More on Productive and Unproductive Labor

Reader Mike Treen was not convinced by my argument that “immaterial production” (1) such as the labor of actors or singers giving live performances is labor that is productive of surplus value if they are employed by a for-profit business. Mike indicates that he supports the contrary view of Ernest Mandel.

In his introduction to the Penguin edition of Volume II of “Capital,” Mandel produced two quotes from Marx. Taken at face value, these quotes would seem to indicate that Marx himself expressed contradictory views on the question of the productive character of labor involved in “immaterial production” and in general was evolving towards the view that only workers who produce material objects can be considered productive of surplus value.

Productive workers produce capital

This question is an important one in Marxist value theory, because the workers who produce surplus value also produce capital itself. With few exceptions, new capital is created out of surplus value. (2) A portion of the very product that the productive workers produce is turned against them in the form of the capital that exploits them on an ever-expanding scale.

I unfortunately do not have a copy of Mandel’s introduction to Volume II of “Capital” on hand, nor was I able to find it on the Internet. It appears still to be under copyright. However, from Mike’s quotes and my own personal recollection, I believe that Mandel more or less argued that non-material production—for example, the labor of a singer whose labor power is purchased at its value by a capitalist employer to give live performances—can never produce surplus value.

Mandel’s views on this question—I remember that it also was my opinion many years ago when I first read Mandel’s introduction to Volume II of “Capital”—seemed closer to the views of Adam Smith than those of Marx. According to Adam Smith, only workers who produce material commodities of some durability—material objects—can be considered productive workers.

Mike reproduced in his comment the two quotes from Marx that Mandel used in his introduction to Volume II—which I strongly urge all readers of this reply to read carefully. One was from “Theories of Surplus Value”—a manuscript that is sometimes considered to be Volume IV of “Capital.” The other quote is from Volume II of “Capital.” Taken at face value, these quotes certainly seem to support Mike’s case..

In a private communication to Mike, I promised to take another look at this question when I had the time. Fortunately, I managed to find the time sooner than I had expected. Exactly what types of labor produce surplus value and capital, and how does such productive labor in the capitalist sense differ from labor that does not? Answering this not only involved rereading the relevant chapter of the manuscript known as “Theories of Surplus Value,” it also involved finding the sentence that Mandel—and Mike—quote from Volume II of “Capital.”

How to approach quotations

Before I deal with the Marx quotations, I want to make some general points on how we should approach the question of one-sentence quotes from the Marxist classics.

Sentences—the same is true for writers in all other fields of science, not just scientific socialism—must always be read in context. What is the nature of the document from which the quotes are being produced? During what stage in the author’s development was the document in question written? Is the document an edited published work approved by the author, or is the document produced from an unpublished, unedited manuscript?

In science—and this includes the science of socialism—we can never prove anything by producing quotes from authors, no matter how authoritative the authors may be in their field. Quotes from even the most authoritative persons must ultimately pass the test of both logic and the empirical evidence. Unlike in theology (3), in science nobody is divinely inspired. Everybody can and does on occasion produce garbled and contradictory sentences.

We can’t shape our theories to our wishes

“If capital,” Mike writes, “can create value and surplus value out of thin air so to speak then it would seem that there would be almost unlimited opportunities for expansion. In the advanced capitalist countries, the health and education sectors alone (which outside the US are predominantly in the hands of the state) would alone offer a huge area for expansion if capital could lay its hands on it for direct exploitation.”

Here Mike raises an important methodological point.

I assume most readers of this blog want capitalism to be replaced by socialism as soon as possible—I certainly do—just like most of the marginalist economists want capitalism to last forever. The marginalists commit a sin against science by starting with the postulate that capitalism is an eternal system without contradictions and then proceed to build an economic theory around that initial postulate. They build a theory according to their wish that capitalism is an eternal system without contradiction, and not according to the evidence.

