Brief Notes on Imperialism, Capital and Surplus Value

(Last edited 3/13/13)

Periods of Imperialism

Imperialism is the contemporary stage of capitalism, which has developed into an integrated global system. Imperialist social formations compete among one another for dominance over the rest of the world (for control of resources, labor, and markets). Imperialism has led to the political and territorial division of the whole world by the capitalist powers.

Imperialism is historically determined (shaped by its own development over time). It is important to consider the dominant and hegemonic fraction of capital during each period of imperialism. We can identify three distinct periods (not mechanically, but as a complex process where during each one, all forms exist but one tends to dominate):

1)   mercantile capital/colonialism
2)   industrial capital
3)   banking capital
4)   finance capital

Imperialism is driven by a constant compulsion to expand. Competition causes the tendency for the rate of profit to fall, forcing production on a larger scale and ever-improving efficiency (through advancing technology), which leads to the concentration of capital. This increased production in turn creates the necessity of opening new markets and for re-investing profits in ever-increasing cycles.

The historical development of capitalism drives fundamentally and ineluctably (though not uniformly) toward the concentration of capital. Monopolies emerge to dominate certain industries (which can use their market power to defend and bolster their rates of accumulating profit, particularly surplus value).

The merging of bank and industrial capital has caused the appearance of finance capital. The phase of imperialism dominated by finance has been characterized by an increase in the importance of the export of capital itself (as distinct from the export of commodities), shifting production away from the previous industrial centers. Today, finance capital is in the hegemonic position.

What is capital?

The study of capital is not only the study of money or the capitalist means of production. In contrast to this, capital is to be understood as a cyclical process constantly unfolding inside a social formation, in which the principal aspect is the material transformation of nature into surplus value using labor power.

Capitalism is a system of social relations of production based on exploitation and domination.

Capital, in a bourgeois economy, is the valorization of a sum of specific values. Not all values are capital; that depends on their utilization. A value that is consumed or sits in a piggy bank is not capital. In order to become capital, values must be invested to produce more value. The capitalist extraction of surplus value (embodied in the capitalist rate of profit) plus the accumulation of other forms of profit such as interest, is the driving force behind the general tendency to produce more, to draw even more profit. The tendency of producing more is never-ending.

Industrial production is the only economic activity that can create new, concrete value (surplus value), especially socially necessary values, under a capitalist mode of production. But industrial capital has become intertwined and dependent on financial capital through the creation of all sorts of financial instruments (derivatives, futures, options, venture capital, hedge funds) and speculation on everything from currencies to raw materials.

The only capital able to produce concrete value, in its movement, is industrial capital. Industrial capital is a productive capital, in which all operations unroll outside the non-productive spheres of circulation and speculation. It doesn’t consist of an exchange (which generates profit only in the form of fictive value), but instead reproduces itself when all factors of production are combined (raw materials, means of productions and labor) – meaning work resulting in the transformation of natural materials into commodities.

What is surplus value?

Surplus value is the new, concrete value that is generated by the exploitation of labor power inside the process of industrial production (converting natural materials into commodities). It is embodied in commodities until it’s realized as profit and re-invested as new capital.

Class struggle waged by capital makes the process of production into the production of surplus value, a process of generating profit. One of the most important forms of struggle is the daily class struggle in the process of production. This is directed by capital, which extracts surplus value from labor during the productive process itself. This process constitutes a fundamental and essential element of capital, and by extension of the capitalist class itself. Surplus value is the most important and fundamental form of profit for capital, since all capital accumulation (and the reproduction of that accumulation) is based on this new, concrete value.

The production of surplus value is not the only form of capitalist domination, but the most important and fundamental. It is the reason for, and the organic unity of, all forms of domination and exploitation (economic, political, ideological) in the same process. It is class struggle in the process of production.

All of capitalist society is organized for the purpose of producing and accumulating surplus value. Toward that objective, everything in capitalist society has been commodified, given a value. All other spheres of society (ideology, politics, science, culture, family structures) are bent to the task of producing surplus value. This is a contradictory process; each sphere, including the economic, also reflects struggle (resistance to domination and exploitation).

The process of generating profit may appear different depending on different modes of investment and economic practices. We can distinguish between different kinds of capital: finance capital (the fusion of banking capital with industrial capital), mercantile capital, and industrial capital. The accumulation of profit takes different forms corresponding to these different kinds of capital: financial interest, unequal exchange (trade), and industrial profit. The mechanisms of extraction are all different. Only industrial profit is surplus value; the others are fictitious values in that they circulate capital; they do not produce new material value.

