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5.0 out of 5 stars A Unity of Production and Realisation
The second volume of Karl Marx's Capital is a notoriously difficult text. Compiled by Friedrich Engels after Marx's death, and first published in 1885, the book has a reputation for being a dull and uninspiring economic treatise. Even David Fernbach, in his 'Translator's Preface', admits that it is 'renowned' for 'the arid deserts between its oases' (p.80). Yet he is also...
Published 1 month ago by SJK

3.0 out of 5 stars Still good But less fascinating
I have read Volume 1 before coming to this volume, now nearly 2/3 accomplished.

If Volume 1 have successfully converted me to the left, with the most fascinating and groundbreaking content, engrossed by the simplest language and way of expression, that turned my mind and view of the history and now upside down; this volume comparatively lacklustre. Still a good...
Published 3 months ago by lakeso

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5.0 out of 5 stars A Unity of Production and Realisation, 13 Jun. 2015
The second volume of Karl Marx's Capital is a notoriously difficult text. Compiled by Friedrich Engels after Marx's death, and first published in 1885, the book has a reputation for being a dull and uninspiring economic treatise. Even David Fernbach, in his 'Translator's Preface', admits that it is 'renowned' for 'the arid deserts between its oases' (p.80). Yet he is also quick to point out that Volume II, unlike Volume I, was not prepared for the printer's press by Marx himself. And this is important to remember, because these are only Marx's notes, all of which Engels had the Sisyphean task of collating into an integrated whole. So while we may not be able to enjoy the rhetorical fireworks that made Volume I a 'work of world literature' (ibid), we do have the joy of digesting Marx's thought without its eloquent trimmings, which is an interesting exercise in itself.

Engels states in his 'Preface' that 'Marx's theory of surplus-value burst like a bolt from the all civilized countries' (p.97). Now this may be a touch exaggerated, given the poor sales of Volume I, but there can be no doubt that its influence steadily grew. But Marx's exposition of the capitalist mode of production would have been severely lopsided if it had only covered the generation of surplus-value in 'the hidden abode of production'. So Marx now takes the products made by the workers in Volume I out into the marketplace, because if a commodity doesn't realise its value then everyone ends up skint. In undertaking such a daunting task, Marx ingeniously establishes the routes the various commodities and capitals take. And while this panorama shows who pays for what and what money goes where, it always returns to the same old question: is it possible to affect equilibrium in a laissez-faire economy?

In 'Part One: The Metamorphoses of Capital and their Circuit', Marx dismantles the tripartite structure of 'industrial capital', because this is the capital that 'encompasses every branch of production...pursued on a capitalist basis' (p.133). In order, then, we have money capital (M-C...P...C'-M'), productive capital (P...C'-M'-C...P), and commodity capital (C'-M'-C...P...C'). Money capital and commodity capital are confined to the circulation stages of a capital's metamorphoses, while productive capital is confined to the production of commodities. As a process, the industrial capital 'assumes [all] these forms in the course of its total circuit' (ibid), and it's this intertwined nature Marx intricately describes. As he observes, 'each individual industrial capital is involved in all three [circuits] at the same time' and they are 'continuously executed alongside one another' (p.181); as such, the endless generation of capital 'can only be grasped as a movement' (p.185) and as a 'unity of the three circuits' (p.184). Intriguingly, Marx also begins to break the C'-M' movement down into its constituent components, i.e. C' = C + c and M' = M + m (C and M denoting the original capital advanced and c and m marking the surplus-value created in the commodities and realised through a sale). By doing so, Marx splits the money in two and shows how a capitalist may either reinvest his entire surplus (m) in expanding his operations or splash the cash on his 'esteemed self and family' (p.146). The capitalists, then, like the workers with their C-M-C buys, make a number of purchases that are incredibly important for economic stability, because both classes now operate as essential players in propping up world economies, i.e. as consumers. (If, however, the capitalist is cagey about his prospects, he can channel his dosh into an accumulation fund, where it can be used to 'cope with disturbances in the circuit' (p.165) or await future investment as 'latent money capital' (ibid).)

