Marx and the Crisis

Publishers Note

Please find below three new articles (Capital, Marx on Crises, Turnovers)  by Humphrey McQueen that address the current economic crisis from a Marxist perspective.

All of Humphrey’s articles are compiled in chronological order (from last to first) in the Features section titled “On the Crisis”. The articles below relate to Greed and Exploitation leads to over-consumption in On the Crisis



By Humphrey McQueen

15 February 2009

One mark of the crisis in the accumulation of capital is that second-hand copies of Marx’s Capital are nowhere to be found .

Those fortunate to have our own sets are taking them down, and opening them, perhaps for the first time. How many of those who start to read at the beginning are likely get to the end.

The dropout rate has little to do with the allegation that Marx is turgid. One obstacle is that Marx put his answers at the front. Hence, the hardest part comes before he leads us through the evidence. To make matters worse, the opening section seems straightforward. We are told about ‘use value’, ‘exchange value’ and then ‘surplus value’. Remembering those distinctions is not hard. The problem is that one-liners cannot define fluid interactions. The genius of Capital is Marx’s showing how the three forms of ‘value’ are in perpetual motion.

Think about approaching Capital in terms of learning to drive a car. The instructor points to the ignition, then to the brakes, and next to the accelerator. Nothing is easier than to identify each. Putting each device into action is not too hard either. Turn the key, shift into Drive, ease one foot onto a pedal. The trick is getting them, and several other components, to work simultaneously.

That is what Marx achieved throughout the three volumes of Capital. He takes us into the gear box, the axles and the computerised connections. He also explains how each of those devices was invented and then improved. He takes us driving beyond the suburbs, out onto the speedway and in the pits to effect repairs.

To do so, Marx proceeds laboriously, as if he were writing a manual to assemble a Ferrari from a crate of parts. Every combination and permutation is considered as he blocks in all the possibilities to make his principal points watertight. Before we reach the middle of Volume Two, such explanations can weary the spirit. Doubts about the pertinence of Marx’s account of exploitation to a financial crisis are compounded because even Marxists pay too little attention to that volume:

Volume Two is a stiffer climb than the others because it deals with money, the circulation of capitals and their expanded reproduction. Today, that plodding provides take-off points for investigating the current crisis. (The differing rates of the turnover of money capital are introduced in the next item in this series.)

Yet another barrier to understanding capitalist exploitation is built into the system. One way of illustrating this aspect is to continue with the car-driving analogy. Capitalism has automatic gears. Once capital is in ‘drive’, it can expand around the globe. Imagine that your vehicle has automatic transmission but also a manual gear-stick to give us the illusion – the fun – of changing gears.

Strange to say, that is how capitalism operates. The difference is that the pretend gears serve a vital purpose. They mislead workers about our place in the system. About forty pages in Volume One, Marx exposes this falsehood in a notorious passage on ‘commodity fetishism’.

So, where to begin? A good point of entry is the final chapter, 33, ‘On the modern theory of colonisation’. Its ten pages present Marx’s recognition of capital as a relationship of power:

A Mr. Peel … took with him from England to the Swan River district of Western Australia means of subsistence and of production to the amount of £50,000. This Mr. Peel even had the foresight to bring besides, 3,000 persons of the working class, men, women and children. Once he arrived at his destination, ‘Mr. Peel was left without a servant to make his bed or fetch him water from the river.’ Unhappy Mr. Peel, who provided for everything except the export of English relations of production to Swan River!

In contemporary terms, Peel’s mistake would be like Leighton’s opening a building site without reminding Gillard to send around her Construction Stasi.

Working through other historical chapters, for example, chapter 10 on ‘The Working Day’, will ease a newcomer into Marx’s way of writing and method of thinking. However, the lengths of his paragraphs and sentences slow progress. We do not need a fresh translation so much as an edition which breaks the material up to accord with contemporary reading habits. (Two examples of that re-editing are in the accompanying extracts from Marx’s Contribution to a Critique of Political Economy.)

Marx on crises

(16 February)

Here are two extracts from Marx’s A Contribution to the critique of Political Economy, (1859), 150 years ago.

This first passage has been edited to break up Marx’s single sentence into four. A danger in this sub-editing is that his interconnections will be lost. That risk is greater in breaking up sentences than paragraphs. Hence, once we have grasped the idea, we need to return to the original form of expression, which follows. On my website, the essay “The Unreadable Marx” shows that Marx is neither turgid nor more difficult than the reality he has to analyse.


The sub-edited version:

The division of exchange into purchase and sale not only destroys locally evolved primitive, traditionally pious and sentimentally absurd obstacles standing in the way of social metabolism. The division also represents the general fragmentation of the associated factors of this process and their constant confrontation. In short, the structure of the exchange process contains the general possibility of commercial crises. This is so because the contradiction of commodity and money is the abstract and general form of all contradictions inherent in the bourgeois mode of labour.

Karl Marx, A Contribution to the Critique of Political Economy, Progress Publishers, Moscow, 1970, p. 96.

The original version:

The division of exchange into purchase and sale not only destroys locally evolved primitive, traditionally pious and sentimentally absurd obstacles standing in the way of social metabolism, but it also represents the general fragmentation of the associated factors of this process and their constant confrontation, in short the structure of the exchange process contains the general possibility of commercial crises, essentially because the contradiction of commodity and money is the abstract and general form of all contradictions inherent in the bourgeois mode of labour.


In the original of this longer extract, the five paragraphs were one. The sentences in the final two paragraphs still need sub-editing.

