Aglietta. M. (1979) A Theory of Capitalist Regulation The Us Experience

A THE OR\' OF CAPITA LlST REGULAT ION
A Theory of Capitalist
Regulation
The US Experience
HALFTITLE PA GE -
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A Theory of Capitalist
Regulation
Th e US Experience
With a neu- postfa ce
blJ th e autho r
- -+ - MI CHEL AGU ETIA

Translated by David Fern bach
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1. The Capitalist Production ofthe Mode ofConsumption
1. The Formation and Evolution of a Ilorm ofSocial Consumption

~.
Cont ent s
The Factors tha! Differentiate the ~age-Earning elass
II . The Eifects of the Socialization of Consumption on Changing Forms of

~Iages
I ntrod uct io n: T h e Need fu r a T h e o ry of Capitalis t Regulat ion
III. The Eifects of the Socialization of Consumption on the Long-Run

Movement Df~lages
Part Ou e
1. The Canalization of Economic ela.s Struggle by Collective Bargaining
T h .. T ransfonnat ion o t h e ....' a ge R..la t io n: t h e La ws o Ca p it al
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Accumuiat ion
Stal ..s and the Long-Run Movement of~lages
l . Th.. Product ion o Capital
Part Two
1. The Creation and Accumulation ofSurplus-Value
Th.. T r a nsfo n n a t io n o f Int ..r _Ca p ita li s t Relat ions and t h .. Laws
1. Abstract Labour and the General Equivalent

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of Com p ..tit io n
Rate and Mass ofSurplus-Value

4 . Th.. Con c ..ntra tion and C..n tralization of Capit a l
3. Productivity ofLabour and Relative Surplus-Value

4. Accumulation of Capital and Growth in Social Labour-Power
n.
1. The Definition of Concentration and its Determinants
1. The Concentration and Centralization ofIndustrial Capital
Overview of Capital Accumulation in the United States
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1. General Conditions ofDevelopment of the Forces ofProduction

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n.
General Tendencies in the Accumulation ofProductive Capital
The Foundations ofFinancial Centralization

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1. The Mechanization ofLabour
Financial Centralization through the Transformation of the Mode of

Consumption
1. PrincipIes ofTaylorism
3. Financial Centralization through Public Expenditure
Taylorism Superseded by Fordism
nI. The Forms of Centralization of Capital: the Giant Corporation and the
Financial Group
3. The Problems Posed by Automation in the Labour Process: NeoFordism
n.
The Influence ofFinancial Conditions: ~aves ofMergers
1. Financial Centralization through the Financing ofFixed Capital
2 . T r ansfonnations in the La b o n r Proc ..ss
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The Determination of the !lominal Reference ~Iage in the United
1. The Evolution ofModes ofCorporate Organization
The Struggle to Establish a Ilormal ~orking Day and the Formation of
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the Trade-Union Movement
3. The Predominance ofProprietary Control: Financial Groups
nI. Forms of~age and Labour Process
Planning and Managerial Control
5 . G..n ..ral Rat .. of Profit a n d Co m p ..tit ion among Ca p itals
1. Time ~ages and the ~orking Day

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1. The Conditions of Existence of a General Rate ofProiit
Pieceworkand the Stimulation ofOutput
1. The Theoretical Status ofPrices
3. The Influence of the Collectivization of~lork on Forms of~lages
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The Expanded Reproduction ofSocial Capital
3 . T h .. T ransfonnation of t h ......'a g.._Ea n l ..rs ' Con d itions o f Lif..
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n. The Competition ofIndividual Capitals on the Basls af the General Rate

ofProfit
1. The Modalities af the Division af Capital lnto Fractions
The Struggle between Capitals in the Transformation of!lorms af
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Production and Exchange

3. Production Priees and Fluctuations in Market Priees
III. The Formation c,fPrices in the Movement af Centralization af Capital
1. The Role ofSurplus Proiit under Full and Monopolistic Competition
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The Factors tha! Diiferentiate Rates ofProiit
3. Ilew Modalities ofDevalorization: Planned Obsolescenee and

Accelerated Amortization
4. Administered Priees in the United Stales
6 . Mon..t ary Sy st..m , C....d it aud Cris<'s
1. The Development oferedit and the Organization ofthe Monetary
System
1. The General Attributes ofMoney : the Significance of the Monetary
Constraint
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The Capitalist Attributes ofMoney: the Formation of a Ilational

