Accumulation of Capital

The transformation of surplus-value into capital, i.e., capitalization. Its essence is that in the process of expanded capitalist reproduction, the capitalist uses the surplus-value appropriated without compensation to continuously augment capital, intensify the exploitation of wage-labor, and appropriate more and more surplus-value.

The capitalist divides surplus-value into two parts. A part of it is used for personal consumption, and a part of it is transformed into capital to buy additional means of production and labor-power required to expand production. Therefore, surplus-value is the source of accumulation of capital, and the accumulation of capital is the precondition for the expanded capitalist reproduction.

The inevitability of the accumulation of capital lies in: for one thing, it has an intrinsic driving force, i.e., the law of surplus-value. The capitalist’s fanatical pursuit of surplus-value drives him to continuously accumulate capital. Secondly, it has an extrinsic pressure, i.e., the law of capitalist competition and the anarchy of production. In capitalist competition, big capital is always in a favorable position. In order to preserve itself in the competition, defeat its rivals and be in an advantageous position, the capitalist cannot but continuously accumulate and expand the scale of capital. The fierce competition in capitalist reproduction forces the capitalists to continuously accumulate capital.

The scale of accumulation of capital depends on the factors that determine the mass of surplus-value. The chief factors that determine the mass of surplus-value are: first, the degree of the rate of surplus-value. The higher the rate of surplus-value, the more surplus-value is obtained from the same amount of variable capital, and the larger the scale of accumulation of capital; and conversely, the opposite is true. Second, the level of the productivity of labor of society. A fall in the productivity of labor and a fall in the value per unit of commodity produce two results: lower value of labor-power, higher rate of surplus-value, and accelerated accumulation of capital; the same amount of variable capital can drive more labor-power, the same amount of constant capital embodied in more means of production, producing more surplus-value and increasing accumulation of capital. Third, the difference between the capital employed and the capital consumed. The capital employed is the capital that is fully functional in the production process; the capital consumed is the part of the capital-value that is gradually transferred to the new product. The extent of the difference between the capital employed and the capital consumed depends on the number of years and the quantity of the instruments of labor employed. The better the quality of the instruments of labor, the longer their service life and the greater their quantity, the greater the difference between the capital employed and the capital consumed. In the production process, the value of the instruments of labor is gradually transferred to the product, but its use-value continues to function as a whole in production, and thus it performs a gratuitous service for the capitalist, like air and natural forces. The greater the difference between the capital employed and the capital consumed, the more gratuitous service is rendered to the capitalist, and the greater the accumulation of capital. Fourth, the increase in the capital advanced. Under circumstances that the ratio of constant capital to variable capital and the rate of surplus-value are fixed, the more capital the capitalist advances, the more workers he exploits, the more surplus-value he obtains, and the more will the accumulation of capital increase.

The uninterrupted movement of accumulation of capital gives rise to two most obvious law-governed phenomena of reciprocal causality: first, the emergence of an industrial reserve army due to a continuous increase in the organic composition and increasing fall in the relative magnitude of variable capital caused by the investment in technical equipment; second, the increasing prevalence and intensification of the phenomenon of social polarization, and the accumulation of wealth on the side of the bourgeoisie and of misery on the side of the proletariat make the fundamental contradictions of the capitalist mode of production increasingly intense. The greater the social wealth, the functioning capital, the extent and energy of its growth, therefore also the absolute size of the proletariat and the productive powers of its labor, the greater is the industrial reserve army. The same causes which develop the expansive power of capital, also develop the disposable labor-power. The relative magnitude of the industrial reserve army thus increases with the potential energy of wealth. But the greater this reserve army in proportion to the active labor-army, the greater is the mass of a consolidated surplus population, whose misery is in inverse ratio to the amount of torture it has to undergo in the form of labor. The more extensive, finally, the pauperized sections of the working class and the industrial reserve army, the greater is official pauperism. This is the absolute and general law of capitalist accumulation. This law relentlessly reveals the inner contradiction between the working class and the capitalist class in capitalist society and its antagonistic and irreconcilable nature.