Marx finishes Part One with a couple of chapters on 'Circulation Time' and 'The Costs of Circulation'. He shows that 'Circulation time and production time are mutually exclusive' (p.203) and that if the circulation time drags on this has an effect on the productive capital's (interrupted) ability to self-valorise in the sphere of production. He also looks into the costs incurred by the circulation of commodities and the outlays needed for bookkeeping, storage, stock formations, and transport costs. Although he doesn't go into them in great depth, this is all fertile ground, as modern capitalism has been defined by revolutions in the movement of commodities and by an incessant drive to conquer space and time in the interests of realising surplus-value (profit). And Marx knew just how important such innovations were for the capitalists. Without them, they would be left with redundant and worthless goods, for the 'product is ready for consumption only when it has completed this [crucial] movement' (p.227).

Marx introduces 'Part Two: The Turnover of Capital' with a short chapter on 'Turnover Time and Number of Turnovers'. Put simply, a circuit of capital, when viewed as 'a periodic process, is called its turnover' (p.235), its duration 'the sum of its production time and its circulation time' (ibid). For Marx, this is important, because it measures 'the time required for the renewal and repetition of the valorization and production process of the same capital value' (p.236). He then goes on to discuss fixed capital and circulating capital. In brief, fixed capital is that which is invested in things like buildings and machines, and that which will carry on functioning productively after a single turnover period. It remains distinct from the products it produces, although the increments of value it transfers to the product through wear and tear return to the capitalist (ready for reinvestment or to cover repairs) once the product has been sold. However, the value of the circulating capital (i.e. labour-power, raw materials, energy, etc) 'enters in its entirety into the product' (p.246), lasts for one turnover period, and must be constantly 'replaced and renewed by new purchases' (ibid). Be aware, though, that 'it is only productive capital that can be divided up into fixed and fluid capital' (p.246-7), because commodity capital and money capital belong to the circulation sphere. And, as you'd expect, the circulating capital will turn over quicker than the fixed.

Once Marx has had his fun demolishing the theories of Adam Smith and David Ricardo, he moves on to distinguish working time from production time - the former being only part of the latter - and to reiterate the importance of shortening circulation time (the C'-M' part of the business). Marx then laboriously unpicks the effects of circulation time on the capital advanced. For example, if a turnover lasts twelve weeks, with a production time of nine weeks and a circulation time of three weeks, then a quarter of the turnover period is spent with the means of production standing idle, which is clearly dead capital. How to keep this process going during the circulation period is now the focus of Marx's investigations. In short, a second capital must be brought in to cover the downtime, and Marx works out all the various turnover times of the variously sized capitals needed to continue the valorisation process in the world of production. In doing so, he not only upsets his readers, but also Engels, the poor sod tasked with wading through his master's minutiae. For Engels, Marx 'was never at ease in reckoning with figures' (p.359) and ascribed 'an underserved significance' (ibid) to 'this tiresome calculation business' (ibid). Anyhow, Marx finishes Part Two with a look at the annual rate of surplus-value and the circulation of surplus-value. In each of these discussions, however, Marx gives in to his 'mathematical proclivities' (to quote Fredric Jameson), and this is probably the point when most people switch off, or simply give up.

Yet it is worth soldiering on. 'Part Three: The Reproduction and Circulation of the Total Social Capital' is a difficult yet absorbing finale to the book. In it, Marx starts to draw a line between productive consumption and individual consumption, as it is only now that 'the working class appears as a buyer of commodities, and the capitalists as sellers of commodities to the workers' (p.428). What Marx does is split social production into two great departments: Department I = means of production, and Department II = means of consumption (he then goes on to break means of consumption into two distinct units, II(a) = necessary means of consumption (subsistence), and II(b) = luxury means of consumption (only for capitalists)). To further his investigation, he shows that 'Just as with the value of any individual commodity...the total annual product of each department also breaks down into c + v + s' (p.472). (The c, however, is calculated on the constant capital consumed and not the total mass applied.)