Money
II. Financial Crises as Ilecessary Aspects of Capitalist Regulation

1.
The Over-Accumulation ofCapital
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The Process ofInflation
G..n ..r a l Co n clnsio n

Pos t fa ce t o t h e New Edition Ca p ita lism a t t he T n r n o f t h e
Ce n t n ry: R..gulat ion T h e o r y and t h e Challenge o fSocial Change
Index
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definition in orthod ox econo mic th eory . In its uni ver se , regulation is

nothing other than th e set of overall properties of genera l eq uilibrium.
Int roduction
Conv entional econo mic science pr esents itself as a set of co herent pr ecepts
The Need for

a 'I'heory of
Capitalist Regulat cn
doc tr ine th at genera lly characterizes th e high pr iests of eq uilibrium
l . Regulation , Equilibrium and the Co n c e p t o Reproduction

Al th e pr esent tim e , dissatisfaction with lh e body of doc trine lh a! lh e
aca de mic establishment co nsiders 'sc ientific econo mics' is expr essed with
gro wing int ensit y by an eve r greate r number of th eorists.' This
th eory .
If thi s th eory has exerc ized such a dictator ship over economic th ou ght ,
it is because it supplies a reassuring vision of society and a justification fur
th e pr ofession of econo mist. Genera l eq uilibrium is seductive because it
suggests th e collective harmony of a co mmunity whose subjec ts pr eserve
th eir absolute auto no my yet where all co nflict is excl ud ed . The normati ve
character of thi s th eoreti cal proj ect doos not in any way diminish its
pr estige . Its pro tagonists claim to elabora te rules of efliciency which th e
econo mic sys te m must obey so th at all subjec ts can act ration ally and th eir
dissatisfaction bea rs on two major failings of lh e dominan! econo mic
actions be mutually co mpatible . They co mpare existing econo mic sys tems
th eory: first1y , its inability to analyse lh e economic pr ceess in t"rms of lh e
according to th ese norm s of absolute efliciency and co nclude th at
tim e lived by its subjec ts, in other words lo give a histor ieal account of
econo mic fael s; and sec ondly, its inability to express lh e social canten! of
economic r"la!io ns, and co nsequently to int er pret lh e forces and co nflicts
al work in th e economic process. These two aspec ts are certainly not
capitalism is both th e least bad alternative and th e only sys tem amenab le
to advance towards an optimal co nfiguration . It sho uld not be surprising
th at thi s dou ble achievement has bro ught th e pro fession of economist
hon our from th e established social order . 'Refurm without risks' is
independent of one ano ther or simply juxtaposed . But th eir essentia l un ity
un der pinned by thi s 'normative science '.
is often inadequ at ely gras ped by co ntempo rary critics, thinking as th ey

genera lly do within th e co nceptual uni ver se of th e very th eory th ey are
Yet th e dissatisfaction th at we mention ed pers ists and eve n gro ws. This
is particularly so in period s of crisis, where th e sca le of th e 'disequilibria' of
see king rad ically to criticize . The greate r part of th e time th ey use th e
th e real econo my casts do ub t on th e validity of th e co ncept of time with
language of thi s th eory , which either vitia tes th eir co nclusions, or at bes t
which genera l equilibrium th eory operates. Keyn es accomplished a
mer ely ques tions th e cor respo ndence of th e orthod ox th eory to reality .
~'Ihat
which can be neither exte nded nor diminished; hence th e inflexi bilit y of
is seldo m challenged , however , is th e logic by which th e co ncepts of
profuund th eoreti cal renovation by turning fur th e sources of his
th e th eory are developed.
inspirat ion to th e tro ubled histor y of a capitalism torn by gigantic co nflicts

and weakened by deep de pression. But Keyn esian th eory failed to exte nd
There is indeed something fascinating about th e monumental edifice

co nstructed by th e neo-classical th eorists of a century ago. The attractio n
its criticism of th e neo-classical co nception of mar ket adjustments to a

critic ism of th e neo-classical co nception of econo mic subjec ts and
it can still exe rc ize tod ay is a funct ion of its tot alizing and tot alit ari an
relations, and so was to be reabsorbed in th e pr ocess of red uction
character . The th eory is tot alizing inasmuch as it is entire ly geared to th e

elabora tio n of a single co ncept , th at of general equilibr ium . It is
characteristic of th e tot alit ar ian pr ocedures of genera l eq uilibrium

doc tr ine .' This recu peration was facilit at ed by th e fact th at Keyn es
tot alit ari an because it red uces and excludes from its amb it econo mic
phenomena identified from observation of real pr actices as 'imperfectio ns',
co nfined his th eoreti cal horizon to th e short ru n oFor if th er e is one field in

