Capital: A Critique of Political Economy - Essay Example

Capital al Affiliation: Capital Capital can be used to mean a number of things depending on a given context. Generally, it refers toall the financial resources that are available to be used at either personal or company levels. It is completely different from money since money is solely used to buy goods and services for the purposes of consumption. On the other hand, capital is durable and it is used in generation of wealth through investments. For instance, patents, brand names, automobiles and software are all inputs that are used to create wealth. Apart from production, capital can also be rented for a particular fee; either monthly or year in order to generate wealth. Moreover, capital can never exist not unless it is produced. Thus, to create capital, it must be combined with labor; in exchange with money and skill (Brewer, 1984). Capital can be claimed and its ownership transferred to a different individual. Hence, most governments have restrictions or rather regulations that limit how capital is used. Thus, this paper presents different forms of capital; constant capital and variable capital. In addition, it will discuss the surplus value in relation to capital accumulation. According to Marx (2004) constant capital refers to the part of capital that is fully represented by all the means of production, the raw materials, the auxiliary materials and labor instruments which do not undergo value alteration in the process of production. Thus, it includes the money outlay on fixed assets such as buildings, machinery and land, raw materials such as the externally purchased services and incident expenses. In addition, constant capital can be described as the proportion of capital which is invested and includes the circulating constant capital and the fixed capital. Fixed capital is a portion of constant capital that has been advanced and functions as the factors of production, in the labor category. Hence, a finished product alongside the materials that were used to create it are brought out from the production process and passed into circulation (Marx, 2004). However, the labor instruments remain intact in the sphere of production since their function expects them to be static. These static instruments that remain behind after a production procedure is complete are thus referred to as fixed capital which passes part of its value to the final product due to wear and tear. The value of fixed capital steadily decreases to a point where the labor instrument is completely worn out as a result of repeated series of production processes. The longer a labor instrument lasts, the longer its value of capital remains fixed. Circulating constant capital, on the other hand, refers to the portion of constant capital whose value is in circulation. This takes place slowly in bits as its value is passed on to the final product which is meant to circulate as a commodity. In the entire process, a portion of its value remains fixed and independent of the product which it produces. Thus, all the other parts of the materials that are formed by a way of contrast in production are the ones termed as circulating capital (Harvey, 2006). According to Marx (1996), Variable capital refers to the portion of capital that is represented by the labor power and undergoes value alteration in the production process. This form of capital reproduces an equivalent of its value or even excess (surplus value) that might vary according to time or season. It is invested in wages and the value that is created from the labor process in a frame of the necessary time of labor is what a worker is entitled to. Thus, this is the sole investment that creates new values since a worker is in a position to produce relatively more than what he or she needs in order to survive in the society. In addition, variable capital transforms from a constant capital to a magnitude that is variable. Thus, variable capital presents itself as an element of capital, from the labor process’ point of view, as a subjective factor and a means of production. Human labor has always been deemed as the source of economic value. A capitalist will always pay lesser amounts to the workers; less than that value which has been added to the final products by their labor. This amount paid to a worker is only sufficient to maintain one at subsistence levels. Thus, according to the Marxian theory, the total worth of the worker’s labor only accounts for a portion which is equivalent to the workers’ subsistence means. The remaining labor is surplus and the value which is produced from this is the surplus value. Therefore, to accumulate capital or rather make profits, a laborer is exploited in order to obtain a surplus value (Marx, 2004). The appropriated product by a capitalist is referred to as the use value which is produced simply because they are material substratum of exchange value. Hence in order to create a surplus value, a capitalist must work towards creating a use-value (a commodity to be sold) and a commodity whose value is higher than the total of all the cost of production used in the entire process. There are a number of ways through which employers have managed to squeeze more and more surplus value out of laborers using several ways: By increasing the duration and intensity of work, through maximization of profit and productivity by lowering the cost of labor and finally through an immense expansion of capitalism from a relative surplus perspective (Harvey, 2006). Capital circulation model M-C…P…C’-M takes place in three stages. The first stage presents a capitalist who appears as a buyer of the commodity in the labor market. His or her money is solely transformed into products or rather go through a M-C circulation process. The second stage is a productive utilization of the purchased products by a capitalist. He or she acts in a capacity of a capitalist producer of the products. The result is always a product of a higher value than the elements that make it. In the third stage, the capitalist gets back into the market as a seller whose products is exchanged for money or undergoes a circulation procedure C-M. Thus, competition and the reserve army of labor are relatively crucial since the validity of the army reserve law is directly linked to performance or rather the capitalist process of production. Every stage in such systems modifies all operations of the law. Therefore, surplus value’s increase due to maximization of productivity and profit margins by lowering the labor cost is totally different from the expansion of capitalism from relative surplus value since the expansion of capitalism has no effect on the cost of labor unlike maximization of capital through reducing the cost of labor. This aspect is further explained by Taylorism since it deals with management of tasks or jobs (Marx, 1996). In conclusion, the rate of surplus value (rate of surplus-value, s/v = (surplus labor)/(necessary labor)) is referred to as the exact expression representing a degree of labor power exploitation by the capital or capitalist. This paper presents various aspects of capital accumulation, how it is created by different forms of capital and how they can determine or rather affects the total surplus value. Thus, capital is a relatively vital factor of production as it gives value to the final product. Constant capital and variable capital are two forms of capital which are mentioned above. The two are great weapons in accumulation of capital since they are among the determinants of the surplus value. In addition, the M-C…P…C-M is an operational model that is used to show how capital can be accumulated (Marx, 2004). Labor is a factor of production which is the most affected when it comes to capital accumulation. In most circumstances, the wages or rather the cost of labor is always reduced to a level where a surplus value would be created. This surplus value and accumulated profits are what we refer to accumulated capital in the long run. There are ways through which surplus value is created. These ways differ on the impact they cause to laborers. To start with, the method of increasing work duration and intensity is one of the methods that increase the surplus value. However, this method has an impact on the labor force. Secondly, maximization of profits and productivity by reducing the cost of labor and increase the relative surplus value is a method that impact negatively on labor force. Finally, an immense expansion of capitalism from the relative surplus value also impact on labor. Thus, labor is at the center of capital accumulation. References Brewer, A. (1984). A Guide to Marx’s Capital. CUP Archive. Print Harvey, D. (2006). The Limits to Capital. The University of California. Print Marx, K. (1996). Das Kapital, vol. 1. Regnery Gateway. Print Marx, K. (2004). Capital: A Critique of Political Economy. Penguin Books Limited. Print Read More