Unit 2 : Science & Production
A presentation by the People’s University as a part of its Summer Organizer School
People’s University
Organizer School
Some community agreements
People’s University
Organizer School
What would you add to this list?
human society, the whole of social relations
“Materialism provided an absolutely objective criterion by singling out “production relations” as the structure of society, and by making it possible to apply to these relations that general scientific criterion of recurrence whose applicability to sociology the subjectivists denied.”
– V.I. Lenin, “What the ‘Friends of the People’ Are and How They Fight the Social-Democrats”
human society’s material social relations (i.e. relations of production)
The Aspects of the Economic Process
~Production~
~Distribution~
~Exchange~
~Consumption~
Proletarian
Bourgeoisie
Landlords
Rent
Profit
Wages
The Market
Supply & Demand
Productive Consumption
Unproductive Consumption, i.e. Destruction
Commodities
What is a commodity?
Two points of view for a commodity
“The usefulness of a thing makes it a use-value”
Use-value…
Which of these things explains the use-value of graphite?
“[Use-values] constitute the material content of wealth, whatever its social form may be. In the form of society to be considered here they are also the material bearers of [...] exchange-value. (Marx)
“material form”
use-value =
“social form”
commodity =
“Exchange value, at first sight, presents itself as a quantitative relation” (Marx)
Under capitalism, example:
10kg of iron = 1000kg of linen
(A) = (B)
What does this tell us?
“[Use-values] constitute the material content of wealth, whatever its social form may be. In the form of society to be considered here they are also the material bearers of [...] exchange-value. (Marx)
“material form”
use-value =
“social form”
commodity =
What are Commodities?
Objects produced for exchange
Value
Use-value
Commodity
Concrete
Abstract
Labour
The value of a commodity is determined by the average socially necessary labour-time required to produce it.
Exchange Value
An object that has a price.
Value
An objects that is a product of human labour.
Use-Value
An object that satisfies a human need.
The Venn Diagram of Value
Production for Use
The Logico-Historical Development of
Capital
C
Use-value
Value
C
Production for Use
Commodity Production & Exchange
*Divide one into two
The Logico-Historical Development of
Commodity Production
C–C
C
C
Use-value
Value
C
Relative
C
Equivalent
C
M
C
Production for Use
Ordinary
Commodities
Money Commodity
Ordinary
Commodities
Simple Circulation
Commodity Production & Exchange
C
Relative
C
Equivalent
*Definite relations
*Divide one into two
The Logico-Historical Development of
Commodity Production
C
Use-value
Value
C–M–C
C–C
C
Exchange-value in reality. Its use-value exists only ideally in the list of things for which it can be exchanged.
A use-value in reality. Its value is only expressed ideally in its price.
A use-value in reality. Its value is only expressed ideally in its price.
Universal
Equivalent
Relative
Relative
~Law of Value~
People’s University
The exchange of commodities is regulated by the principle of equivalent for equivalent.
~The General Formula of Capital
Capital is a material social relation (i.e. a production relation) that appears as a material relation between people and a social relation between things. It is a production relation in which the proletariat sells its only commodity, labour-power, to the bourgeoisie to be used in the process of producing commodities.
Capital is the process of production & circulation of money & commodities aimed at the production and realization of surplus value.
People’s University
M – C – M’
Production for Use
Simple Circulation
Commodity Production & Exchange
Capital
C
Relative
C
Equivalent
*Definite relations
*Divide one into two
The Logico-Historical Development of
Commodity Production
C
Use-value
Value
Exchange-value in reality. Its use-value exists only ideally in the list of things for which it can be exchanged.
A use-value in reality. Its value is only expressed ideally in its price.
A use-value in reality. Its value is only expressed ideally in its price.
C
M
C
Ordinary
Commodities
Money Commodity
Ordinary
Commodities
M
C
M’
C–M–C
M-C–M’
C–C
C
Universal
Equivalent
Relative
Relative
“We have seen how money is changed into capital; how through capital surplus-value is made, and from surplus-value more capital. But the accumulation of capital presupposes surplus-value; surplus-value presupposes capitalistic production; capitalistic production presupposes the preexistence of considerable masses of capital and of labour power in the hands of producers of commodities. The whole movement, therefore, seems to turn in a vicious circle, out of which we can only get by supposing a primitive accumulation (previous accumulation of Adam Smith) preceding capitalistic accumulation; an accumulation not the result of the capitalistic mode of production, but its starting point. … In themselves money and commodities are no more capital than are the means of production and of subsistence. They want transforming into capital. But this transformation itself can only take place under certain circumstances…”
Marx, Capital, Vol. 1, Ch. 26
Ground of Capital
i.e., Simple Circulation
Condition of Capital
Appearance of Capital
?