In this, they are no different than the misnamed “creation scientists” who reject biological evolution. The creationists instead of starting with the evidence—which happens to overwhelmingly support both biological evolution and Darwin’s proposals that natural selection is its major driving force—begin with their wish that the creation myth of the ancient Jews contained in the Christian Bible is true. They then twist the evidence around their initial postulate that the biblical creation myth is true.

As scientific socialists, we have no right to use the method of either the “scientific creationists” or the bourgeois marginalist economists, only in reverse. For example, we cannot start with the postulate that capitalism has no, or at most very little, room for further expansion, draw the conclusion that the the socialist revolution is therefore not far off, and then develop our economic theory around this postulate.

Certainly in the history of the Marxist movement many political tendencies have passed solemn resolutions by majority vote proclaiming that capitalism has reached the end of the line and the revolution is now at hand. (4) When the industrial cycle refused to obey “party discipline” of said resolutions and turned upward—even though the resolutions were passed by majority vote after the most democratic of discussions—many members of these tendencies lost their Marxist bearings altogether and decided that capitalism was eternal after all.

It may indeed be true that capitalism now after centuries of expansion has very little room left to expand further. Despite a generation of extreme political reaction, the workers’ revolution may be very near. I for one hope that is the case. But we cannot tailor our economic theories to our wishes. I devoted a series of posts, beginning with this one, to examining this very important question—also known in Marxism as the “breakdown” theory.

However, we cannot as scientific socialists reject the idea that labor involved in non-material production can produce surplus value and new capital on grounds that if we assume the contrary idea we restrict—in our minds but not in the real world—the possibilities for further capitalist expansion. Indeed, if anything a false theory increases the risk the revolution will be further delayed.

In any case, unlike bourgeois marginalist economists and creation “scientists,” if we are to be scientific socialists—Marxists—we must study the world as it is and not how we would like it to be. True, the point is to change the world, but the starting point of revolutionary action must always be the world as it actually is.

Non-material production and the class struggle today

Indeed, if we posit that “non-material production” can increase the production of surplus value if it is “privatized”—that is, shifted to a purely for-profit basis—we have a scientific explanation of why bourgeois politicians are pushing for transforming health and educational services now financed by the state and provided more or less as a right back into private for-profit businesses where access to education and health will be provided only according to the ability to pay.

Doesn’t the view that non-material production can produce surplus value and new capital shed light on why such basic services as higher education and medical care are not provided as a right in the United States? Indeed, even the right for a quality elementary school and high school education is under attack within the United States in the guise of “charter schools.”

The United States is, after all, the only major capitalist country where the workers have never formed their own mass political party. It provides a warning to the workers outside the United States that if they do not fight to retain the gains won by the struggles of their ancestors, they will lose their rights, such as they are, to health care and education. It also shows why it is important that these rights be extended to the United States if they are to be defended elsewhere, and why we can expect the American capitalists to resist this extension.

The limits of non-material production

On the other hand, I think we should not exaggerate the weight of non-material production. As Lenin already explained in “Imperialism,” imperialism has a strong long-term tendency to shift industrial production from the imperialist countries themselves, where the value of labor power is relatively high, to countries where the value of labor power is low and the rate of surplus value is much higher. (5) Isn’t this the main way that the capitalists resist the long-term tendency for the rate of profit to fall?

As industrial production has shifted towards Asia in recent decades, the capitalist class and its bought and paid for intelligentsia in the imperialist countries has put increasing emphasis on so-called “post-industrial” society, where “services” and “information” and not industrial production dominate. These theoreticians of reaction claim that the classical industrial proletariat—factory workers concentrated in large-scale factories—is disappearing and with it any future for the trade unions, not to speak of a socialist revolution.

In the imperialist countries, it true that the “heavy battalions” of the industrial working class concentrated in gigantic large-scale industrial enterprises, if not exactly disappearing have been in numerical decline for decades. The workers concentrated in large-scale factories are leaving behind the light battalions of workers—such as the threatre workers that Mike’s union in New Zealand is organizing—who are often engaged in “non-material” production.