which eq uilibrium th eory has fuund itself in serious trouble , and has made
littl e headway on da unting pro blems, it is that of long-run economic
rather th an dialectically transfurming its co ncepts by incorpo rating a more

co ncrete co ntent int o th em . This is why th e term 'reg ulation' needs no
INTRODUCTI DN: THE NEED FDR A THE OR\' OF CA PITA Ll ST R
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movements. The very noti on of eq uilibrium is put in question her e , in an
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irrepressible way . In th eir de sire to recon cile th e co ncept of equilibrium
co nfro nt one ano ther in sterile oppo sition, eac h simply excl ud ing th e
with th a! " f dy na mic development , th e neo-d assical th eorists caricature
other , as lon g as th e sys te m is defined in th e manner of the va rious

co nceptions of equilibrium as a net work of relations be tween economic
th eir Qwn redu cti ve pr oc edures, putting th e very noti on " f equilibrium
blate ntly int o ques tio n. A ha s! of macro -econ omi c moo els of developme nt
agents and ac tivities which display a pri ori types of specified rationality .
has mu sh roomed , al! seeking th e co nditions fur balance d or harmonious

econo mic gro wth.
The attempt to define th e regulation of a sys tem in movem ent leads to a

different co nception of th e sys te m. It implies th e co nception of a hierarchy
The failure of th ese co untless mod els, which di!fer amo ng th em selves
in th e co nstitutive relationships of th e sys tem , and not mer ely a functi on al
only by mathem at ical refinements of th e same norm ati ve pr oc ed ur e , is

particularly pate nt in th e pract ical adv ice th ey have so ught to ,,!fer th e
interdependen ce .
un der-developed countries. Yet th eir inadequ acies are no less al th e
tool s needed to establish th e co neept of mode of productio n . For th e study

of a mod e of pr od uction will seek to isolate th e dete rminant relationships
These method ologieal indieati on s pose th e question of th e ana lytical
th eoreti callevel. Any treatment of gro wth th at evacua tes history leads to a
co neeption of tim e th at rend ers dy na mics a mer e va riant of sta tics - in
th at are reproduced in and thro ugh th e soc ial tran sform at ion , th e changing
forms in which th ese are repr od uced , and th e reasons why thi s
effect, a logical tim e whieh is not th e expre ssion of any real movem ent . A
va riab le called 'time' is int roduced int o the characteristic multi-
repr oduction is accompa nied by ruptures at differe nt po ints of th e social
dime nsional par am eter s of equilibrium, suc h that th e repr esentation of

equilibrium co nditions lays down 'paths of gro wth'. The va riab le of tim e is
sys tem. To speak of th e regulation of a mod e of pr od uction is to try to

formulate in genera l laws th e way in which the de te rmina nt str uc ture of a
not co nstructed ; it is one of th e independent va riab les of th e mod el. But
soc iety is rep rod uced . The object of th e pr esent work is th e regulation of
dynamics is ety mologically th e study of forces. It necessaril y involves th e

co nstruction of a 'tempo rality', as th e characteristic of a real move me nt .
th e capitalist mod e of pr oduction . Our investi gat ion will base itself on a
long-r un hist orieal ana lysis of th e economy of th e United Sta tes of
The study of a movem ent , moreover , is th e study of ehanges of sta te. If a
America .
sys tem is de scr ibed as dynamie , th en th e co nstitutive relationships of thi s

sys te m mu st have a logic of intern al tran sform ati on . To co nceive of th e
regulation of a sys tem tran sforming itself in thi s way is to see th e ehanges
2 . T h e Role o H is t o rie al Analy sis in a The o ret ical Elaboration
th at oc cur in its relationships as suc h th at these relationships can always be
The arguments so far are designed to indicate th at a th eory of soc ial
organized int o a sys tem. This raises two method ological pr oblems.
regulation is a co mplete alte rnative to th e th eory of genera l equilibrium. If

we are to co ntribute to th e co nstruction of thi s alte rnative , th en we cannot
On th e one han d , we deny th at what exists doos so automa tically. The
see k to dispel th e characteristic hypo theses of gene ra l eq uilibrium th eory
noti on of rcprodu ction th en becomes necessar y . To speak of repr od uction

is to show the pr oc esses which pe rmit what exists to go on existing. In a
by ado pting th e language of th e latter or its criteria of scientificity.' All