Capital requires a special commodity that, when consumed by the capitalist, generates more labour than it cost to produce it.
That special commodity, labour-power, must appear on the market for sale.
C
M
C
M
C
M’
Essence of Capital
M
C
M’
C’
…
…
P
MP
LP
~The Historical Facts of~
~Primitive Accumulation~
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Philosophy PHIL 0002
Production of raw materials
Replacing existing property relations
Creating a proletariat
Expanding the proletariat
Accumulation of surplus value
People’s University
Organizer School
1500s
1600s
1700s
1800s
The Industrial Revolution
1760-1840
The American Revolution
1776
The “Glorious”
Revolution
1688
The “Discovery” of the Americas
1492
The Battle of Tenkadibou
1591
The Fall of Constantinople
1453
The Paris Commune
1871
The Haitian Revolution
1791 to 1804
The French Revolution
1789-1799
The Technological Revolution
(or the Second Industrial Revolution)
1870-WW1
English Class Conflict: the English Civil War (1642-1651) and the beheading of King Charles in 1649, the Republican Interregnum period of Oliver Cromwell, the restoration of the Monarchy in 1660, and finally… ↓
The American Civil War
1861-1865
The Thirty Years War
1618-1648
The Jamestown, Virginia Colony
1607
The Publication of Malleus Maleficarum
1486
The Peak of the Great Witch Hunt
1580 and 1630
Peasant Uprisings: Parliamentary enclosures of the English common lands began in 1604 and proceeded until the early 20th century. This led to uprisings by peasants including the Kett’s Rebellion, the Midland Revolts, the Newton Rebellion, the Western Rising, etc.
King Philip's War & Bacon’s Rebellion
1675-1678
Constant Capital
The value of the means of production (i.e., the tools and the raw materials) used up in the production of the commodity.
Variable
Capital
The value of the labour-power (i.e., the tools and the raw materials) used up in the production of the commodity.
Surplus
Value
The surplus value embodied in the commodity.
People’s University
Organizer School
C
V
S
Labour-Power (V)
Objects
of Labour
Instruments
of Labour
Products of Labour
💥
The Labour Process
The Forces of Production
The life process of society as an organic whole
C
Constant Capital
The value of the means of production (i.e., the tools and the raw materials) used up in the production of the commodity.
Variable
Capital
The value of the labour-power (i.e., the tools and the raw materials) used up in the production of the commodity.
Surplus
Value
The surplus value embodied in the commodity.
People’s University
Organizer School
C
V
S
Necessary Time (V)
The Rate of Surplus Value
(Degree of Exploitation)
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May 19, 2025
Organizer School
+
Surplus Time (S)
V & S
S
V
Necessary Labour (Paid)
Surplus Labour (Unpaid)
The Value of Labour-Power (i.e. Wages)
Surplus Value (i.e. Profit)
Working Day
*Variables V and S are all measured in labour-time.
Variable Capital & Surplus Value
A
C
B
Relative
Absolute
~Rate vs. Mass~
People’s University
Why does the mass of surplus value tend to increase over time?
M–C…P…C’–M’
M–C…P…(C+c)–(M+m)
Period 2:
In simple reproduction…
M–C…P…(C+c)–(M+m)
Period 1:
(M+m)–(C+c)…P…(C+c)+(c+c)–(M+m)+(m+m)
Period 2:
In expanded reproduction…
The capitalist uses all of the surplus, “m,” on their individual consumption.
The capitalist uses all (or even some) of the surplus, “m,” to expand their production.
March 30, 2025
People’s University
Organizer School
Simple Reproduction
Expanded Reproduction
Constant Capital
The value of the means of production (i.e., the tools and the raw materials) used up in the production of the commodity.
Variable
Capital
The value of the labour-power (i.e., the tools and the raw materials) used up in the production of the commodity.
Surplus
Value
The surplus value embodied in the commodity.