Large-scale industrial production in the age of the iPhone and iPad

Where I live on the U.S. West Coast the local newspaper is full of news about the antics of Apple’s billionaire founder and boss Steve Jobs and the great news about Apple’s latest profits—which are far surpassing analysts’ expectations! A million iPads have recently been sold in the United States, two million worldwide!

Among the latest exciting stories is that an Apple engineer after apparently downing a few too many beers left the prototype of the next-generation iPhone in a bar. Somebody found the prototype and sold it to a Web site that published photos of it. This bought down the wrath of Apple and the police.

Apple is on a board that controls the police squad dedicated to computer crime; the fusion of the monopolies and the state is not a mere phrase. These Apple-controlled cops raided the home of the owner of the Web site, and there is talk of a criminal prosecution of that person.

Apple is concerned that now that consumers are better informed about the future iPhone, the now better-informed consumers might not purchase the current iPhone but instead wait for the coming improvements. Whatever happened to “consumer sovereignty”? Aren’t the consumers supposed to have perfect information? Apparently not if Apple gets its wishes!

An even bigger story has been that despite the “disaster” of the publication of the pictures of the iPhone prototype, the total stock market value of Apple now exceeds that of Microsoft! What exciting news!

But how are iPhones and iPads actually produced? Generally, the press ignores the whole question. Presumably, since we are living in a “post-industrial” society, they simply come out of the head of Apple’s billionaire “genius” CEO Steve Jobs.

But this week the curtain that covers the actual production of these typical products of “post-industrial” society has been lifted, at least for the moment. It is now the focus of “criticism and troubling questions,” the New York Times correspondent David Barboza writes in the May 26 edition, “about a wave of suicides among its workers at a pair of factories here [in China] that serve as major suppliers to global brands like Apple, Dell and Hewlett-Packard.”

The reason is that the imperialist media, always eager to bait the Peoples Republic of China, has stumbled upon the story—reported in the Chinese press—of a wave of suicides by workers in a couple of factories owned by FoxConn in southern China. Apparently, exploitation in these factories, which produce among other things iPads and iPhones, is so bad that some workers prefer to take their own lives rather than put up with it.

Could this have anything to do with the tremendous profits that Apple has been “earning” of late, which has enabled its stock market value to rise above that of Microsoft? In case there is any confusion, FoxConn is not a state-owned socialist enterprise but a capitalist company headed by the Taiwan-based industrial capitalist Terry Gou.

According to the New York Times, the enterprise in which the suicides occurred include two factories that together employ 420,000 workers. Assuming that the workers are divided more or less equally between the two factories, there would be about 210,000 workers per factory. This would be about the twice the entire population of my hometown, Albany, New York—the capital of the Empire State!

It is in factories like these that iPhones, iPads and many of the other high-tech gadgets of “post-industrial,” “information” society are made. These factories have concentrations of workers that far exceed anything seen before in the history of capitalism. Conditions in these gigantic factories are driving some workers to suicide—the very conditions under which the surplus value and capital is being produced that made Steve Jobs and a few other Silicon Valley tycoons the billionaires they are today.

But many other workers concentrated in these giant enterprises are no doubt searching for ways to fight the capitalist exploitation in the gigantic factories that produce the wonderful gadgets that are bought in such large numbers in the “post-industrial” West. And in time these workers will shake the world and transform it. These gigantic industrial battalions will back up the light battalions represented by Mike’s union of fast food and threatre workers.

No, there is no “post-industrial” society. What is happening instead is that the axis of world history is moving from old Europe and its colonial extension in North America to Asia where the great mass of humanity—divided into classes—lives, works, produces and engages in class struggles.

