Capital accumulation

“ This large capital, which had so fructified as to produce more than twenty-five millions as interest, was an accumulation, penny by penny, shilling by shilling, and pound by pound, of the savings of that class of persons who, in every country, have the greatest difficulty in accumulating. Habitual efforts of self-denial, and a rigid determination to postpone temporary gratification to permanent good, could alone have enabled these accumulators to retain so much of what they had produced beyond the amount of what they consumed. ”

“ This problem being of such paramount importance for capitalist economy, it is not surprising that bourgeois economists have dealt with it again and again. Attempts to grapple with this vital question for capitalist economy, with the question whether capital accumulation is possible in practice, come up time and again in the history of economic theory. ”

“ Sir, I firmly believe that abundance and cheapness of provisions is one of the constituents by which the continuance of manufacturing and commercial pre-eminence may be maintained. You may say the object of these observations is to flatter the love of gain, and administer merely to the desire of accumulating money. I advise this measure on no such ground. I believe that the accumulation of wealth, that is, the increase of capital, is a main element, or at least one of the chief means by which we can retain the eminence we have so long possessed. ”

“ The conditions for the capitalisation of surplus value clash increasingly with the conditions for the renewal of the aggregate capital—a conflict which, incidentally, is merely a counterpart of the contradictions implied in the law of a declining profit rate. ”

“ As long as B, B ́ and B ́ ́, etc., buy producer goods from their colleagues A, A ́ and A ́ ́ in order to renew their constant capital that has in fact been used up, the limits of simple reproduction are not transcended, and the whole thing has nothing to do with our problem. The moment the producer goods purchased by B, B ́, B ́ ́, etc., serve to increase their constant capital, however, for purposes of accumulation, a number of new questions clamour for attention. ”

“ But as it is impossible to create surplus value with money, it cannot, in this form, advance beyond the threshold of its career. Capital must assume commodity-form, so that the particular portion of it which is earmarked for accumulation can be capitalised. For only in this form can it become productive capital; that is, capital begetting new surplus value. Therefore, like the original capital, it must again be divided into two parts; a constant part, comprising the inanimate means of production, and a variable part, the wages. ”

“ But all methods for the production of surplus value are at the same time methods of accumulation; and every extension of accumulation becomes again a means for the development of those methods. It follows, therefore, that in proportion as capital accumulates, the lot of the labourer, be his payment high or low, must grow worse. ”

“ If in reality the distribution of income between workers and capitalists, and the propensity to save of capitalists, are such as to require a rate of accumulation which exceeds the rate of increase in the stock of capital appropriate to technical conditions, then there is a chronic excess of the potential supply of real capital over the demand for it and the system must fall into chronic depression. ”

“ Accumulation requires no new sources of money at all. Before, when the capitalists themselves consumed their surplus value, they had to have a corresponding money reserve in hand, the analysis of simple reproduction already having proved that the capitalist class must itself put into circulation the money needed for the realisation of their surplus value. Now, instead of consumer goods, the capitalist class, or rather B, B ́, and B ́ ́, buy an equivalent amount of means of production in order to expand their production. ”

“ So far as accumulation takes place, the capitalist must have succeeded in selling his commodities, and in reconverting the sale-money into capital. Moreover, the breaking-up of surplus-value into fragments neither alters its nature nor the conditions under which it becomes an element of accumulation. Whatever be the proportion of surplus-value which the industrial capitalist retains for himself, or yields up to others, he is the one who, in the first instance, appropriates it. ”

“ That there must be a limit to the accumulation of capital is obvious. The downward course of the rate of interest, notwithstanding that many new employments have been made possible for capital, indicates how large is the increase of surplus value. ”

“ I have been endeavouring to get you to admit that the profits on stock employed in manufactures and commerce are seldom permanently lowered or raised by any other cause than by the cheapness or dearness of necessaries, or of those objects on which the wages of labour are expended. Accumulation of capital has a tendency to lower profits. ”

“ Together with this additional quantity of commodities, a portion of the additional money required for its circulation is thrown into circulation, so far as the value of this mass of commodities is equal to that of the productive capital consumed in their production. This additional quantity of money has precisely been advanced as an additional money-capital, and therefore it flows back to the capitalist through the turn-over of his capital. ”

“ Thus capitalist accumulation as a whole, as an actual historical process, has two different aspects. One concerns the commodity market and the place where surplus value is produced—the factory, the mine, the agricultural estate. Regarded in this light, accumulation is a purely economic process, with its most important phase a transaction between the capitalist and wage labourer. In both its phases, however, it is confined to the exchange of equivalents and remains within the limits of commodity exchange. ”

“ The progress of accumulation would no doubt be considerably checked, if the returns to capital were to be reduced still lower than at present. But why should any possible increase of capital have that effect? This question carries the mind forward to the remaining one of the three requisites of production. The limitation to production, not consisting in any necessary limit to the increase of the other two elements, labour and capital, must turn upon the properties of the only element which is inherently, and in itself, limited in quantity. It must depend on the properties of land. ”