People’s University
May 19, 2025
Organizer School
C
V
S
Labour-time in the means of production (V)
The Organic Composition of Capital
People’s University
May 19, 2025
Organizer School
+
Time to (re)produce labour-power
C & V
C
V
Dead Labour
Living Labour
The Value of the Means of Production
The Value of Labour-Power
The Cost-Price of Capital
*Variables C and V are all measured in labour-time.
Constant Capital & Variable
A
C
B
~The Organic Composition of Capital~
March 30, 2025
People’s University
“On the side of value, it is determined by the proportion in which it is divided into constant capital [c] or value of the means of production, and variable capital [v] or value of labour power, the sum total of wages. On the side of material, as it functions in the process of production, all capital is divided into means of production and living labour power. This latter composition is determined by the relation between the mass of the means of production employed, on the one hand, and the mass of labour necessary for their employment on the other. I call the former the value-composition, the latter the technical composition of capital.
Between the two there is a strict correlation. To express this, I call the value composition of capital, in so far as it is determined by its technical composition and mirrors the changes of the latter, the organic composition of capital.”
Why does the organic composition of capital tend to increase over time?
C
V
Labour-time in the means of production (C)
The Rate of Profit
People’s University
May 19, 2025
Organizer School
+
Surplus Time (S)
+
C & V & S
S
C+V
Dead Labour
Surplus Living Labour
The Value of Means of Production
Surplus Value
The Value of a Capitalistically Produced Commodity
*Variables C, V, and S are all measured in labour-time.
Constant Capital & Variable Capital & Surplus Value
A
D
C
B
Necessary Living Labour
Necessary Time (V)
The Value of Labour-Power
Expanded Reproduction
(i.e., an absolute increase in variable capital, v)
A Rising Organic Composition of Capital
(i.e. a relative decrease in variable capital, v, compared to constant capital, c)
The Progressive Production of a Relative Surplus Population
(i.e., formation of an
Industrial Reserve Army)
The greater the social wealth, the functioning capital, the extent and energy of its growth, [the development of the accumulation process] and, therefore, also the absolute mass of the proletariat [variable capital, v] and the productiveness of its labour [the organic composition of capital, c/v], the greater is the industrial reserve army. The same causes which develop the expansive power of capital, develop also the labour power at its disposal. The relative mass of the industrial reserve army increases therefore with the potential energy of wealth. But the greater this reserve army in proportion to the active labour army, the greater is the mass of a consolidated surplus population, whose misery is in inverse ratio to its torment of labour. The more extensive, finally, the lazarus layers of the working class, and the industrial reserve army, the greater is official pauperism. This is the absolute general law of capitalist accumulation.
~The General Law
of Capitalist Accumulation
V rises
C rises faster than V
“Lastly, the extraordinary productiveness of modern industry, accompanied as it is by both a more extensive and a more intense exploitation of labour-power in all other spheres of production, allows of the unproductive employment of a larger and larger part of the working-class, and the consequent reproduction, on a constantly extending scale, of the ancient domestic slaves under the name of a servant class, including men-servants, women-servants, lackeys, etc.”
“...in all spheres, the increase of the variable part of capital, and therefore of the number of labourers employed by it, is always connected with violent fluctuations and transitory production of surplus population, whether this takes the more striking form of the repulsion of labourers already employed, or the less evident but not less real form of the more difficult absorption of the additional labouring population through the usual channels.”
Marx, Capital
Vol. 1, Ch. 15
Marx, Capital
Vol. 1, Ch. 25
Constant Capital
The value of the means of production (i.e., the tools and the raw materials) used up in the production of the commodity.
Variable
Capital
The value of the labour-power (i.e., the tools and the raw materials) used up in the production of the commodity.
Surplus
Value
The surplus value embodied in the commodity.
People’s University
May 19, 2025
Organizer School
C
V
S
Labour-time in the means of production (C)
The Rate of Profit
People’s University
May 19, 2025
Organizer School
+
Surplus Time (S)
+
C & V & S
S
C+V
Dead Labour
Surplus Living Labour
The Value of Means of Production
Surplus Value
The Value of a Capitalistically Produced Commodity
*Variables C, V, and S are all measured in labour-time.
Constant Capital & Variable Capital & Surplus Value
A
D
C
B
Necessary Living Labour
Necessary Time (V)
The Value of Labour-Power
~Surplus into Profit
People’s University
Surplus
Value
Profit
Rate of Surplus
Value
Rate of Profit
“The transformation of surplus-value into profit must be deduced from the transformation of the rate of surplus-value into the rate of profit, not vice versa. And in fact it was rate of profit which was the historical point of departure. Surplus-value and rate of surplus-value are, relatively, the invisible and unknown essence that wants investigating, while rate of profit and therefore the appearance of surplus-value in the form of profit are revealed on the surface of the phenomenon.”
