I’ve been doing a close reading of the third volume of Marx’s Capital. Since I have this blog, I thought it might be a good idea to write up a summary of each chapter as well as some of my own reflections as I make my way through the book. This blog has been great for forcing me to synthesize ideas from different books and to articulate my ideas clearly and simply. I sometimes feel like I’m back in school doing book reports. I guess there was a reason all those teachers made me do book reports: you learn better that way.
Several things led me to decide to tackle Kapital 3:
1. I just finished rereading the first volume of Kapital, following along with David Harvey’s online lectures. Volume one is such a great book, and I had such a good time listening to Harvey’s lectures that I felt inspired to tackle another volume of Kapital.
2. I have been thinking and reading a lot about the Transformation Problem but I’ve never actually read through all of Marx’s account on the subject, so I thought it was high time I actually went to the source. In my interview with Andrew Kliman he talks about the need to “let Marx speak for himself” instead of always relying on his interpreters.
3. I have been reading a lot about crisis theory without ever having read all the way through Marx’s account of the Falling Rate of Profit in Volume 3 of capital.
4. I am very curious to better understand banking and monetary phenomena from the Marxist perspective. Here on the internet we are inundated with Austrian/libertarian rants about the Federal Reserve. I have many critiques of these arguments. I am especially interested in making a thorough critique of that abomination “Zeitgeist Addendum” that is masquerading around the internet disguised as social theory, attracting all sorts of well-intentioned folks who don’t have the theoretical tools to untangle many problems with the film. But before I jump into that critique I want to have all of my theoretical tools together and for that I need a better understanding of how Marx treats monetary and banking phenomena.
Volume 3 of Kapital is an important book. It is in this book that Marx attempts to show how the abstract social relations between labor and capital worked out in book one and book two are translated into the concrete, everyday forms we experience in reality. Throughout Marx’s work there is an understanding that the everyday, subjective experience of living in a capitalist society is not the full story. We may appear to be free, autonomous economic agents maximizing our utility in the marketplace, but underneath this subjective experience lies a network of social relations formed by these market interactions. An analysis of this network of interactions, of social relations, reveals deeper processes at work… processes of coercion, exploitation, and antagonism.
The powerful insights of Volume One of Kapital are based largely on an abstract analysis of the labor-capital relationship. But through abstract categories like relative and abstract surplus value, or the value of labor power, or the forces and relations of production, Marx is able to paint a very vivid picture of very real world phenomena: the battle over the working day, the condition of laborers, the transition to large scale industry, etc.
But there are also all sorts of other real world phenomena that aren’t explained yet, some which seem tricky to fit into the theory of value as it stands in Volume one, specifically the quantitative aspects of price and profit. And this is because Marx was extremely careful and precise in the way he built arguments. He couldn’t analyze every single relation within capitalism at the same time. He needed to make abstractions, to leave out some things in order to bring them back later on in the argument. In Volume 3 of Kapital Marx planned to bring back in some of those key relationships that he had to abstract from in the first two volumes, specifically the effects of competition between capitalists and the effect of this on price and profit. In putting these new variables into the equation Marx bridges the gap between the abstract and the concrete. All of the sudden, this abstraction called “value”, takes on a recognizable real world form. At the same time we become more acutely aware of what Marx is talking about in Volume One of Kapital when he talks about the “fetishism of commodities”: these abstract social relations can only be expressed through these subjective interactions in the marketplace, yet this very expression hides much of the true nature of these relationships creating the illusions the make up our bourgeois ideology.
If I may summarize the structure of the argument very briefly: In Volume 1 Marx begins by discussing the relation between independent commodity producers. Here he abstracts from any class relation. This allows him to conclude that commodities exchange at their socially necessary labor time.
He then adds the capital-labor relation into the picture and we see that C-M-C (commodity-money-commodity) gets inverted to become M-C-M (money-capital-money) when labor power becomes a commodity. This leads Marx into a long analysis of the labor capital-relation leading to concepts like relative and absolute surplus value as well as many other power insights.