The whole concept of “post-industrial” society is ridiculous if you give it a little thought. If we were really moving into “post-industrial” society, civilization would be collapsing all around us. Without large-scale industry, there is no production of food—agriculture itself has become a branch of large-scale industry and increasingly dependent on large-scale industrial production for its inputs—there would be no clothing, no housing, no electricity, no refrigerators, no washing machines, no automobiles, and—yes—no “personal computers,” no flat screen TVs, no smartphones, no iPads, no Internet, no “high tech” and no “information” industries.

In fact, at no time in the past has large-scale industrial production—and the huge concentrations of industrial workers employed in them—even if these workers may not be working in the same geographical locations that their 20th century predecessors did—has ever been as important as it is at present.

The decline of large-scale industry in the imperialist countries—pointed to by Lenin when it was still in its early stages and largely confined to Britain—and unfolding according to the economic laws explained by Karl Marx in great detail in “Capital”—merely shows the economic decay of these countries—not the declining importance of large-scale industry.

Mandel’s quotes from Marx

And now I will get to the substance of Mike’s questions, the quotes from Marx produced by Ernest Mandel.

“In Theories of Surplus Value (Moscow 1969),” Mandel wrote, “Marx did have long sections supporting the view that the labour of actors for example is productive labour if he works for a capitalist.” However, according to Mandel, “Even here however he contradicts himself when he wrote (page 172): ‘As for labours which are productive for their purchaser or employer himself—as for example the actor’s labour for the theatrical entrepreneur—the fact that their purchaser cannot sell them to the public in the form of commodities but only in the form of the action itself would show that they are unproductive labours.'”

Did Marx really contradict himself?

In this quotation, Marx seems to indicate that he is in agreement with Adam Smith’s view that labor that does not become fixed in a material commodity that lasts for some time is not productive labor in a capitalist sense—that is, that such labor cannot produce a surplus value. But remember, in interpreting quotations we must always deal with them in the context in which they appear.

The context in which this quotation appears is a long criticism of the view of Adam Smith that the above sentence seems to be defending—that labor engaged in “non-material” production can never produce surplus value.

In “Theories,” Marx explained that as a general rule—with some exceptions—labor that is exchanged against revenue as opposed to capital—that of personal servants, for example—is not engaged in material production. On the other hand, labor that is exchanged against capital—that is, labor hired by for-profit businesses—is engaged in material production. According to Marx, this caused Adam Smith to draw the wrong generalization that “non-material production” is always non-productive of surplus value.

But in the quote provided by Mandel, which I reproduced above, Marx seems to defend the very view that he through the rest of the manuscript was polemicizing against. Remember also that these are unedited manuscripts. Marx was writing mostly in German—though he occasionally wrote phrases in English. He also had terrible handwriting—perhaps almost as bad as mine—so in order to produce these translations, they first had to be translated from Marx’s ghastly handwriting into something that was readable by most people, and then translated from German into English in order to make them available to the English-speaking public.

In addition, “Theories of Surplus Value” was not edited by Engels but first by Kautsky, and then by the Institute of Marxism-Leninism of the Communist Party of the Soviet Union. In both cases, people that—whatever their merits may have been—were considerably less qualified to prepare Marx’s notebooks for publication than was his closest friend and co-thinker Frederich Engels.

Still, let’s assume that the sentence that Mandel quotes is really what Marx intended to write in some long ago London evening.

Marx is writing in London somewhere between the year 1861 and 1863, filling up a notebook that will form part of the manuscript that will long after his death become known as “Theories of Surplus Value” or Volume IV of “Capital.” Typewriters are still in the future, Marx’s writing tools are a pen and ink pool. Tonight he is working on a criticism of one of the greatest masters of political economy, Adam Smith.

It is, of course, possible that in writing his critique of Smith Marx might change his mind. Perhaps Marx realizes that Smith was correct after all in claiming that labor engaged in non-material production can never actually produce surplus value. Marx decides that he is sinking into a maze of contradictions in arguing the opposite. What would Marx do in this case? Would he write one sentence containing his new view and then go on as before?