critical studies th at still orient th em selves towar ds thi s th eory ado pt th e
sys tem whose internal relationships are in co urse of tran sform ati on , not
every thing doos co ntinue to existo It is thus necessar y to study th e way in
bas ic principIe th at is at th e roo t of its red uctive pr oc ed ures: th e a pri ori
which inn ovation appears in th e sys tem. There is no a pri ori reason why a
pos tulation of econo mie subjects defined by a rational co nduct th at is
tran sform ati on mu st be no more th an a 'plastic deformation' of the
alleged to be a eha racte ristie of human nat ur e , a permane nt da tum taken as
relationships th at struc ture th e sys tem; if thi s were so , th en co ntinuity

would be ass ured and th e coneept of repr oduction would be simple. But
self-ev ide nt; econo mie relations are th en de fined as mod es of coordination
be tween th e pr ed etermined and un alter able be haviour of th ese subjects.
when ac tual soc ial sys tems are studied , historieal expe rience co nfirms that
Theore tieal debates revolve around th ese mod es of coordination and ten d
towar ds th e definition of an equilibrium configuration of an ever more
transf orm ation me ans rupture, qualitative change.

On th e other han d , th ese two noti on s of repr od uction and rupture
INTRODUCTIDN: THE NEE D FDR A THE OR\' OF CAPITALl ST R
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gene ra l scope. Hen ce th e need th ese th eorists feel to len d th eir eq uilibrium
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a dynamic character . The need would no! exis! if th e bas ic co noep!s of
capitalist sys tem as a who le , can find no footho ld in genera l eq uilibrium
economic th eory were th ose " f relationship and precess, incor po rating an
th eory . To take refuge in partial investi gati on s, half empirical, half

th eoreti cal , only co mpo unds th e co nfusion . The way furward doos not lie in
int ernal principIe " f transfurm at ion in th eir very definitio n, instead of
subjec t and sta te. Bu! in th a! case th e co rroep! of equilibrium itself would
an atte mpt to give a bette r reply to th e th eoreti cal questions raised by th e
lose its fuundation and make way fur th e co noep! of repr od uction .
orthod ox th eory , but rather in an ab ility to pose quite different th eoreti cal
Notio ns of tim e , as we have already said, are dosely depend ent on more
questions. This means a collective elfort to develop a th eory of th e
fundamental conceptions of th e object of th e th eory , th e crite ria of
regulation of capitalism which isolat es th e co nditions, rhythms and furms
scientific procedure , and th e ro le of abs traction in th e creation " f co rroepts.
of its social transfurm ati on s.

The term 'regulation' , whose co ncept it is th e task of th eory to
From lhis point of view, genera l equilibrium pertains to an idealist

philosophy of abs trae! man , based on th e noti on of a 'sta te of nature'.
This is why th e field of econo mic science is not defined in thi s th eory by
co nstruct , denotes th e need fur an analysis encomp assing th e econo mic

sys te m as a who le . This analysis should pr oduce genera l laws that are
a division between various social activities, but rather by a pr incipIe th at
socially de te rminate, pr ecisely spec ifying th e hist orical co nditions of th eir
makes uni ver sal claims. Any human action is economic as long as it is
validity.
gove rned by th e principIe of rationality - th at is, by a logic of choices th at

satisfies certain axioms of furmal co herence .4 Once defined as a science of
For reasons already outlined , our pr oject will be susta ined by a

pr oced ure quite differe nt from th e red uctive pr ocess characteristic of
human behav iour detac hed from any social co nditions, th e dominant
idealism o This pr oced ure finds its logical fuund ations in dialectical
econo mic th eory canno t but be altoge ther fureign to histor y . It can only
mat eri alism oThe met hod elabora ted by Marx has impo rt ant co nsequences,
pr oceed norm ati vely . The appare ntly rigorous character of th e th eory
both fur th e proper order of research and exposition and fur th e

fundamental co ncepts from which it is possible to develop a th eory of th e
should not deceive us her e . It is not th e rigour of an experimenta l science,

increasing th e explanato ry po wer of its co ncepts by an ever clos er
regulation of capitalism o
Marx's refusal to pos tulate an immutable essence unde rlying th e
int er change between th e development of knowledge and pr actical action
variability of phenomena means th at fur him th e tension characteristic of

eve ry pr ocess of knowled ge doos not take th e furm of an opposition
on th e object of analysis. It is rather th e rigou r of a th eological

