Who’s afraid of Volume Two?

By Humphrey McQueen

Many a Marxist who embarks on Capital sticks with volume I because it deals with the class struggle. Few proceed through the other three volumes, doing little more than dip into volume III for the chapters on the origins of crises around the tendential law of the rate of profit to fall and, more recently, hunting the Snark of fictitious capital across Part V. (see my ‘Fictitious Capital’ on this site) Almost no one reads volume II, disparaged as arid. This lopsided acquaintance with Marx’s project spawns misunderstandings from a failure to see aggregate capital as the object of his critique. Those who know only volumes I and III will never know capital. The central span of the bridge between appearance and reality is missing.

In the opening paragraph of volume III, Marx spells out why, by itself, volume I is a trap for young players:

In Book I, we analysed the phenomena that constitute the process of capitalist production as such, as the immediate productive process, with no regard for any of the secondary effects of outside influences. But this immediate process of production does not exhaust the life span of capital.

It is supplemented in the actual world by the process of circulation, which was the object of study in Book II. In the latter, namely in Part III, which treated the process of circulation as a medium for the process of social reproduction, it developed that the capitalist process of production taken as a whole represents a synthesis of the process of production and circulation.

In the quest for guidance about crises, volume II is more germane than any of the other three, although A Contribution to the Critique of Political Economy on money is also invaluable. Volume II explores the interlocked circuits of money capital, production capital and commodity capital; their turnover times; and the flows between production goods (Department I) and consumption goods (Department II). Marx demonstrates how the normal functioning of these three processes, let alone disruptions within and between them is capable of stalling the whole system.
Studying the relations between bankers and industrialists in the first decade of last century convinced the Austrian Marxist Rudolf Hilferding that ignorance of volume II was disabling since its

analysis of the social process of production is undoubtedly the most outstanding elaboration of that brilliant notion. Indeed, the largely ignored analyses in the second volume of Capital are, from the standpoint of pure economic reasoning, the most brilliant in that whole remarkable work. Above all, an understanding of the causes of crises is quite impossible without taking into account the results of Marx’s analysis.

Hilferding emphasised the disproportionalities that arose as each circuit moved at its own pace, thereby compounding the imbalances between all the values from production and those realisable as profit through consumption.
Marx instanced how the on-selling of invoices which conceals that a collapse is underway while everything seems rosy:

Thus the production of surplus-value, and with it the individual consumption of the capitalist, may increase, the entire process of reproduction may be in a flourishing condition, and yet a large part of the commodities may have entered into consumption only apparently, while in reality they may still remain unsold in the hands of dealers, may in fact still be lying in the market. Now one stream of commodities follows another, and finally it is discovered that the previous streams had been absorbed only apparently by consumption. The commodity-capitals compete with one another for a place in the market. Late-comers, to sell at all, sell at lower prices. The former streams have not yet been disposed of when payment for them fall due. Their owners must declare their insolvency or sell at any price to meet their obligations. This sale has nothing whatever to do with the actual state of the demand. It only concerns the demand for payment, the pressing necessity of transforming commodities into money. Then a crisis breaks out.

As soon as that happens, capitalists of every stamp compete to swindle their way out of bankruptcy. They stampede to unload invoices at a discount in the hope of getting enough cash to hang on until the cycle picks up. As the fox-hunting Engels would have it, once the crisis erupts ‘a steeplechase breaks out … for banknotes’, which is where we are again.
The Neo-Classicals read volume III because it picks up their pet topic, market prices. In the words of a winner of the faux Nobel Prize in Economic (soi-disant) Science, William J Baumol:

We economists have always had a somewhat warmer spot in our hearts for Volume III, and have tended to treat Volume I as an ‘unnecessary detour’ to the issue that really matters – the explanation of competitive pricing. But that is merely a reflection of our own prejudices as bourgeois (shall I say, ‘vulgar’?) economists.