Not likely. More likely, he would call it a night and sleep on the question. If he did change his mind and formed a new view, wouldn’t he discard what he wrote, throw out the old notebook and instead open up a new notebook developing his new revised view explaining why Smith was right on this point after all? But where is this new notebook? If such a notebook exists or ever existed, it has not been found.

But then why did Marx write the sentence like he did? Isn’t it much more likely that he was paraphrasing the views of the man he was criticizing, Adam Smith?

In order to clarify things, I will reproduce not only the quote but the text that surrounds the quoted sentence, with the sentence that Mandel quotes reproduced in bolded capital letters so our readers can see the context of the quote.

WARNING! We are seeing a master at work and the going won’t be so easy. So let’s peak over Marx’s shoulder and take a look at what he is writing.

“When we speak of the commodity as a materialization of labour—in the sense of its exchange-value—this itself is only an imaginary, that is to say, a purely social mode of existence of the commodity which has nothing to do with its corporeal reality; it is conceived as a definite quantity of social labour or of money. It may be that the concrete labour whose result it is leaves no trace in it. In manufactured commodities this trace remains in the outward form given to the raw material. In agriculture, etc., although the form given to the commodity, for example wheat or oxen and so on, is also the product of human labour, and indeed of labour transmitted and added to from generation to generation, yet this is not evident in the product. In other forms of industrial labour the purpose of the labour is not at all to alter the form of the thing, but only its position. For example, when a commodity is brought from China to England, etc., no trace of the labour involved can be seen in the thing itself (except for those who call to mind that it is not an English product). Therefore the materialisation of labour in the commodity must not be understood in that way. (The mystification here arises from the fact that a social relation appears in the form of a thing).

“It remains true, however, that the commodity appears as past, objectivised labour, and that therefore, if it does not appear in the form of a thing, it can only appear in the form of labour-power itself; but never directly as living labour itself (except only in a roundabout way which in practice seems the same, but whose significance lies in the determination of different rates of wages). Productive labour would therefore be such labour as produces commodities or directly produces, trains, develops, maintains or reproduces labour-power itself. Adam Smith excludes the latter from his category of productive labour; arbitrarily, but with a certain correct instinct—that if he included it, this would open the flood-gates for false pretensions to the title of productive labour.

“In so far therefore as we leave labour-power itself out of account, productive labour is labour which produces commodities, material products, whose production has cost a definite quantity of labour or labour-time. These material products include all products of art and science, books, paintings, statues, etc., in so far as they take the form of things. In addition, however, the product of labour must be a commodity in the sense of being ‘some vendible commodity’, that is to say, a commodity in its first form, which has still to pass through its metamorphosis. (A manufacturer may himself construct a machine if he cannot get one built anywhere else, not to sell it but to make use of it as a use-value. However, he then wears it out as a part of his constant capital and so sells it piecemeal in the form of the product which it has helped to make.)

“Certain labours of menial servants may therefore equally well take the form of (potential) commodities and even of the same use-values considered as material objects. But they are not productive labour, because in fact they produce not ‘commodities’ but immediate ‘use-values‘. As for labours which are productive for their purchaser or employer himself—as for example the actor’s labour for the theatrical entrepreneur—the fact that their purchaser cannot sell them to the public in the form of commodities but only in the form of the action itself would show that they are unproductive labours.

“Apart from such cases, productive labour is such as produces commodities, and unproductive labour is such as produces personal services. The former labour is represented in a vendible thing; the latter must be consumed while it is being performed. The former includes (except for that labour which creates labour-power itself) all material and intellectual wealth—meat as well as books—that exists in the form of things; the latter covers all labours which satisfy any imaginary or real need of the individual—or even those which are forced upon the individual against his will.

