Marx and Capital Accumulation
In On Capital, Karl Marx emphasizes the effects of competition, not on
prices, but on wages and unemployment. Though the effect of competition within
capitalism lowers down prices for the consumer, it also lowers wages and
working conditions when jobs are scarce and the need for employment is high.
Without the government to prevent the worst affects of capitalism, “it creates
for the changing needs of the self-expansion of capital, a mass of human
material always ready for exploitation”[1].
Karl Marx’s reasoning derives from the phenomenon that uncontrolled capitalism
tends to unevenly accumulate resources and capital over time. As capital is
allocated within the means of a few businesses or enterprises, competition
begins to disappear, and capitalism along with it. Marx first introduces this
idea when he talks about the liberation of labor and how machines set labor
“free”. Innovation, Marx seems to assess, sets free not “only the laborers
immediately turned out by the machines, but also their future substitutes in
the rising generation”[2].
Though I have nothing in particular against the notion of innovation, Marx
introduces machines as a means of capital and disrupting labor. While the
capitalist, in Marx’s terminology, invests more on machines and innovation to
make a faster product and a cheaper process, he cuts away at jobs that
individuals are dependent on. Nonetheless, I must concede that Marx does not
assess that investment may create new markets and thus new jobs. Yet, the
argument here is not the growth of the market, but the allocation of capital,
and how available it becomes to both competitors (those who may want to enter
the market) and the workers, the proletariat. Marx’s most compelling argument
comes through his introduction of his idea of pauperism, not only does it call
for some form of government intervention into a capitalist economy, but it also
shows the effects of an uneven allocation of capital. Fewer workers are needed
when capitalists begin investing into innovation, thus the creating what Marx
calls the “surplus-population”. The surplus-population consists of three
categories: those able to work, orphans and pauper children, and the
demoralized, ragged, and those unable to work[3].
The effects of pauperism play into his discussion within the Manifesto of the Communist Party. Marx
adds, “owing to the extensive use of machinery and to division of labor, the
work of the proletarians has lost all individual character, and consequently,
all charm of the workman”[4].
Once the skill of the worker is negligible, then anyone can fulfill the work.
From this point, child labor and gender discrimination arises, as historically,
these types of workers were more susceptible to lower wages and increasingly
dangerous tasks. Competition for wages with pauperism as a consequence showed
the most negative consequences of capitalism in Marx’s time. Though I will not
go as far as Marx and say that all private property should be abolished, I will
once again ask, how much capital can be allocated within one enterprise,
business, or individual until competition and thus capitalism ceases?
Capitalism is short-lived
because competition can only be sustained as long as individuals can compete. Viable
competition means that the allocation of resources and capital keep a realistic
barrier of entry and prevents monopolization of business. My argument is that
capitalism no longer exists in the United States due to the lack of
competition. Instead of garnering local competition between companies, huge
multi-national enterprises hold the most capital, and though they may offer the
cheapest product, they don’t necessarily offer the best. Nonetheless, any
company or small-business that would want to compete against a Wal-Mart or a
McDonald’s for example would not be able to, simply because the resources and
capital to do so is so unequally allocated in the favor of Wal-Mart and
McDonald’s. According to Forbes, the top five companies in 2011 made a
collective 296.66 $ billion dollars of revenue[5].
Moreover, the top ten richest Americans in 2011 compile a collective 291 $
billion dollars of net worth[6].
To put this more into perspective about how much money and capital this is, in
2011, the collective nominal GDP of countries in Central America[7]caps
off at around 167.326 $ billion[8].
Five companies and ten individuals in the United States have a bigger revenue
and net worth than seven individual sovereign countries in Central America (both
individually and collectively). If sovereign Latin American countries cannot
even compete with companies and individuals in the United States, then how can
regular individuals compete with them? We do not live within capitalism, but we
live within the negative effects of capitalism. The accumulation of resources
and capital has always been a reoccurring criticism of capitalism. For this
reason, capitalism, more specifically fair competition, is a short lived
phenomenon. The more accumulation of resources, capital, and money that the “winners”
or those who are successful acquire, the more difficult it becomes to compete
with these winners. That’s how you end up with your Carnegies and your J.P.
Morgans. Marx saw the effect of this early on, but looking at the numbers above
it doesn’t seem that it stalled. Now, we have companies that have a bigger net
worth or revenue than the nominal GDP of a whole country, and you expect
someone to compete with that? And from here, comes the introduction to both a
radical notion and a radical conclusion: in order to preserve fair competition and
an accumulation of capital that keeps capitalism from becoming a plutarchy,
capitalism needs government intervention.
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