Was Marx wrong about Capitalism?

[peaccenicked]

I will start with a quote from Das Kapital,
'At their birth the great banks, decorated with national titles, were only associations of private speculators, who placed themselves by the side of governments, and thanks to the privileges they received, were in a position to advance money to the state…the bank of England began with lending its money to the government at 8%; at the same time it was empowered by parliament to coin money out of the same capital, by lending it again to the public in the form of bank notes. It was not long ere this credit money, made by the bank itself, became the coin in which the Bank of England made its loans to the state, and paid, on account of the state, the interest on the public debt. It was not enough that the bank gave with one hand and took back with the other; it remained, even whilst receiving, the eternal creditor of the nation down to the last shilling advanced.’ Chapter 31.

Up to this point, I was under the impression that M-C-M was the dominant form of capitalist existence, this paragraph seems to contradict that and suggest that it is M-M. or M-M[dash]

Today we have seen that there is as much as three times the ammount of money out there than the worlds GDP.
This suggests that commodities are not the basic unit of capitalism but exchange values in themselves. Commodities in themselves are produced under industrial capitalism while the dominant mode of product is actually empty. Virtual numbers in cyberspace.
Yet these numbers are used to manipulate industrial capital and direct it towards cheap labour.
Correct me if I am wrong but Marx seems to suggest that finance capital services industrial capital but now it definitely appears the other way round,
while implying that finance is really in control in this paragraph I quoted above.

"The great part that the public debt, and the fiscal system corresponding with it, has played in the capitalisation of wealth and the expropriation of the masses, has led many writers, like Cobbett, Doubleday and others, to seek in this, incorrectly, the fundamental cause of the misery of the modern peoples."

How true is that if financial capital is the dominant mode, and the cost of Brown's recent bailout is reckoned at £16,000 per head.

[Die Neue Zeit]

Nope - M-C-M - money into commodities back into money (or, alternatively but not identically, $$$ into capital back into $$$) :)

[bretty]

I will start with a quote from Das Kapital,
'At their birth the great banks, decorated with national titles, were only associations of private speculators, who placed themselves by the side of governments, and thanks to the privileges they received, were in a position to advance money to the state…the bank of England began with lending its money to the government at 8%; at the same time it was empowered by parliament to coin money out of the same capital, by lending it again to the public in the form of bank notes. It was not long ere this credit money, made by the bank itself, became the coin in which the Bank of England made its loans to the state, and paid, on account of the state, the interest on the public debt. It was not enough that the bank gave with one hand and took back with the other; it remained, even whilst receiving, the eternal creditor of the nation down to the last shilling advanced.’ Chapter 31.

Up to this point, I was under the impression that C-M-C was the dominant form of capitalist existence, this paragraph seems to contradict that and suggest that it is M-M. or M-M[dash]

Today we have seen that there is as much as three times the ammount of money out there than the worlds GDP.
This suggests that commodities are not the basic unit of capitalism but exchange values in themselves. Commodities in themselves are produced under industrial capitalism while the dominant mode of product is actually empty. Virtual numbers in cyberspace.
Yet these numbers are used to manipulate industrial capital and direct it towards cheap labour.
Correct me if I am wrong but Marx seems to suggest that finance capital services industrial capital but now it definitely appears the other way round,
while implying that finance is really in control in this paragraph I quoted above.

"The great part that the public debt, and the fiscal system corresponding with it, has played in the capitalisation of wealth and the expropriation of the masses, has led many writers, like Cobbett, Doubleday and others, to seek in this, incorrectly, the fundamental cause of the misery of the modern peoples."

How true is that if financial capital is the dominant mode, and the cost of Brown's recent bailout is reckoned at £16,000 per head.

M-M' is the formula I generally thought described commodity fetishism.

[peaccenicked]

Jacob you are righT M-C -M ' My mistake I thought I had written that. I'll edit that, Does the article make more sense now?
Bretty. I M-M' Is the process by which money is made out of money without a commodity being directly present.

[BobKKKindle$]

Capitalist production is actually expressed as M-C-C'-M'. The change from "C" to "C'" shows that the finished goods are not the same as the materials which the capitalist has at the beginning of the production process - they have been transformed through labour which is also the origin of profit. M-C-M' is simply commerce which existed before capitalism - the capitalist buys a good, and then finds a way to sell the exact same good at a higher price, possibly by traveling to another country where the level of demand is higher and the good is in short supply (for example, the spice trade in Europe during the medieval period) or by waiting until conditions have changed, as in the case of property speculation.