“The commodity is the most elementary form of bourgeois wealth. The explanation of ‘productive labour’ as labour which produces ‘commodities’ also corresponds, therefore, to a much more elementary point of view than that which defines productive labour as labour which produces capital.

“Adam Smith’s opponents have disregarded his first, pertinent definition, and instead have concentrated on the second, pointing out the unavoidable contradictions and inconsistencies to which it gives rise. And their attacks were made all the easier for them by their insistence on the material content of the labour, and particularly the specific requirement that the labour must fix itself in a more or less permanent product. We shall see in a moment what it was that particularly gave rise to the polemics.

“But first this further point. Adam Smith says of the Physiocratic system that its great merit is that it represented the wealth of nations as consisting ‘not in the unconsumable riches of money, but in the consumable goods annually produced by the labour of the society’ ([Wealth of Nations, O.U.P. edition, p. 299], [Garnier] t. III, l. IV, ch. IX, p. 538).

“Here we have a deduction of his second definition of productive labour. The definition of surplus-value naturally depended on the form in which value itself was conceived. In the Monetary and Mercantile systems it is therefore presented as money; by the Physiocrats, as the produce of the land, as agricultural product; finally in Adam Smith’s writings as commodity in general. In so far as the Physiocrats touch on the substance of value, they resolve it entirely into pure use-value (matter, corporeal object), just as the Mercantilists resolve it into the pure form of value, the form in which the product makes itself manifest as general social labour: money. With Adam Smith, both conditions of the commodity—use-value and exchange-value—are combined; and so all labour is productive which manifests itself in any use-value, any useful product. That it is labour that manifests itself in the product already implies that the product is equal to a definite quantity of general social labour. As against the Physiocrats, Adam Smith re-establishes the value of the product as the essential basis of bourgeois wealth; but on the other hand he divests value of the purely fantastic form—that of gold and silver—in which it appeared to the Mercantilists. Every commodity is in itself money. It must be recognised that at the same time Adam Smith also falls back more or less into the Mercantilist conception of ‘permanency’—in fact, inconsumability. We can recall the passage in Petty (see my first volume, p. 109, where I quote from Petty’s Political Arithmetick) where wealth is valued according to the degrees in which it is imperishable, more or less permanent, and finally gold and silver are set above all other things as wealth that is ‘not perishable’.”

I think the evidence is overwhelming that Marx is not “wavering in his views” but is simply paraphrasing the views of his opponent Adam Smith and explaining as only Marx could the origins of Smith’s mistaken views.

The essence of Marx’s criticism of Smith

I think the essence of Marx’s criticism of Smith is found in a sentence that Marx puts in parentheses that is found at the end of a paragraph that I reproduced about three paragraphs before the sentence that Mandel quoted in his introduction to Volume II of “Capital.”

The sentence is this: “(The mystification here arises from the fact that a social relation appears in the form of a thing).” According to Marx, Smith was led into error by the fetish of commodities. That is, the Scottish economist confused what is really a relationship between people for a relationship between things. Indeed, exchange value does appear as a relationship between commodities—things.

Doesn’t exchange value as the independent value form—money—appear as gold bullion and its various representives in the sphere of circulation? And isn’t gold bullion in the form of bars of gold very much a thing? In Volume I of “Capital,” doesn’t Marx devote a good many pages to explain this process of reification in which a relationship between people appears as a relationship between things like pork bellies, iPods, shoes, bottles of wine, gold and so on?

Since a song does not appear to be a thing—we can’t hold it in our hand like we can an iPad or a gold coin—it “perishes at the instant of production,” as Smith put it—Smith couldn’t see how a song could embody the relationship of production that Marx later called surplus value. But once we understand that value including surplus value is not a relationship between things but a relationship between people engaged in production mediated by things, which appears as a relationship between things, Smith’s—and Mandel’s—confusion is cleared up.