co nstruction , co nfined purely to th e world of ideas; th e stricte r its logic ,
between th e th eoret ical and th e empirical, exte rnal to th e th eoreti cal
th e more divor ced from reality . Such is th e fat e of genera l eq uilibrium

th eory as it refines its th eorems to adjust to criticisms made on its own
co nstruction itself. This tension is expressed inst ead by th e relationship

between abs tract and co ncrete within th e develop ment of th eory itself.
ground. The final outco me is in no way paradoxical, but already impli cit at
free of any social tie , int rod uces an absolute opposition between th eory
Abstraction is not a return of th ou ght in to itself in order to gras p its real

essence (the rational subjec t); it is rather an exclusively experimenta l
and expe rience, necessit y and co ntingency , essence and phenomenon . The
pr oced ure of investi gati on of th e co ncrete (historically determinate social
goal of th eory is to express th e essence of its object by stripping it of
relations). It fullows th at co ncepts are not int rod uced once and fur all at a
eve ry thing co ntingent ; institution s, social int er acti on s, co nflicts, are so
single level of abs traction. They are transfurm ed by th e characteristic

int er play which co nstitutes th e passage from th e abs tract to th e co ncrete
its po int of origin oFor th e co ncept of th e rational and sovere ign subjec t,
mu ch dro ss to be purged to rediscover econo mic behav iour in its pure
and enab les th e co ncrete to be absorbed within th eory . Theo ry , fur its part ,
sta te. Purity is finally atta ined in th e co ncept of pr ice , as th e suflicient and
exclusive bond between all rational subjec ts unde r th e uni furm co nstraint
is never final and co mplete, it is always in th e pr ocess of development . The

pr ogression of th ou ght doos not co nsist simply of hypo thetico-deductive
of sca rc ity.
Econ omi sts co nfronted with th e transfurm ati on s and crises of
co ntempo rary
~'Iestern
societies, and with th e troublin g future of th e
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phases; th ese rather alte rnate with dialectical phases. It is th e dialectical
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phases that are most impo rt ant , and make th eory something other th an th e
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accumulatio n and th e laws of cQmpetition means to elucida te th e
struggle.
co ntradictory pr ecess of th e genera lization of th e w age re/ation and th e

stra tification of th e two po lar social dasses (bo urgeoisie and pro letariat)
~'Ie intend to show, th er efore , how th e regulation of capitalism must be

int er preted as a social creation. This th eoret ical pos ition will enab le us to
co nstituted by it.' It means ta a.k what de termines th e hier arch y of social
co nceive crises as ruptures in th e co ntinuous repr od uction of soc ial
relations and th e mod e of social unificati on engende re d by th e

accumulation of capital. It means to subo rdinate analysis of th e movement
relations, to see why period s of crisis are period s of int ense social creation ,
and to unde rstand why th e resolution of a crisis always involves an
of ind ividual capitals to th a! of th e social capital, defined by th e wage
irrever sible transform at ion of th e mod e of pr od uction . The co ncept of a
relation or th e social relation of th e appropriation of bo th th e product s of
ruptu re only makes sense in a th eory th at takes qualita tive changes int o
account - an indispensable co ndition in th e social sciences, where th e
labour and labour-po wer itself as co mmod ities. It means, th er efure , to

pose a pro blem amenable ta an experimental method th a! gives a large
place to histor ical analysis (the study of laws of th e social division of
sys te ms un der study cannot be repr esente d by sys te ms ofequations whose
labou r), instead of a met aphysical problem (the existe nce of harmon y
morph olo9Y, in other words a space structured by relationships subjec t to

th e pr incipIes of qualita tive differe nce and unequ al influence . Such sys te ms
develop in a way th at repr od uces a bas ic invari ant element in eac h of their
between subjec ts who are oblivious of one another and are endowed with
pr e-existing resou rces and a pr e-established rationality).
This boo k is th er efore divided int o two major sec tions: th e first part
variables can be co ntinuo usly differe ntiated. A social sys te m co nstitutes a
explores th e laws of capital accumulation th rou gh a study of th e
co mpo nent parts, th at is, a de te rminant relation ship whose pr esen ce is

what ass ures th e sys te m its integrit y and co hesion . So lon g as th e
transform ati ons of th e wage relation ; the sec ond explores th e laws of
repr oduction of th e fundamental invari ant is not pu t in ques tion, th e
co mpetition th ro ugh a study of th e transform at ion s of inter -capitalist
quantita tive parameters of th e sys te m can develop co ntinuously . But th er e