“ It has proved that the first condition of the rapid accumulation of capital is the diversion of money from unproductive to productive channels, and that the amount of accumulated capital is one of the two regulating influences of the wages of the labourer. ”

“ How much then is the case strengthened, when we consider that these transformations of capital are of the nature of improvements in production, which, instead of ultimately diminishing circulating capital, are the necessary conditions of its increase, since they alone enable a country to possess a constantly augmenting capital without reducing profits to the rate which would cause accumulation to stop. ”

“ By the conversion of the commodity-capital into money, the surplus-product, in which the surplus-value is incorporated, is also monetised. The capitalist reconverts the surplus-value thus monetised into additional natural elements of his productive capital. In the next cycle of production the increased capital furnishes an increased product. ”

“ To these considerations must be added, that even if improvements did for a time decrease the aggregate produce and the circulating capital of the community, they would not the less tend in the long run to augment both. They increase the return to capital; and of this increase the benefit must necessarily accrue either to the capitalist in greater profits, or to the customer in diminished prices; affording, in either case, an augmented fund from which accumulation may be made, while enlarged profits also hold out an increased inducement to accumulation. ”

“ Expansion of the market here means extended production, since production is said to be its own exclusive market—the consumption of the workers being an element of production, i.e. the reproduction of variable capital. Therefore the limit for both the expansion of production and the extension of the market is one and the same: it is given by the volume of the social capital, or the stage of accumulation already attained. The greater the quantity of surplus value that has been extracted in the natural form of capital, the more can be accumulated ”

“ Just as simple reproduction may be compared to an unchanging circle, to be repeated time and again, so enlarged reproduction, to quote Sismondi, is comparable to a spiral with ever expanding loops. Let us begin by examining the loops of this spiral. The first general question arising in this connection is how actual accumulation proceeds in the two departments under the conditions now known to us, i.e. how the capitalists may capitalise part of their surplus value, and at the same time acquire the material prerequisites necessary for enlarged reproduction. ”

“ Assuming capitalist methods of production, the value of his product yields him a surplus over and above his expenses, that surplus value which does not replace his capital but constitutes [Pg 54] his net income, which he can consume completely without encroaching upon his capital and which is thus his fund of consumption. ”

“ Similarly, too, the payment of interest to the owners of capital has absorbed a large part of the increased income of society, though the proportion going to this factor is probably growing smaller owing to the fall in the rate of interest. But as we have seen, modern industry [Pg 175] is essentially capitalistic, that is, it depends upon the use of capital for its operations. Since we allow private property in capital and believe that to be the best method yet devised for securing its accumulation, we must justify interest. ”

“ Therefore in the accumulation of wealth, so far as it arises from the saving by anyone of the products of his labour, from his bequest of this capital to another who farther adds to it by saving some of the profit which the capital yields, as employed in the payment for labour or in trade either by the capitalist himself or someone to whom he lends it, and from the continuation of this process through generations, there is nothing which tends to lessen for anyone else the possibilities of ownership. ”

“ The surplus beyond the prices which would be fixed by a freedom in exchanging property, gained by the owners of factories, transfers property without any equivalent, and goes in company with the other enumerated means, to the accumulation of a property-transferring capital, and not to the increase of a property-exchanging currency. ”

“ It may be true generally that, in old countries, where there is a great accumulation of surplus capital, and a consequent low rate of interest, they will be made. But, in a new country, the condition of society may be ripe for public works long before there is, in the hands of individuals, the necessary accumulation of capital to effect them ”

“ It is potential money-capital on account of its capacity and destination of being converted into the elements of productive capital. But practically he merely accumulates a simple hoard, which is not an element of actual production. His activity for the time being consists only in withdrawing circulating money out of circulation. ”

“ From the account which has been given of the profits of stock, it will appear, that no accumulation of capital will permanently lower profits, unless there be some permanent cause for the rise of wages. If the funds for the maintenance of labour were doubled, trebled, or quadrupled, there would not long be any difficulty in procuring the requisite number of hands, to be employed by those funds; but owing to the increasing difficulty of making constant additions to the food of the country, funds of the same value would probably not maintain the same quantity of labour. ”

“ The temptation to save from revenue to augment capital is always in proportion to the rate of profits, and, if from accumulation of capital profits [Pg 40] and interest should fall very low indeed, at that point accumulation would nearly stop, because it would be almost without an object. ”

“ The very term 'accumulation of capital' supposes a power somewhere to employ more labour; it supposes the total [Pg 50] income of the society to be increased, and therefore to create a demand for more food and more commodities. You ask 'whether we can furnish to persons of the same incomes a great additional quantity of commodities without lowering the price so much compared with the price of production as to destroy the effective demand for such a supply, and consequently to check its continuance to the same extent.' We answer this is not our case ”

“ But a certain time elapses between the expenditure and the reflux, and meanwhile the money paid out for wages might, among other uses, serve for the monetisation of surplus-value. But we know, in the first place, that, the greater the time, the greater must be the supply of money which the capitalist A must keep continually in reserve. ”