The Dialectics of Capital

In the three volumes of Capital, Marx provides a brilliant example of how the dialectical method can be used to analyse the most fundamental processes in society. By so doing, he revolutionised the science of political economy, a fact which is not denied even by those economists whose views sharply conflict with those of Marx. So fundamental is the dialectical method to Marx’s work, that Lenin went so far as to say that it was not possible to understand Capital, and especially its first chapter, without having read the whole of Hegel’s Logic! This was undoubtedly an exaggeration. But what Lenin was driving at was the fact that Marx’s Capital is itself a monumental object-lesson on how dialectics ought to be applied.

"If Marx did not leave behind him a ‘Logic’ (with a capital letter), he did leave the logic of Capital, and this ought to be utilised to the full in this question. In Capital, Marx applied to a single science logic, dialectics and the theory of knowledge of materialism [three words are not needed: it is one and the same thing] which has taken everything valuable in Hegel and developed it further." (41)

What method did Marx use in Capital? He did not impose the laws of dialectics upon economics but derived them from a long and painstaking study of all aspects of the economic process. He did not put forward an arbitrary schema and then proceed to make the facts fit into it but set out to uncover the laws of motion of capitalist production through a careful examination of the phenomenon itself. In his Preface to the Critique of Political Economy, Marx explains his method:

"I am omitting a general introduction which I had jotted down because on closer reflection any anticipation of results still to be proved appears to me to be objectionable, and the reader who on the whole desires to follow me must be resolved to ascend from the particular to the general." (42)

Capital represented a breakthrough, not only in the field of economics, but for social science in general. It has a direct relevance to the kind of discussions which are taking place among scientists at the present time. When Marx was alive, this discussion had already begun. At that time, scientists were obsessed with the idea of taking things apart and examining them in detail. This method is now referred to as "reductionism," although Marx and Engels, who were highly critical of it, called it the "metaphysical method." The mechanicists dominated physics for 150 years. Only now is the reaction against reductionism gathering steam. A new generation of scientists is setting itself the task of overcoming this heritage, and moving on to the formulation of new principles, in place of the old approximations.

It was thanks to Marx that the reductionist tendency in economics was routed in the middle of the last century. After Capital, such an approach was unthinkable. The "Robinson Crusoe" method of explaining political economy ("imagine two people on a desert island…") occasionally resurfaces in bad school text-books and vulgar attempts at popularisation, but cannot be taken seriously. Economic crises and revolutions do not take place between two individuals on a desert island! Marx analyses the capitalist economy, not as the sum-total of individual acts of exchange, but as a complex system, dominated by laws of its own which are as powerful as the laws of nature. In the same way, physicists are now discussing the idea of complexity, in the sense of a system in which the whole is not just a collection of elementary parts. Of course, it is useful to know, where possible, the laws which govern each individual part, but the complex system will be governed by new laws which are not merely extensions of the previous ones. This is precisely the method of Marx’s Capital—the method of dialectical materialism.

Marx begins his work with an analysis of the basic cell of capitalist economy—the commodity. From this he explains how all the contradictions of capitalist society arise. Reductionism treats things like whole and part, particular and universal as mutually incompatible and exclusive, whereas they are completely inseparable, and interpenetrate and determine each other. In the first volume of Capital, Marx explains the twofold nature of commodities, as use-values and exchange-values. Most people see commodities exclusively as use-values, concrete, useful objects for the satisfaction of human wants. Use-values have always been produced in every type of human society.

However, capitalist society does strange things to use-values. It converts them into exchange-values—goods which are produced not directly for consumption, but for sale. Every commodity thus has two faces—the homely, familiar face of a use-value, and the mysterious, hidden face of an exchange-value. The former is directly linked to the physical properties of a particular commodity (we wear a shirt, drink coffee, drive a car, etc.). But exchange value cannot be seen, worn or eaten. It has no material being whatsoever. Yet it is the essential nature of a commodity under capitalism. The ultimate expression of exchange-value is money, the universal equivalent, through which all commodities express their value. These little pieces of green paper have no relation whatever to shirts, coffee or cars as such. They cannot be eaten, worn or driven. Yet such is the power they contain, and so universally is this recognised, that people will kill for them.