All types of capital are identified by the specific forms their value is represented by: money, goods/merchandise, means of production. However, the form of money is always represented (in every phase), and is privileged, since money is the equivalent of all merchandise (including the means of production, and labor necessary to the functioning of industrial capital). Money is value in itself, independently from the various things money is attached to.

The movement of capital is not really interested in these other things for its reproduction, but fundamentally requires the increase of the quantity of value. Therefore the movement of capital seems to appear essentially as an increase of monetary quantity, which is a very advanced form of monetary circulation. The movement of capital produces value only to guarantee its reproduction as capital, and to reproduce it on an even larger scale.

To really understand the origin of surplus value at the social level, we need to first recognize the limitations of the profit being extracted through mercantile transactions and through financial transactions (which is non-productive or fictitious value). In fact, this limitation is one of the fundamental aspects of the crisis facing capitalism/imperialism now. Indeed, in all the cyclical crises facing imperialism since the 1900s, one of the prominent aspects is how profit was/is being accumulated. Trade and monetary circulation are endemically governed by the rule of exchange between equivalent goods. This applies to any exchange or any contract. Therefore, no new value is being created, meaning no real surplus value can be produced, in the sphere of circulation and speculation.

The circulation of goods is a mechanism that helps to realize a product’s necessary social value by finding a consumer for that commodity. But, in and of itself, while the circulation of merchandise (or commerce) may generate profit, it does not produce any new (concrete) surplus value.

The relations of production determine the process of distribution. This is one of the most important secrets of the production of surplus value. Industrial profit and/or mercantile profit or interest are not autonomous forms of capital accumulation, but are all derivatives of (portions of) the surplus value produced in the sphere of production. Nowadays finance capital seems to constantly violate this reality, and with this violation is putting capital in a deeper hole that is becoming increasingly difficult to get out of.

Surplus Value is a Social Relationship of Domination

The production of surplus value is an economic process embedded in a social relationship. The fundamental internal contradiction of a capitalist society is capital vs. wage labor. This contradiction is manifested in class struggle between capitalists and workers. The relationship between these classes is an antagonistic one: workers are exploited by capitalists in the process of the production of surplus value. To force them to produce, and to accept exploitation, capitalists dominate workers economically, politically, and ideologically.

Capitalism produces intolerable effects, including many forms of oppression, wars, and ecocide. These are extremely dire consequences, but nevertheless peripheral to the generation of capital. Fighting the effects themselves will not stop them. For that, global capitalism must be destroyed. The generation of capital itself must be halted, at its source: surplus value.

Surplus value production will not end by attacking it only from the outside. It must be targeted at the core, through pushing forward its inner contradiction. The only ones who can ultimately overturn capitalism are those who are, through being enslaved to it, producing it: the working class.

This is the only class that can follow through to the end, to actually defeat capitalism. It is only by the workers overturning and destroying the entire ensemble of social relations through which capital reproduces itself, that capitalism can be stopped. When workers liberate themselves, they liberate all of society from the domination of capital.

Labor/work is not a good, but is the usage of a good: the labor power that capitalism buys from the working class. Not all work is incorporated in the process of exchanging a monetary value for labor power. So, not all work enters the process of capital accumulation of producing new value. Some work serves instead to guarantee and perpetuate the circulation of capital – even if there is profit accumulation, it is only a derivative of industrial profit.

Those who are not productive workers, not part of the process of producing surplus value, but are still part of the “popular masses” (unemployed, non-productive (service) workers, students, progressive/radical petit bourgeoisie or “middle class” elements) — can’t destroy (or even touch) capital at its source, cannot go on strike to make it stop reproducing itself. Before the finished goods have even left the factory, the surplus value has already been produced by the workers and appropriated by the capitalist.

All the popular masses can, nevertheless, expose and resist various forms of domination by capital, as well as its effects, and find ways to damage the system at different points. For example, strategically blocking the flow of capital and resource extraction can complement, support and enhance struggles of workers at the point of production, if they are enacted in solidarity with and under the leadership of those workers.

Because capitalism is at a global stage of imperialism, the struggle against it is also global. Inside the imperialist social formations, the popular masses must fight imperialism, as well as build solidarity for the struggles against imperialism by the international working class.

To liberate the world from the domination of capitalism, workers must overturn political domination (smash the current state and seize political power) in order to take the means of production and subsistence out of private hands, and to abolish wage labor. Only then, when the profit resulting from surplus value is no longer the motive force of expansion of production, will humanity be free to figure out, and implement, a way of life that can be just and sustainable.

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