Mandel’s second quote

Mike produces a second sentence quoted by Ernest Mandel in his introduction to the Penguin edition of Volume II of “Capital.” The quote from Marx is reproduced by Ernest Mandel as follows:

“With regard to immaterial goods, while Marx does not repudiate any of his earlier writings (6) [my emphasis—SW] directly, he insists strongly and repeatedly on the correlation between use-values embodied in commodities through a labour process which acts upon and transforms nature, and the production of value and surplus value. Moreover, he provides a general formula which implies the exclusion of wage-labour engaged in ‘personal service industries’ from the realm of productive labour:” [Now comes the quote from Marx] “If we have a function which, although in and for itself unproductive, is nevertheless a necessary moment of reproduction, then when this is transformed, through the division of labour, from the secondary activity of many into the exclusive activity of a few, into their special business, this does not change the character of the function itself.”

Circulation is not the same as ‘non-material production’

Marx in this quote was dealing not with non-material production but with circulation. Indeed, the specific subject of Volume II of “Capital” is circulation of capital, just as the subject matter of Volume I is the production of Capital.

Mandel’s error here is actually far more straightforward than was the case with his first quote. By circulation of capital, Marx means the process whereby the value of commodity capital is transformed first into money capital and then immediately transformed back into means of production such as raw and auxiliary materials and labor power—other commodities.

Marx calls this the metamorphosis—or, to translate from Greek to English, the “change of form”—of commodities. In the first stage, the commodity, which is a unity of use value and exchange value, is transformed into the independent form of exchange value—money. In the money form, all specific use values disappear. Instead, we have capitalist wealth in the abstract—money. Then the money again assumes the form of commodities with specific use values—particular forms of wealth once again—means of production, specific raw and auxiliary materials—like iron ore or electricity, for example—and labor powers of specific skills, which are used to produce new commodities of a specific use value—steel ingots, for example—which again will have to be metamorphosed back into money. Or in plain language, sold. Again and again.

Below I reproduce the quote in context to show that Marx is indeed dealing with circulation. Since the issue is far more straightforward than was the case with the first quote, I can reproduce the context in a much shorter quote from Marx. Like was the case in the first quote, I reproduce the sentence that Mandel quoted out of context in bolded upper case.

“To the capitalist who has others working for him, buying and selling becomes a primary function. Since he appropriates the product of many on a large social scale, he must sell it on the same scale and then reconvert it from money into elements of production. Now as before neither the time of purchase nor of sale creates any value. The function of merchant’s capital give rise to an illusion. But without going into this at length here this much is plain from the start: If by a division of labour a function, unproductive in itself although a necessary element of reproduction, is transformed from an incidental occupation of many into an exclusive occupation of a few, into their special business, the nature of this function itself is not changed. One merchant (here considered a mere agent attending to the change of form of commodities, a mere buyer and seller) may by his operations shorten the time of purchase and sale for many producers. In such case he should be regarded as a machine which reduces useless expenditure of energy or helps to set production time free.”

For capitalist reproduction, circulation is absolutely necessary. If the circulation does not occur—the commodities are not sold—the whole process grinds to a halt. This is exactly what happens in a crisis—whether partial or general—of overproduction, which happens to be the main subject of this blog.

Labor engaged in circulation is not productive of value and surplus value

Marx does not consider the labor involved in circulation—the “sales effort,” if I may borrow from the language of Baran and Sweezy—to be productive of value and therefore of surplus value. The labor involved in circulation is not non-material production like is the case with a singer employed by a theatre owner. In contrast to changing the physical location of a commodity, for example—the labor of haggling in the market—buying and selling—does not produce an atom of value or surplus value. It therefore makes no difference whether the industrial capitalists do the haggling in the market in their own person—act as their own merchants—hire workers—salespeople to do it for them—or have it done through a separately organized business—a mercantile intermediary. And if the latter is the case, neither the labor of the merchant—or his wage or salaried workers if he has any—is productive of value. And where there is no value produced, there is no surplus value produced.