Marx sets out his examples (such as this one on simple reproduction) thus:

Department I = 4,000 (c) + 1,000 (v) + 1,000 (s) = 6,000 means of production.
Department II = 2,000 (c) + 500 (v) + 500 (s) = 3,000 means of consumption.

He investigates what ideal circumstances would have to exist for equilibrium to be sustained. In short, there aren't any. But if there were, then the demand for means of production in Dept II would be equal to the demand for means of consumption in Dept I. So, in the above example, the v + s in Dept I (£1,000 in wages (v) and £1,000 in revenue (s)) must be exchanged for the £2,000 (c) means of consumption created in Dept II (as both classes in Dept I have to live and eat). With the £2,000 the capitalists in Dept II receive, they can now replace the £2,000 means of production they've consumed in the labour process, thereby returning the £2,000 (I (v + s)) back to the capitalists in Dept I. But there is a crucial difference. The £2,000 returned to the capitalists in Dept I is now in money form, rather than the commodity form (i.e. means of production) it had existed in previously. So now the capitalists in Dept I have the variable capital (i.e. £1,000 in cash) to go out and buy the labour power needed to restart the valorisation process (M-C-M'). And the v + s in Dept II is spent in the same way, i.e. by the workers and the capitalists spending their wages and their revenues on means of consumption to the tune of £1,000, so the capitalists in Dept II now have the money needed to restart the valorisation process (having bought anew the means of production from Dept I). The £4,000 (c) created in Dept I, meanwhile, is reinvested in making means of production to be sold among the producers of the means of production themselves. (Nevertheless, in all these many purchases, there are 'certain reserves of money - whether for capital advance, or for expenditure of revenue - [that] must always be taken as present in the hands of the capitalists alongside their productive capital' (p.476), and it's these reserves that help facilitate the wheeling and dealing between the departments.) So, to establish equilibrium, Marx posits the following formula: I (v + s) = II (c).

(Disclaimer: I may have all of the above totally wrong.)

But what happens when this circular process is broken and the monetary ping-pong comes to an end? Well, there are systemic possibilities of crises (the creation and alleviation of which Marx doesn't really go into, as he's too lost in his endless calculations). For instance, if the capitalist in Dept I sells his surplus means of production to Dept II but doesn't buy any means of consumption in return, the capitalist in Dept II hasn't realised the value congealed in his products and thus cannot re-employ the labour needed to work his newly acquired means of production: the process therefore stops (leading to an overproduction of worthless goods, or a commodity stock, depending on the demand for the product). To be sure, Marx covers the all various outcomes. He will show the exchanges between the two departments, the exchanges within Department II, the mediation of the exchanges by money, how the constant capital is divvied up in Department I, the effects on variable capital and surplus-value, capital and revenue, etc, etc. In fact, he seems to have every angle covered. And then he pulls the rug out from under your feet. Just when you think you have it down, and just when the calculations have begun to make a kind of sense, he announces that 'The precondition for simple reproduction, that I (v + s) = II (c), is incompatible with capitalist production from the start' (p.596) and that 'Accumulation of capital, i.e. genuine capitalist production, would be impossible in this way' (ibid). So why, the reader screams, lobbing the book in absolute disgust, bother explaining it all? Well, to show that economic balance is impossible. Capitalism is driven by excess, and when the accumulation of money is the governing principle, no handbrake (such as a sensible relation between supply and demand) can be applied to such an out-of-control system. And so we're left with a monetary organism periodically beset by huge crises, which are viewed as structurally inevitable.

