Theory of Accumulation of Capital

Marxist theory of the continuous transformation of surplus-value into capital. The transformation of surplus-value into capital is accumulation of capital. The scientific theory of accumulation of capital was founded by Marx. Before Marx, the classical bourgeois economists also conducted valuable studies on the question of accumulation of capital. For example, Adam Smith and David Ricardo held that the accumulation of capital is, different from the storage of money or commodities, only a deferral of consumption, where no increase in value takes place; accumulation of capital only takes place when money is used to employ workers to produce and bring back profits. However, they could not scientifically explain the source of accumulation of capital and regarded the thrift of capitalists as a means to increase the accumulation of capital; nor did they have a scientific theory of the organic composition of capital that could reveal the influence of the accumulation of capital on the condition of the working class. Based on his theory of surplus-value, Marx has exposed the secret of capital’s capability to extract unpaid labor and obtain surplus-value, explained both the transformation of surplus-value into capital and the emergence of capital from surplus-value, and created a scientific theory of accumulation of capital.

Marx’s theory of accumulation of capital consists mainly of the following: First, on the driving forces of accumulation of capital. On the one hand, the only purpose of capitalist production is to obtain as much surplus-value as possible. The expansion of the scale of production allows the capitalist to extract more surplus-value. Therefore, the unlimited hunger for surplus-value is the intrinsic driving force of the accumulation of capital. On the other hand, increasing market competitiveness is the extrinsic pressure for the capitalist to accumulate capital. The inner contradiction of the commodity shows that the individual capitalist who increases the productivity of labor will obtain an extra surplus-value and thus have an advantage in the market competition, and conversely may be eliminated from the market. Second, on the source of accumulation of capital. Surplus-value, i.e., the unpaid labor of the working class, is an important source of accumulation of capital. Without the surplus-value created by workers, capitalists cannot save capital for accumulation even if they do not eat or drink. Thus, the essence of accumulation of capital is that the capitalists use the accumulated surplus-value to further accumulate capital, expand reproduction, and then further appropriate more surplus-value. Third, on the means of accumulation of capital. Surplus-value is an important source of accumulation of capital, and the increase in the accumulation of capital depends on the increase in surplus-value. Therefore, the means of increasing accumulation of capital, i.e., the means for grabbing more surplus-value, include increasing the degree of exploitation of workers, i.e., increasing the intensity of labor and lengthening the labor-time and minimizing the wages of workers; increasing the productivity of labor, i.e., producing more products over the same period of time; expanding the difference between the capital consumed and the capital employed, with the fixed part of constant capital being employed for a longer period of time and its value being gradually transferred to new products only in proportion to the degree of wear and tear. The greater the accumulation of capital, the greater the difference between the capital employed and the capital consumed. In the same proportion as these instruments of labor serve as product-formers without adding value to the product, i.e., in the same proportion as they are wholly employed but only partly consumed, they perform, as we saw earlier, the same gratuitous service as the natural forces, water, steam, air, electricity, etc. Increasing the amount of the capital advanced, while the rate of surplus-value is constant, increases the capital advanced, increases the variable capital, and as the scale of production expands, the surplus-value will also increase. Fourth, on the general law of accumulation of capital. As the accumulation of capital increases, the capitalist increases the proportion of constant capital and decreases the proportion of variable capital by improving technology and increasing the productivity of labor, which leads to a continuous increase in the organic composition of capital. With the continuous increase in the organic composition of capital, capital’s demand for labor-power is relatively or even absolutely reduced, leaving a large number of workers unemployed. Marx pointed out: “The greater the social wealth, the functioning capital, the extent and energy of its growth, and, therefore, also the absolute mass of the proletariat and the productiveness of its labor, the greater is the industrial reserve army… The relative mass of the industrial reserve army increases therefore with the potential energy of wealth.” The general law of accumulation of capital is thus the accumulation of the wealth of the bourgeoisie on one side and the accumulation of the pauperization of the proletariat on the other.

Based on the analysis of the source and essence of accumulation of capital, the theory of accumulation of capital has explained the organic composition of capital and its changes, and revealed the general law of accumulation of capital. The theory of accumulation of capital is an important part of the theoretical system of Marxist political economy, and the formation of the theory of accumulation of capital is an important hallmark of the completion of the theoretical system of Marxist political economy.