– Marx, Capital Vol. 3
Essence
Appearance
The Organic Composition of Capital
*With respect to turnover, the rate of profit is annualized (i.e., the rate of profit = profit per turnover x turnovers per year).
~Law of Value~
People’s University
The exchange of commodities is regulated by the principle of equivalent for equivalent.
A Rising
Organic Composition of Capital
(i.e. a relative decrease in variable
capital, V, compared to constant capital, C)
A Relatively Constant
Rate of Surplus Value
(i.e., a consistent relationship between variable capital, V, and surplus value, S)
A Tendential Fall in
the Rate of Profit
(i.e., the rising intensity of competition & concentration of capital)
This mode of production produces a progressive relative decrease of the variable capital as compared to the constant capital, and consequently a continuously rising organic composition of the total capital. The immediate result of this is that the rate of surplus-value, at the same, or even a rising, degree of labour exploitation, is represented by a continually falling general rate of profit. (We shall see later why this fall does not manifest itself in an absolute form, but rather as a tendency toward a progressive fall.) The progressive tendency of the general rate of profit to fall is, therefore, just an expression peculiar to the capitalist mode of production of the progressive development of the social productivity of labour. This does not mean to say that the rate of profit may not fall temporarily for other reasons. But proceeding from the nature of the capitalist mode of production, it is thereby proved logical necessity that in its development the general average rate of surplus-value must express itself in a falling general rate of profit.
~The Law of the Tendency of the Rate of Profit to Fall
The Rate of Profit
People’s University
The Rate of Profit
At its logico-historical limit
S
+
V
C
Constant
Rate of Surplus
Rising
Organic Composition
~The Law of the Tendency of the Rate of Profit to Fall
1
+
1
1
3
+
3
6
5
+
5
11
7
+
7
16
9
+
9
21
…
,
,
,
,
0.5
0.333…
0.3125
0.304…
0.3
0
+
0
1
Labour-time in the means of production (C)
The Rate of Profit
People’s University
May 19, 2025
Organizer School
+
Surplus Time (S)
+
C & V & S
S
C+V
Dead Labour
Surplus Living Labour
The Value of Means of Production
Surplus Value
The Value of a Capitalistically Produced Commodity
*Variables C, V, and S are all measured in labour-time.
Constant Capital & Variable Capital & Surplus Value
A
D
C
B
Necessary Living Labour
Necessary Time (V)
The Value of Labour-Power
Labour-time embodied in the means of production (C)
The Rate of Profit
People’s University
May 19, 2025
Organizer School
+
C & V & S
S
C+V
Dead Labour
The Value of a Capitalistically Produced Commodity
*Variables C, V, and S are all measured in labour-time.
Constant Capital & Variable Capital & Surplus Value
A
D
C
B
Living Labour
Labour Time
(V+S)
~The Division of Profit
People’s University
Industrial Capital
Merchants Capital
Classes:
Revenues:
Interest-Bearing Capital
Landed Property
Commercial
Capital
Money-Dealing
Capital
Profits:
Gross Profit = Profit of Enterprise + Interest
Surplus Profit
Ground Rent
Interest
*Deduction from Gross Profit
Profit of Enterprise
Industrial Profit, P
Commercial Profit, C
Money-Dealing Profit, M
Income related to…
productive
capital
commodity
capital
money
capital
Review
The Law of Value: The value of a commodity is determined by the socially necessary labour time required to produce it under average conditions of production. Competition pushes producers toward these average conditions, and prices fluctuate around this underlying value, regulating how labour and resources are allocated in the economy.
The General Law of Capitalist Accumulation:
As capital accumulates, the total mass of capital and the scale of production expands. The absolute number of workers increases, but the employment of labour grows at a slower rate than capital, producing a relative surplus population (the industrial reserve army of labour).
The Tendency of the Rate of Profit to Fall: As capitalism develops, productivity increases: less living labour is required to produce the same use-value due to technology. Machinery transfers existing value, but only living labour creates new value and surplus value. As the share of labour declines relative to total capital, the rate of profit tends to fall. This can lead to crises of overaccumulation, where too much capital, labour, and commodities exist to be profitably realized.