To conclude, then, Volume II may not have the literary brio of Volume I, but it is still an incredibly interesting and important book, and one which must be placed beside its predecessor, if only to gain an overall picture of Marx's economic system. And with this argument in mind, I must admit to finding Fernbach's comments a little unfair, although I haven't had the arduous task of trying to translate it (so he can be forgiven). The points I have picked up on barely scratch the surface of what is a very dense and concentrated book. And I cannot make any claims to a total understanding of the book myself (that will take multiple readings). Yes, it is uneven and contradictory in places. (At one point Marx says that a fundamental contradiction of the capitalist mode of production is how it produces tons of commodities the working class can't afford, as they are 'always poor and must always remain poor' (p.391). Fair enough. So you'd think he would be in favour of a wage rise? Well, no, not exactly, because 'crises are always prepared by a period in which wages generally rise' (p.486-7), for when wages rise, that means less profit ((because higher wages = less exploitation)), which can lead to inflation ((as employers look to regain their profit margins)), which can lead to more wage rises, which can still lead to faltering profits, which can lead to crises and stagnation, etc, etc.) And yes, Marx doesn't give a full account of the credit system, which plays such a vital role in everyday existence. But he does expose the underlying workings of the world we live in. He may not have added all the shading and nuance we'd like, but his outline is there and still holding strong. Can anyone explain capitalism as a totality, given the fact that it is constantly morphing and adapting itself to each new situation? No, it is impossible, but Marx made a good start, and it is only by reading Volume II that his worldview starts to form and effervesce, despite its laboured presentation. But the presentation isn't important, for it's the thought and the diagnostic acumen that continues to impress and beguile his many readers.
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3.0 out of 5 stars Still good But less fascinating, 8 April 2015
I have read Volume 1 before coming to this volume, now nearly 2/3 accomplished.

If Volume 1 have successfully converted me to the left, with the most fascinating and groundbreaking content, engrossed by the simplest language and way of expression, that turned my mind and view of the history and now upside down; this volume comparatively lacklustre. Still a good book, but not as fascinating and mind exploding. And you can tell from reading K. Marx's health deteriorated rapidly writing this volume. Wordings and logic chosen became more abstruse and inefficient and I can find the mistakes in writing easily all along. Sometimes I even thought was it the same K Marx who wrote this?

However, you can find out in this volume much more effective in pointing out the structural problem of commodity production and distribution under the capitalism. K Marx stopped pointing blaming finger at the capitalist in exploitation of the labour for surplus value (as it has already been presumed when you are supposed to have finished Volume 1 already), focusing his attention instead, on how the capital production works, and the predicament of capitalists themselves (the credit, the money supply, the wage-profit antithesis, the invisible and evil urge for continuous producing and selling). After all these, you know much better there is no winner under capitalism except capital/money itself.

And I also want to point out that the more you really read the Capital, the more you know it is futile to so-called revolutionize the politics and economy, as you just can't. You have been put in that particular history that you actually can do nothing to steer the ship away from the crush path. You can only watch it crush as a bystander.

I thus suggest you keep your patience to read this book.
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5.0 out of 5 stars 1 but a brilliant exposition of money and finance, 8 May 2015
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not the literary classic of vol. 1 but a brilliant exposition of money and finance. Where would you find a book written 150 years ago so in tune with contemporary society of today. I suggest reading it with the chapters on money in Vol. 3. I view Vol. 2 very relevant in todays domination of capitalism by finance. It "screams" out(financial sector of capitalism),for a rigorous Marxist analysis.
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0 of 1 people found the following review helpful
2.0 out of 5 stars A Masterful Force of Logic Going Nowhere, 15 Mar. 2015
Dean M. Jackson (Washington, DC) - See all my reviews
It should be stressed for the novice to this subject, all three volumes of Capital provide a scientific explanation, as Marx put it, of how the Capitalist system works from the perspective that labor is the underlying essence of all value. If one accepts the basic assumptions made early in Chapter 1 of Capital, Volume 1--that abstract labor is the source of value(1)--Marx's logic flows well, not only through Volume 1, but all the way through Volume 3.

If one is looking to fault Marx's economics based on the works of Capital, one will come up empty not only because Marx's logic is flawless, but as economist and former Marxist Thomas Sowell says, " ...Marx considered the idea of proving a concept to be ridiculous. Moreover, Engels had asserted...that one only proves one's ignorance of dialectics by thinking of it as a means by which things can be proved."(2)

However, there was one instance where Marx let his dialectical guard down, allowing for an empirical objection that would consign all of Marx's works for naught. Sowell himself touches upon the specific passage where Marx cornered himself, but doesn't appreciate the full ramifications of Marx's observation.