I hope this clarifies the question.


1 It should be remembered that all production involves the manipulation of matter and energy. Einstein proved that matter and energy are simply different forms of the same thing. For example, a song is a vibration of gas molecules that exists for a very short period of time but not a zero period of time. What is meant by non-material production is not something that exists outside of matter-energy but rather is a form of production that does not leave behind a material object that endures over what we humans perceive as a period of time.

2 Better-paid workers might occasionally save some of their wages by investing them in interest-bearing securities and occasionally even starting their own enterprises that in a very few cases grow into large capitalist enterprises. Therefore, wages can be capitalized, transformed into capital, as well as profits—surplus value. However, this is very much the exception and must remain the exception under capitalist production. If wages could be transformed into capital on a large scale, who would be willing to sell their labor power to capitalist employers? And who would produce the surplus value in the first place?

3 The contrary approaches arise from theology. For example, fundamentalist Jews believe that the books of the Torah—what Christians call the “Old Testament” and fundamentalist Christians, but not of course the Jews, would include the books of the New Testament, as well—were either written by God Himself or at least were written by divinely inspired authors who acted as little more than stenographers for God.

No matter how confused, garbled, contradictory, or just plain meaningless a passage or verse might be, the religious fundamentalists claim that even when it is removed from its context these God-written or God-inspired sentences must contain some profound truth. Frankly this kind of nonsense helped motivate my personal break from religion. Even as a young child, I came to the conclusion that science and religion were not compatible and that I was in favor of science—not religion.

Yet in my 40 years as a Marxist I have run into this same game of “quotesmanship,” which belongs properly to theology and religion, more than once. When isolated sentences are quoted out of context from Marx, Engels, Lenin or some other authoritative figure to prove a point, it is time at the very least to roll up your sleeves and do some serious reading and thinking and watch your wallet as well!

4 In my youth, I was very interested in certain publications that would announce every week that a new Great Depression was about to begin. The following week, the same publication would announce that the Depression had indeed actually begun. The next week it was back to about to begin. The publications would alternate bi-weekly between these two positions.

The writers and editors putting out these types of publications were not very much influenced by what was actually happening in the economy—whether it was booming or in recession was irrelevant.

At first I was excited by these kind of proclamations. If the authors of these publications were correct, then the Depression that had either begun or was about to begin meant that the radicalization of the working class was also about to begin and that the revolution itself might be only a few years off. I was skeptical of such proclamations, but I couldn’t resist the thought: But what if they are right?

It helped fuel my own growing interest in economics. What was really going on, and what had caused the Great Depression in the first place?

Today, with 40 years of experience behind me, I realize that these publications were published by political sects that used the same method of certain groups of fundamentalist Christian or Jewish religious sectarians. These religious sects would go through the Bible and discover obscure passages that proved, to their satisfaction at least, that the Messiah—either Jesus or the unnamed Jewish fellow—was about to appear to bring glory, power and wealth to true believers while banishing the skeptics to the eternal fires of hell.

The political sectarians used exactly the same method. These sects’ weekly announcements of economic collapse were designed to keep their wavering members from dropping out. Who would want to drop out of the “revolutionary party” on the very eve of the crisis that would sweep that party to power? This approach to politics and “party building” is as far from the real method of Marx and the science of socialism as you can get.

5 When I was new to the Marxist movement, I learned that the opposite was the case, that capitalism would never industrialize the oppressed nations and that this was the Leninist theory. However, if you actually read “Imperialism,” I think you will see that Lenin defends the contrary view.

6 If Marx changed his position on the possibility of labor engaged in non-material production being productive of surplus value and capital, wouldn’t he have repudiated the earlier position? Don’t we all if we are honest do this when we change our minds about questions both important and minor and repudiate our earlier positions? How could Marx have changed his position on this question as Mandel implies he did without repudiating his previous position?

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