The dual nature of the commodity expresses the central contradiction of capitalist society—the conflict between wage-labour and capital. The worker thinks he sells his labour to the employer, but in fact what he sells is his labour power, which the capitalist uses as he sees fit. The surplus value thus extracted is the unpaid labour of the working class, the source of the accumulation of capital. It is this unpaid labour which maintains all the non-working members of society, through rent, interest, profits and taxation. The class struggle is really the struggle for the division of this surplus value.

Marx did not invent the idea of surplus value, which was known to previous economists like Adam Smith and Ricardo. But, by disclosing the central contradiction involved in it, he completely revolutionised political economy. This discovery can be compared to a similar process in the history of chemistry. Until the late 18th century, it was assumed that the essence of all combustion consisted in the separation from burning substances of a hypothetical thing called phlogiston. This theory served to explain most of the known chemical phenomena at the time. Then in 1774, the English scientist Joseph Priestley discovered something which he called "dephlogisticated air," which was later found to disappear whenever a substance was burned in it.

Priestley had, in fact, discovered oxygen. But he and other scientists were unable to grasp the revolutionary implications of this discovery. For a long time afterwards they continued to think in the old way. Later, the French chemist Lavoisier discovered that the new kind of air was really a chemical element, which did not disappear in the process of burning, but combined with the burnt substance. Although others had discovered oxygen, they did not know what they had discovered. This was the great discovery of Lavoisier. Marx played a similar role in political economy.

Marx’s predecessors had discovered the existence of surplus value, but its real character remained shrouded in obscurity. By subjecting all previous theories, beginning with Ricardo, to a searching analysis, Marx discovered the real, contradictory nature of value. He examined all the relations of capitalist society, starting with the simplest form of commodity production and exchange, and following the process through all its manifold transformations, pursuing a strictly dialectical method.

Marx showed the relation between commodities and money, and was the first one to provide an exhaustive analysis of money. He showed how money is transformed into capital, demonstrating how this change is brought about through the buying and selling of labour power. This fundamental distinction between labour and labour power was the key that unlocked the mysteries of surplus value, a problem that Ricardo had been unable to solve. By establishing the difference between constant and variable capital, Marx was able to trace the entire process of the formation of capital in detail, and thus explain it, which none of his predecessors were able to do.

Marx’s method throughout is rigorously dialectical, and follows quite closely the main lines traced by Hegel’s Logic. This is explicitly stated in the Afterword to the Second German edition, where Marx pays a handsome tribute to Hegel:

"Whilst the writer pictures what he takes to be actually my method, in this striking and [as far as concerns my own application of it] generous way, what else is he picturing but the dialectic method?

"Of course the method of presentation must differ in form from that of inquiry. The latter has to appropriate the material in detail, to analyse its different forms of development, to trace out their inner connection. Only after this work is done, can the actual movement be adequately described. If this is done successfully, if the life of the subject-matter is ideally reflected as in a mirror, then it may appear as if we had before us a mere a priori construction…

"The mystifying side of Hegelian dialectic I criticised nearly thirty years ago, at a time when it was still the fashion. But just as I was working at the first volume of Das Kapital, it was the good pleasure of the peevish, arrogant, mediocre Epigonoi who now talk large in cultured Germany, to treat Hegel in the same way as the brave Moses Mendelssohn in Lessing’s time treated Spinoza, i.e., a ‘dead dog.’ I therefore openly avowed myself the pupil of that mighty thinker, and even here and there, in the chapter on the theory of value, coquetted with the modes of expression peculiar to him. The mystification which dialectic suffers in Hegel’s hands, by no means prevents him from being the first to present its general form of working in a comprehensive and conscious manner. With him it is standing on its head. It must be turned right side up again, if you would discover the rational kernel within the mystical shell.

"In its mystified form, dialectic become the fashion in Germany, because it seemed to transfigure and to glorify the existing state of things. In its rational form it is a scandal and abomination to bourgeoisdom and its doctrinaire professors, because it includes in its comprehension and affirmative recognition of the existing state of things, at the same time also, the recognition of the negation of that state, of its inevitable breaking up; because it regards every historically developed social form as in fluid movement, and therefore takes into account its transient nature not less than its momentary existence; because it lets nothing impose upon it, and is in its essence critical and revolutionary.