Notwithstanding this prejudice, prominent bourgeois economists recognise the brilliance of volume II. Wassily Leontief acknowledges the debt that his own input-output tables owe to Marx, while Paul Samuelson accepts that Marx’s ‘finest analytical work came in this area of circular interdependence’.
If it is wrong to get stuck at volume I, or to cherry pick through volume III, it is equally misguided to confine an explication of crises to volume-II materials. Introducing volume III, Marx laid out why we

must locate and describe the concrete forms that grow out of the movements of capital as a whole. In their actual movement, capitals confront each other in such concrete shape, for which the form of capital in the immediate process of production, just as its form in the process of circulation, appear only as special instances. The various forms of capital, as evolved in this book, thus approach step by step the form that they assume on the surface of society, in the action of different capitals upon one another, in competition, and in the ordinary consciousness of the agents of production themselves.

In carrying his critique from the concept of the value to market price, Marx never abandoned the quest for the reality of the latter. They were on the surface but were not just an appearance, just as fictitious capital can service the expansion of individual capitals, and even of aggregate capital.
What has become ever more superficial are the explanations about every element in that synthesis proffered by the academic type who, in Marx’s words,

proceeds historically and, with wise moderation, collects the ‘best’ from all courses, and in doing this contradictions do not matter; on the contrary, what matters is comprehensiveness. All systems are thus made insipid, their edge is taken off and they are gathered together peacefully in a miscellany. The heat of apologetics is moderated here by erudition, which looks down benignly on the exaggerations of economic thinkers, and merely allows them to float as oddities in its mediocre pap. Since such works appear only when political economy has reached the end of its scope as a science, they are at the same time the graveyard of this science.

Keynesians, neo-Richardians and shame-faced Marxians do not escape this interment.
Survey of omissions
Having illumined the pertinence of volume II, it remains to illustrate its omission from theorising about crises over the past thirty years.

Erik Olin Wright promised in 1978 that the second chapter of his Class, Crisis and the State would

survey and criticise the diverse classical theories of economic crisis within Marxism, and then ‘distributes’ them diachronically along the history of capitalism.

Predictably, this diversity did not extend to volume II which is not even in the ‘Bibliography’.

Chris Harman draws on only volumes I and III for his five-page explication in Zombie Capital and the Relevance of Marx. His acolyte Tom Bramble did not think beyond his master’s voice for his 2011 JAPE article which also marginalises volume II, omitting it from his ‘References’ and from his analysis, despite passing mentions of the circuits of capital and turn-over times. Mike Beggs’s sideswipe at Harman also lists only volumes I and III.

When David Harvey discusses turnover times in The Limits to Capital he quotes the Grundrisse, rather than Marx’s revised account in volume II. Nowadays, he downplays the significance of volumes II and III by emphasising that Marx did not complete them, thereby overlooking the claims advanced for their importance by Hilferding and by Marx himself. Harvey’s video lectures and his 2010 Companion to Capital are confined to volume I so that those who rely on this truncated view of capital need to be reminded that its expansion operates across a broader canvas.

Since 2000, the only appearance of volume II in the Journal of Australian Political Economy is in my ‘What happened in globalisation’, which is not surprising given the near absence of Marx from the references to all its contributions. The sole mention of his works in the special issue on Work Choices concerned the production of ideology, not commodities; only two of the contributions to the issue on the post-1992 boom managed to weave in clips from Marx on economics; more amazing is that only two of the authors for the special on the mis-named Global Financial Crisis thought Marx worth noticing, and one of them was the anti-Marxist Steve Keen who drew on ideology. The ‘political economy’ label is no guarantee of radicalism, still less of Marxism. Thomas Malthus was a professor of political economy, against whom Marx gave us his root-and-branch critique.

Today, the reading groups on Capital are not being deterred by Marx’s injunction:

There is no royal road to science, and only those who do not dread the fatiguing climb of its steep paths have a chance of gaining its luminous summits.

Without scaling the three peaks in volume II, would-be Marxists will attain no more than a slight elevation above ‘the insipid flatness’ of bourgeois apologists.

Humphrey McQueen

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