M-M' is the use of money as a commodity - when a bank gives someone as a loan, they charge a rate of interest which is always slightly higher than the interest rate for deposits, so that when the loan is repayed the ban is able to make a profit even though they have not bought a commodity or produced anything.

During the imperialist epoch it becomes harder to distinguish between different types of economic activity because the merge of industrial and banking capital means that a single firm may carry out multiple activities at the same time.

[Die Neue Zeit]

^^^ Funny - I usually think of "M-C-M" as money-to-capital-to-money, which makes sense considering that, after petty wage labour allows petty capital to be formed, the circulation of $$$ enables the mass hiring of labour (and thus the mass accumulation of capital). That is why Marx and Engels called for the replacement of $$$ with labour credits.

[BobKKKindle$]

Funny - I usually think of "M-C-M" as money-to-capital-to-moneyThat's because you don't understand the meaning of "C" which is not surprising. C is not capital, but commodities, and so the formula C-M-C means that someone starts with a commodity and then, after selling the commodity to someone else, uses their money to buy another commodity - as a worker would do by selling his labour power and then using his wages to purchase the things he needs to survive and support his dependents.


The simplest form of the circulation of commodities is C-M-C, the transformation of commodities into money, and the change of the money back again into commodities; or selling in order to buy. But alongside of this form we find another specifically different form: M-C-M, the transformation of money into commodities, and the change of commodities back again into money; or buying in order to sell. Money that circulates in the latter manner is thereby transformed into, becomes capital, and is already potentially capital.Capital, Vol. 1, Chapter Four

[peaccenicked]

I think the point I was making might have been missed. The exact nature of commodity production is important technically and I give way to precision on that. The dichotomy I am trying to bring forth is between Industrial and Finance capital. It is not enough to say that the issues are blurred because of their hybrid nature. What I am saying is that there is an internal contradiction in Marx's analysis of Capitalism, that cannot be explained away by 'dialectical' sophistry.
Marx introduces commodities as the basic unit of capitalism and implies, if it is not explicit that the bankers have hegemony over the whole process.
While it is true that money corresponds to the gold equivalent of X amount of each commodity this gets skewed up by ficticious capital, and the advent of reserve currencies such as the pound and now primarily the dollar.
Today the contradiction is manifest as the estimated value of derivatives in the market at three times the world's GDP.
The only consequence of this I can see is that Marxists could be sight blinded to the crisis in production and not take the side of the industrial capitalists against the banks
as they squeeze for debt and make bankruptcies.
In the past we have tended blame only the immediate capitalist for the lay-offs, with the notion that the bosses will be adequately compensated. Dare say but the banks get off scot free. Ultimate they run the market deciding who succeeds and who fails. Banks are swallowing up banks, and this is leading to the control of the economy of a financial oligarchy.
The present crisis I hope will bring this contradiction to light.

[redguard2009]

I think it's a bit more complicated than a simple 4-digit formula (it should be M=C=C=M! Not dashes!)

Capital today can easily be manipulated into profit simply by the transformation of capital from one hand to another. Families borrow from banks (who also borrow) and are assailed by interest rates which can see the original capital investment as much as double (depending on the terms of the investment); individuals buy into company stocks, electronically but not physically owning part of the profit a productive or services company generates, and then sell that stock to another for a higher price; and let's not forget the enormous services industry, inparticular those companies that make money doing nothing more than answering phones.

I'm not exactly sure what I'm trying to get at besides the fact that commodity production and the distribution of commodities into a market forum is not necessarily the end-all of capital generation. In Marx's age, "services" didn't exist; a shop-owner selling commodities either made those commodities himself or bought them from the factory owner who did -- in today's complex marketplace, commodities and capital can be disconnected by many more "chain links" (a company buys a bank loan to purchase tools and equipment, aka commodities, to harvest trees, which are sold to another company which turns the harvested wood into a variety of usable material, who in turn sells that usable material to some outlet conglomeration, who then sells that material to a consumer with money also loaned from a bank, who builds a house under the direction of a real estate company, who sells the now-livable land).

Fucking chicken-egg shit.