European capitalism began with merchants in long distance trade and banking.

But, in other passages (despite the one above) in Capital, Marx does not regard early merchants and usurers as proper capitalists.

In Chapter 5, Marx states that “merchants’ capital and interest-bearing capital are derivative forms, and at the same time … these two forms appear in the course of history before the modern standard form of capital” (Marx 1906: 183).

But, since the business activities of merchants only take place “within the sphere of circulation” (Marx 1906: 182) and “surplus-value cannot be created by circulation” (Marx 1906: 183), merchants do not create surplus value and cannot be true capitalists in Marx’s sense of this term.

For example, if a merchant capitalist buys commodities for $100 and sells them for $110 has he created surplus value by his labour? (Engels, for instance, once proposed a question similar to this one to Marx.) It would seem that Marx merely thinks that the initial $100 is only “circulating money capital” and any surplus obtained in this way is done so “by trickery, or by speculation on the oscillation of commodity prices” (letter, Marx to Engels, London, 30 April 1868; elsewhere Marx sees gambling in a comparable way). Though the transaction can be explained as M–C–M′, the value is not created by the labour power of the merchant or speculator, but can only be created by labour-power engaged in capitalist production.

Marx, then, cannot think that, say, medieval Italian merchant traders were real capitalists.

This is confirmed in Chapter 16:

“It will suffice merely to refer to certain intermediate forms, in which surplus-labour is not extorted by direct compulsion from the producer, nor the producer himself yet formally subjected to capital. In such forms capital has not yet acquired the direct control of the labour-process. By the side of independent producers who carry on their handicrafts and agriculture in the traditional old-fashioned way, there stands the usurer or the merchant, with his usurer’s capital or merchant’s capital, feeding on them like a parasite. The predominance, in a society, of this form of exploitation excludes the capitalist mode of production; to which mode, however, this form may serve as a transition, as it did towards the close of the Middle Ages. Finally, as is shown by modern ‘domestic industry,’ some intermediate forms are here and there reproduced in the background of Modern Industry, though their physiognomy is totally changed.” (Marx 1906: 559–560).

Because of his mystical labour theory of value, this is another gaping hole in Marx’s theory. Early accumulation of money partly for investment was undoubted linked to merchants and banking to some extent, who can legitimately be regarded as capitalists.

Capitalism, for Marx, grew out of feudalism and there was an historical transformation from feudalism to capitalism:

“The economic structure of capitalistic society has grown out of the economic structure of feudal society. The dissolution of the latter set free the elements of the former.

The immediate producer, the labourer, could only dispose of his own person after he had ceased to be attached to the soil and ceased to be the slave, serf, or bondman of another. To become a free seller of labour-power, who carries his commodity wherever he finds a market, he must further have escaped from the regime of the guilds, their rules for apprentices and journeymen, and the impediments of their labour regulations. Hence, the historical movement which changes the producers into wage-workers, appears, on the one hand, as their emancipation from serfdom and from the fetters of the guilds, and this side alone exists for our bourgeois historians. But, on the other hand, these new freedmen became sellers of themselves only after they had been robbed of all their own means of production, and of all the guarantees of existence afforded by the old feudal arrangements. And the history of this, their expropriation, is written in the annals of mankind in letters of blood and fire.

The industrial capitalists, these new potentates, had on their part not only to displace the guild masters of handicrafts, but also the feudal lords, the possessors of the sources of wealth. In this respect their conquest of social power appears as the fruit of a victorious struggle both against feudal lordship and its revolting prerogatives, and against the guilds and the fetters they laid on the free development of production and the free exploitation of man by man. ….

The starting-point of the development that gave rise to the wage-labourer as well as to the capitalist, was the servitude of the labourer. The advance consisted in a change of form of this servitude, in the transformation of feudal exploitation into capitalist exploitation. To understand its march, we need not go back very far. Although we come across the first beginnings of capitalist production as early as the 14th or 15th century, sporadically, in certain towns of the Mediterranean, the capitalistic era dates from the 16th century. Wherever it appears, the abolition of serfdom has been long effected, and the highest development of the middle ages, the existence of sovereign towns, has been long on the wane. In the history of primitive accumulation, all revolutions are epoch-making that act as levers for the capitalist class in course of formation; but, above all, those moments when great masses of men are suddenly and forcibly torn from their means of subsistence, and hurled as free and ‘unattached’ proletarians on the labour market. The expropriation of the agricultural producer, of the peasant, from the soil, is the basis of the whole process. The history of this expropriation, in different countries, assumes different aspects, and runs through its various phases in different orders of succession, and at different periods. In England alone, which we take as our example, has it the classic form.” (Marx 1906: 786–787).

Marx dates capitalism from the 16th century, and sees the “expropriation of the agricultural producer” as the fundamental basis of capitalism.

There is also a very profound insight that can be drawn from this Chapter of Capital, but it never occurred to Marx: if in the early history of capitalism very brutal and coercive polices were necessary to create an industrial proletariat and class of people who accumulate sufficient levels of capital for industrialisation, how can communism in the Third World trying to effect industrialisation escape such brutality as well?

In fact, that is actually what happened in communist countries engaged in forced industrialisation of largely backward agrarian economies, as in the Soviet Union: extremely brutal state violence and coercion to create a proletariat and enough accumulation of capital.

If capitalism’s early history of accumulation and the creation of a class of labourers was brutal, then so was that of communism!

Arguably, it was more so: the history of communism is also “written in the annals of mankind in letters of blood and fire,” but to an even worse extent. We see that history in Stalin’s Five-Year Plans, the forced collectivisation, the theft of the agricultural surplus through the forced collectivisation, the driving of Russian peasants to the towns, and the Soviet famine of 1932–1933. And that is before we get to the brutal consequences and abuses of the authoritarianism and totalitarianism that communist transitional states inevitably descended into.

Even if one were to construe capitalism as a “disease,” history shows us that the communist “cure” was worse than the disease.

Finally, in some respects, Marx really needed capitalism, because the full development of a capitalist society was the necessary precondition for a transitional communist state leading to stateless communism.

So in that respect, for Marx, capitalism has a vital and necessary historical role and was a necessary stage of history, and so whatever coercive, exploitative factors needed for its establishment and complete development were also historically necessary. This can be seen in Marx’s remarks on the transition to capitalism in India wrought by the British empire:

“... we must not forget that these idyllic [sc. Indian] village-communities, inoffensive though they may appear, had always been the solid foundation of Oriental despotism, that they restrained the human mind within the smallest possible compass, making it the unresisting tool of superstition, enslaving it beneath traditional rules, depriving it of all grandeur and historical energies. ....

England, it is true, in causing a social revolution in Hindostan, was actuated only by the vilest interests, and was stupid in her manner of enforcing them. But that is not the question. The question is, can mankind fulfil its destiny without a fundamental revolution in the social state of Asia? If not, whatever may have been the crimes of England she was the unconscious tool of history in bringing about that revolution.”
Marx, Karl. 1853. “The British Rule in India,” New York Daily Tribune, June 25, 1853.
https://www.marxists.org/archive/marx/works/1853/06/25.htm

Harvey, David. 2010. A Companion to Marx’s Capital. Verso, London and New York.

Marx, Karl. 1906. Capital. A Critique of Political Economy (vol. 1; rev. trans. by Ernest Untermann from 4th German edn.). The Modern Library, New York.

Marx, Karl. 1990. Capital. A Critique of Political Economy. Volume One (trans. Ben Fowkes). Penguin Books, London.