In volume 2 of Kapital Marx analyzes the way a capitalist economy reproduces itself. This involves analyzing the way commodities and values travel through the circuit of capital. We learn that in order for the system to reproduce itself very specific conditions are required.
Finally in Volume 3 Marx begins to talk about the social relations within the capitalist class. It’s these relationships that help bring the theory of value in volume one, a theory which makes a lot of intuitive sense in its powerful description of the antagonistic dynamics between capital and labor, into a more substantive description of the quantitative nature price and profit and of the qualitative relations between different parts of the capitalist class.
Perhaps you have had this experience: you are sitting in a coffee shop reading Volume One of Kapital and you look at your cup of coffee and wonder “Does the price of this coffee reflect it’s socially necessary labor time?” The first thing that occurs to you is that the chain of purchases and production going all the way back to the Nicaraguan farmers that picked the coffee beans is a long a complex one. Much of the profit made from selling this cup of coffee is split between the owners of the coffee shop, the bank that owns the mortgage on that coffee shop, the merchants who transported that coffee, etc. So in Volume 3 Marx intends to figure out how all these different relations among money-capitalists, landlords and productive capitalists work out. In other words, he plans to explain the relation of profit, interest and rent. In Volume one this division of profit between capitalists was abstracted from because Marx was there concerned only with the creation of surplus value, not the way that surplus was divvied up between capitalists.
Within this topic there is another more specific aspect of the relation between capitalists to be explored: average profits. This is a phenomena that bothered a lot of the classical economists. If there are no barriers to the flow of capital, profits tend toward an average because anyone can invest in anything. If my industry makes above average profits other people will start to invest in that industry, eating away at the profit margins, until my industry is making average profits. This however causes problems for the labor theory of value as we left it in Volume One where we assumed that commodities traded at their socially necessary labor time. If only labor creates value, shouldn’t labor-intensive industries with high proportions of workers to machines make more profits than highly automated industries with low proportions of workers and lots of machines? In Volume 3 Marx solves this riddle.
But his solution wasn’t good enough for some people. I hope to address some of these criticisms as I move through this project. I suspect that much of the issue really has to do with the logical structure of Marx’s argument, where abstractions are being made, the order of these abstractions, etc. So I will try to be very specific about this structure as I record my thoughts on each chapter.
The biggest difficulties in reading Volume 3 may be the writing style and the fact that it is an incomplete work. Marx died before finishing volumes 2 and 3. Engels published these books by compiling all of Marx’s unfinished notes, adding his own material to fill in gaps where needed. But parts of volume 3 read like they are unfinished. There are repetitions of arguments characteristic of a first draft, sections are missing, and some sections are just pages and pages of excerpts that Marx had made from factory reports and legislative commissions occasionally adding his own notes as to what he intended to say about them.
Because Marx didn’t finish writing Volume 3 much of the writing can be dry. Gone is much of the vivid, compelling language of volume one, though there are moments of literary brilliance. There is a lot of painfully slow, boring mathematical detail. So just getting through some chapters has been difficult for me. At other times I have had difficulty putting the book down.
But I hope to get through most of it and leave some sort of record of it all here on my blog. At the time of writing this introduction I have plowed through the first 180 pages without hurting myself, so I think that is a good sign. I already have great fears about the chapters on rent as I hear they are pretty impenetrable. We will see… I hope that posting my thoughts here may serve some useful purposes for others as well. I am no expert on Vol. 3 but I think that I have some useful things to say about it and I at least can summarize the arguments in a cohesive way. I would hope that others having difficulty with some chapters might be able to find some useful insights here. I also would hope that some folk may leave their own reflections on these chapters here- that this part of my blog might serve as a useful jumping-off point for discussion of Volume 3 and the issues surrounding it. I would hate for any readers to think that this blog can serve as a substitute for reading the real book itself. To really understand Marx you have to read him for yourself.