General Law of Capitalist Accumulation

The law that capitalist accumulation inevitably leads to the accumulation of wealth at one pole and accumulation of misery at the opposite pole. The ultimate result of this law is that “the death knell of capitalism sounds”.

The purpose of production in pursuit of surplus-value drives capitalism to continuously expand reproduction. The expanded reproduction is a typical phenomenon of capitalism. In order to expand reproduction, there must be accumulation of capital, i.e., transformation of surplus-value into capital. Competition forces capitalists to expand their capital to maintain it, and they can only expand their capital by continuous accumulation. To achieve accumulation of capital, on the one hand, it is necessary to have additional means of production on the market, and on the other hand, additional labor-power on the market as well as the means of life to sustain additional labor-power. The expansion of capitalist reproduction is both an expansion of the scale of production and an expansion of the capitalist relations of production and a deepening of the exploitation of laborers. Capitalist expanded reproduction and accumulation of capital have had a great influence on the working class.

One of the most important factors in the study of the influence of accumulation of capital on the fate of the working class is “the composition of capital and the changes it undergoes in the course of the process of accumulation.”

The composition of capital can be studied from two aspects: physical form and value form.

The physical form of capital consists of a certain amount of means of production and laborers. The ratio of the means of production to the laborers who use them is called the technical composition of capital. With the capitalist development, the adoption of better machines and production methods, the portion of capital spent on the means of production continuously grows. The number of machines and raw materials per worker, on average, continuously increases, and the technical composition of capital continuously increases. This is the inevitable trend of the development of productive forces.

The composition of capital in the form of value refers to the ratio of constant capital (the value of means of production) to variable capital (the value of labor-power).

The technical composition of capital is closely bound up with its value composition. In general, a change in the technical composition of capital causes a change in the value composition of capital. Marx called the value composition of capital, which is determined by its technical composition and mirrors the changes of the latter, the organic composition of capital.

In general, at the current stage of capitalist development, under the influence of the scientific and technological revolution, the organic composition of capital is continuously increasing.

Under capitalist conditions, the increase in the organic composition of capital and the decrease in the proportion of variable capital in the total capital means that the living labor employed by capital, in relation to the means of production, is continuously decreasing. This leads to a relative reduction in the demand for labor. The growth of the demand for labor is slower than the growth of aggregate social capital and the scale of the means of production, however, the supply of labor-power in the labor market increases. This is because the market competition has forced small producers to go bankrupt and bankrupt small producers have to find employment; and the development of machinery has created conditions for the employment of women and children; moreover, the working population has also increased due to natural growth. Moreover, the use of more efficient production technology and equipment, the intensification of labor and the lengthening of the working-day allowed the capitalist, given the scale of production, to discharge some of their workers and push them into the reserve army of labor.

Therefore, the mechanism of accumulation of capital and the increase in the organic composition of capital have created a relation of demand and supply of labor-power unfavorable to the working class, and a significant portion of the workers inevitably face unemployment. Accumulation of capital inevitably produces a relative surplus population—the law of population peculiar to capitalism.

Industrial reserve army and relative surplus population are not only consequences of capitalist accumulation, but also conditions of capitalist accumulation. In times of economic crisis when production declines, the number of unemployed workers increases sharply. When the economy is at a high stage, capitalists recruit the needed workers from among the unemployed workers. As Lenin pointed out, the industrial reserve army “is an indispensable attribute to the capitalist economy, which could neither exist nor develop without it.”

In the process of accumulation of capital, on the one hand, capitalists take hold of more and more wealth; on the other hand, due to technological progress, the organic composition of capital increases and a relative surplus population emerges, which worsens the condition and impoverishes the working class. Marx summarized it as the general law of capitalist accumulation. He 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… 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 its torment of labor. 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.” “Accumulation of wealth at one pole is, therefore, at the same time accumulation of misery, agony of toil, slavery, ignorance, brutality, mental degradation, at the opposite pole, i.e., on the side of the class that produces its own product in the form of capital.”

Marx pointed out the historical tendency of capitalist accumulation. He said: “Centralization of the means of production and socialization of labor at last reach a point where they become incompatible with their capitalist integument. Thus integument is burst asunder. The knell of capitalist private property sounds. The expropriators are expropriated.” He saw in the historical tendency of accumulation of capital that the future society will “re-establish the individual property [of the producer] based on the acquisitions of the capitalist era: i.e., on co-operation and the possession in common of the land and of the means of production.”