In the "The Poverty of Philosophy" (1847) Marx says, "In acquiring new productive forces men change their mode of production; and in changing their mode of production, in changing the way of earning their living, they change all their social relations. The handmill [a productive force] gives you society with the feudal lord, the steam-mill [a productive force], society with the industrial capitalist."(3)

Sowell argues regarding Marx's handmill/steam-mill analogy, "If read literally, these words suggest a one-way causation and explanation of given states of being rather than of transformation. But that is clearly inconsistent both with Marx's and Engels' own treatment of history and with the dialectical conception of reciprocal interaction. These words are perhaps best read as epigrams-and of the dangers of misunderstanding inherent in that writing style."(4)

Is Sowell correct? Was Marx merely being terse with his handmill/steam-mill analogy?

While Sowell is indeed correct that Marx and Engles viewed the unfolding of history as a "dialectical conception of reciprocal interaction", that observation does not answer the question: What comes first? The machinery, or new social relations, derived from machines, that interacts with the old social relations to produce the new hybrid social relations? Marx was emphatic that machines came first, then all else followed them. In his retort to Pierre-Joseph Proudhon's observation that the use of machines was a consequence of the division of labor,(5) Marx writes:

"Thus it is slapping history in the face to want to begin by the division of labor in general, in order to get subsequently to a specific instrument of production, machinery.

Machinery is no more an economic category than the bullock that drags the plough. Machinery is merely a productive force. The modern workshop, which depends on the application of machinery, is a social production relation, an economic category."(6)

The problem with this empirical observation is that before there was a steam mill there already existed an industrial capitalist society that not only contained the requisite industrial capitalist mode of production that manufactured the necessary constituent parts that went into the creation of the steam mill (there were many companies involved in the problem-solving for and manufacture of components that went into a steam engine), but this pre-steam mill society also contained an already sophisticated industrial capitalist labor force that made the constituent parts for the steam mill, not to mention built the steam mill itself. Contemporaneous with the industrial capitalist production of steam engines, there existed the production of the machines that the steam engines would power. In other words, the steam mill presupposes an already functioning industrial capitalist society! Marx's rebuke to Proudhon is a tautological response that also fails to recognize that a steam engine is made up of independently manufactured parts that predates the manufacture of a steam engine with those independently manufactured parts! Marx fails to mention this double inconsistency with his material "productive forces" empirical observation.

Simplified, Marx is speaking of the root cause for industrial Capitalism...the steam engine, but that beginning of industrial Capitalism only exists to the extent of (1) the already existing industrial Capitalist division of labor that manufactured the component parts for the steam engine; (2) the already existing industrial Capitalist capital goods/intermediate goods industries that manufactured the constituent parts that went into the construction of the steam engine; (3) the already existing industrial Capitalist capital goods/intermediate goods industries that manufactured the machines that the steam engine powers; and (4) an already existing industrial Capitalist division of labor that manufactures those machines powered by the steam engine!

When the first steam-mill was completed supposedly, according to Marx, 'giving' a society with industrial Capitalism, in fact industrial Capitalism, and an industrial Capitalist division of labor, already existed, and would have to already be in existence otherwise there could be no steam-mills and the machines they were created to power!

Marx behaves like a child throwing a tantrum: Machines come first, then all else follows. Why? Because Marx said so, even though the historical record says otherwise!

In fact, and unknown to Ricardian economists or Marx, industrial Capitalism couldn't have emerged without the conscious decision of nations to allow for the rise of interest rates to free market heights, abandoning low interest rates policies, such low interest rates policies making possible the Mercantilist pre-industrial Capitalist era. Only with higher, market-based interest rates is it possible to accumulate the necessary large quantities of capital for industrial enterprise.

During the Mercantilist era low interest rates ensured that only consumption-based investments could take place, such investments requiring relatively little capital expenditures, such low capital expenditures being a function of the expected return on the investment, which return is based on the low interest rate policy being followed by Mercantilist nations. Industrial ventures, on the other hand, require large expenditures of capital, such amounts only made possible by a higher rate of return that can recoup the larger capital outlay, a higher rate of return that is made possible only with higher, market-based, interest rates.
(see first comment for available links to titles cited)

1. Capital, Karl Marx, p.27.

2. Marxism: Philosophy and Economics, Thomas Sowell, p.109

3. The Poverty of Philosophy, p. 122 (takes into account the changes and corrections introduced by Marx into the copy presented to N. Utina in 1876).