When payments cancel one another as positive and negative quantities, no money need actually appear on the scene. Here money functions merely as measure of value with respect to both the price of the commodity and the size of mutual obligations. Apart from its nominal existence, exchange-value does not therefore acquire an independent existence in this case, even in the shape of a token of value, in other words, money becomes purely nominal money of account.

Money functioning as means of payment thus contains a contradiction: on the one hand, when payments balance, it acts merely as a nominal measure; on the other hand, when actual payments have to be made, money enters circulation not as a transient means of circulation, but as the static aspect of the universal equivalent, as the absolute commodity, in short, as money.

Where chains of payments and an artificial system for adjusting them have been developed, any upheaval that forcibly interrupts the flow of payments and upsets the mechanism for balancing them against one another suddenly turns money from the nebulous chimerical form it assumed as measure of value into hard cash or means of payment.

Under conditions of advanced bourgeois production, when the commodity-owner has long since become a capitalist, knows his Adam Smith and smiles superciliously at the superstition that only gold and silver constitute money or that money is after all the absolute commodity as distinct from other commodities – money then suddenly appears not as the medium of circulation but once more as the only adequate form of exchange-value, as a unique form of wealth just as it is regarded by the hoarder.

The fact that money is the sole incarnation of wealth manifests itself in the actual devaluation and worthlessness of all physical wealth, and not in purely imaginary devaluation as for instance in the Monetary System. This particular phase of world market crises is known as monetary crisis. The summum bonum, the sole form of wealth for which people clamour at such times, is money, hard cash, and compared with it all other commodities – just because they are use-values – appear to be useless, mere baubles and toys, or as our Doctor Martin Luther says, mere ornament and gluttony. This sudden transformation of the credit system into a monetary system adds theoretical dismay to the actually existing panic, and the agents of the circulation process are overawed by the impenetrable mystery surrounding their own relations.

(Marx, A Contribution to the Critique of Political Economy, pp. 145-6.)


This sequence of responses to the crisis in the accumulation of capital has stressed the need to return to Marx’s critique of political economy.

Even people who accept the relevance of Capital to the exploitation of labour wonder whether those insights can help us to penetrate a financial crisis. That skepticism is reasonable unless exploitation and high finance can be linked.

The earliest of these items showed how the eruption of the current crisis in the financial sector is the latest instance of the crises that arise through the expropriation of surplus value. (The crisis flows from the inability of aggregate capital to realise a profit because wages are less than the value of the commodities in which surplus value resides. In such circumstances, more sections of capital attempt to make money out of money, that is, by swindling each other. Exploitation is thus pivotal to the financial crisis.)

Asserting that Marx must be the starting point for every analysis of capitalism is vacuous without demonstrating how that truth in detail. As a contribution towards that understanding, this item takes a two-page segment from Chapter 12,’The Working Period’, in Volume Two of Capital.

Bank rescue packages are promoted to get money-capital flowing for businesses. This item will track the effects from blockages in access to money-capital by pursuing the crux of Marx’s analysis in Chapter 12:

Interruptions and disturbances of the social production process, as a result of crises, for example, thus have a very different effect on those products of labour that are discrete in nature, and those whose production requires a longer connected period.

Marx illustrates this unevenness by comparing extreme scales of production – a factory producing cotton goods with a workshop making locomotives. In the first case, the working period is one week while in the second example the period runs to three months.

Any return of surplus value as profit is always delayed by a period of circulation. The turnover times in both cases, therefore, will be longer than the working period.

In both cases, money-capital is needed to buy labour power, raw materials, semi-finished goods and ancillaries such as power.

A Chinese sweatshop delivers cartons of socks every day. Suppose also that they are paid for them on delivery. That small business might scrape by without borrowing at all. Its owner will use the receipts from Friday to buy the cotton and boxes needed for Saturday. He can extend credit to himself by making his workers wait for their pay.

But now suppose that effective demand for socks slumps and the wholesaler cannot place any more with WalMart. This agent delays paying the sweatshop. Its owner has no horde of cash and so cannot pay his labourers or suppliers. Within a couple of weeks, the gates are shut and the workers on their way back to their villages.

At the other extreme, a firm like Boeing must have lines of credit over its long periods of production. Aircraft-manufacturers entered the current crisis with extended credit arrangements. Those necessary precautions encouraged the creation of exotic financial instruments from futures trading and their derivatives because corporations bet (hedged) on future prices of materials and money-capital.

This comparison helps us to see why different kinds of business are failing at different rates. Coastal China is reeling from the closure of thousands of factories that had been snapping together consumer goods for re-export. As soon as the effective demand dried up, so did their cash flow.

What does re-thinking Marx’s analysis provide? Memorising Chapter 12 will not help Warren Buffett to pick a corporation in which to invest. Nor can Marx’s investigations allow militants to predict when this or that employer will file for bankruptcy.

The re-thinking clarifies our responses by revealing a pattern beneath the chaos of ‘the news’. The roller-coaster is law-bound. Its uneven pace is conditioned by the different time periods for the raising and repayment of money capital.

This scientific approach directs attention from mindless moralising about ‘extreme capitalism’, ‘greed’ and ‘irrational exuberance’.

Random and immoral events do happen. For example, a firm can go bust because the accountant stole the earnings to buy a Masarati for her toy-boy. But these thefts illumine the Faustian bargain facing every capitalist: to re-invest or to indulge? Too much of the latter risks putting an end to being a capitalist – crisis or no.

One thought on “Marx and the Crisis

  1. David Harvey's lecture on GFC says:

    David Harvey’s lecture at the Royal Society for the encouragement of Arts, Manufactures and Commerce (RSA), London, in animation.

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