4. Marxism: Philosophy and Economics, Thomas Sowell, p.56.

5. "Division of labor, then, is the first phase of economic evolution as well as of intellectual development: our point of departure is true as regards both man and things, and the progress of our exposition is in no wise arbitrary." - The Philosophy of Poverty, Pierre-Joseph Proudhon (1847).

6. The Poverty of Philosophy, p. 149 (takes into account the changes and corrections introduced by Marx into the copy presented to N. Utina in 1876).
Revised Addendum: Formulated on February 25, 2014, 10:30 AM EST

Proof that Marx's Law of Value (which posits that labor is the sole source of value, imputing that value into commodities) is in error:

If all the machines created throughout the history of man were to have been kept within the confines of the minds of their creators, that is never manufactured, would such machines be imputed with value in a Marxist sense? Yes, they should equal the POTENTIAL value of their labor.

Now, since actual labor is required for there to be potential value, and there is no actual labor to speak of, then the potential imputation of labor value into machines/commodities is zero, and therefore Marx's Law of Value is in error.

In fact, the proof affirms that imputation of a commodity's value can't be anything physical, it must be subjective...that is in the mind of the observer.
Addendum (July 18, 2014):

The following nicely illustrates how net (new) investment (productivity increases) took place before medium of exchange, while (1) also illustrating how such net (new) investments spurred trade between separated communities; and (2) clarifying Marx's confusion as to what came first to alter social relations, (i) machines; or (ii) something else preceding machines...

Tribe A saved more by looking for food less, placing that saved time into creating a net that would increase the catch of fish. We can say that Tribe A has a greater productive edge than does Tribe B, whose members are still using sharpened sticks to catch fish--very laborious and relatively unproductive.

Now Tribe A decides, due to its higher productivity/wealth, it can afford to save more time, adding this saved time to the saved time it used for making fishing nets, and build a boat that will allow their nets to catch even more fish. Being busy building boats, Tribe A allows Tribe B to build the nets--a less productive venture than the new boat-building venture is. Tribe A's greater productivity thanks to fishing boats (and greater wealth thanks to fishing boats) allows for more children, increasing the tribe's population, allowing for a larger labor supply in the near future that will be available for procuring other innovative, labor-saving inventions.

In the modern economy the money we save is the "saved time" that Tribe A used to construct nets/boats, but since the rate of interest is being intentionally kept low by the Federal Reserve, the Bank of England, the European Central Bank and the Bank of Japan, there can be no new capital formation (money that's used for new long-term productive investments) in Western economies (nor Japan) for new productive ventures, because the lure for such new investments--the higher rate of return that higher, market-based, interest rates offer--is non-existent; the central bank mandated low interest rate policy won't cover the loan on the massive outlay of capital that net (new) productive projects require.

By the way, notice what comes first in the above illustration, contradicting Marx's claim that the "material productive forces" (machines) are the INITIAL venue by which societies alter their values/relationships...people had to "save time" FIRST by curtailing their quest for food.* Now in the modern economy, where money is used, FIRST comes the necessity of market-based interest rates that allows for the accumulation of capital that THEN produces the labor-saving machines! The higher the market-based interest rate, the better for capital accumulation.
*Incredibly, Marx was unaware (or more likely, deluded himself into unawareness) of this critical sequence.
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5.0 out of 5 stars Five Stars, 23 July 2015
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0 of 1 people found the following review helpful
5.0 out of 5 stars Five Stars, 14 April 2015
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the biggest rip off ever
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5.0 out of 5 stars !!!!, 11 Mar. 2013
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The order came earlier in perfect condition. I am very happy with the purchase. 10 from 10. And the book is definitely 'must have' for people interested in International Relations and Political economy !!!
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5.0 out of 5 stars Five Stars, 15 Sept. 2014
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good book, have to say
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