exist weak po ints, or zones where cor rective mechanisms can break do wn.
relations. These two th emes are in no way simply juxtaposed .
~'Ie
shall
sho w, on th e co ntrary , th at th e co mpetition between auto no mo us capitals

issues from th e fundamental antago nism of th e wage relation th at is th e
moti ve force of capital accumulation.
~'Ie
In th at event a direct threat is posed to th e repr oduction of th e invari ant

element, and hence to th e existe nce of th e sys te m itself.
~'Ihen
thi s
shall see more pr ecisely th at th e
hap pens, th e sys te m reacts as a tot alit y to plug th e gap by modi fying th e
major social transform at ion s of th e 20th century , which tend to unify th e

wage-earn ing dass by th e uni ver sal extension of th e wage relation , also
form of regulation . A change of regime takes place , in a morphological
lead to a deep division within th e capitalist dass by accentuating th e
such transform ati on . They canno t be studied by th e analytical tool s used to

sca n th e stability of an equilibrium in a homogenou s space where th e
uneven develop ment of capitals and reinfor cing th e co ncentration of

capital. The forms of cQmpetition are histor ically mod ified to th e exte nt
th at th e expanded repr oduction of capital in genera l imposes its demands
on social relations as a who le . This co ntradictory pr ocess dces not take
place without transforming th e structure of th e sta te itself. The more th e
capitalist dass is divided by th e changing forms of co mpetition , th e mor e it
is impelled to seek its unity in th e framewor k of th e sta te and to co nsolidate
its do mination by enmes hing th e entire society in sta te -governed
relationships.' This leads to both economic and ideological practices of
sta te inter vention which co nstitute a develop ment of basic social relations.
transform ation th at may be more or less co nsiderable . Ruptures are one
possible sta tes of th e sys te m are known in advance and its movement is
repr esented by co ntinuously differentiable funct ion s.
Both Parts One and Two co ntain three chapters. In Part One , th e first
chapter studies th e pr od uction of capital - th at is to say, it analyses in what
way capital is a fundamental social re lation de noting a mod e of division of
labour . The pro position th at capital arises from social labour finds its
precise expression in th e Marxist co ncept of surplus-va lue. The analysis of
surplus-va lue in its two mod alities, absolute and relative , leads to th e
shall use th e term stru ctur al fo rms for th e co mplex soc ial relations,
formulation of th e law of capital accumulation. At this level of abs traction,

th e law enab les th e lon g-run tendencies of capital accumulation in th e
organized in institution s, th at are th e histor ical pr oducts of th e dass
United Sta tes to be surveyed in a genera l overview. The sec ond and thi rd
~'Ie
9 I 23
10 I 23
~----------------------
-'
(1
chaplers make th e analysis of surplus-va lue deeper and mor e co ncrete by
co nversely, th e origin of th e financial crises characteristic of capitalist
investi gating th e genera l meaning " f th e transfurm ati on s in th e wage
regulation . The nat ur e of th ese financial crises in turn pro vides an overall
relation over th e las! century . These chaplers also ena ble us to give a
perspective on inflati on . For it is necessar y bo th to link inflat ion to its most
th eoreti cal fuund ation ta th e period ization of capitalism int o success ive
fundamental de te rminants , in th e transfurm ati on s of th e wage relation and
stages " f histor ical evolution. The criterion fur lhi s period ization is
furni shed by th e changing canten! of relative surplus-va lue: in th e frs!
th e furms of co mpetition th ey engender , and to take due account of th e
stage, th e transform ati on of th e labour pr ecess witho ut major alte ra tio n in
our reflection on th e phenomenon of inflati on , we shall examine th e
th e co nditions of existe nce " f th e wage-ea rn ing dass; in a sec ond stage, th e
simultaneous revolutionization of both th e abour pr ec ess and the
sta ndpoint th at co nsiders it as a crisis of capitalism rather th an a crisis th at
co nditions of existence " f th e wage-earn ing dass.
effect , th e develop ment of capitalism weakens, and possibly even pu ts int o

ultimat e ques tion , th e laws ofcommod ity exchange on which it is based.
In Part One of thi s boo k, th er efure , we reject th e idea th at th e
pro tr acted and insolu ble nat ur e of it as a crisis. In th e co urse of deepening
expresses a mod ality of capitalist regulation . In th e pr ocess of inflati on , in
co ncentration of capital is th e most fundamental process in th e hist ory of

~ oth
century capitalism oThe key th eor eti cal pr ocess rather lies in a radical
4 . Sp a t ia l and T e m p o r al De limitation o f the Field o f Analy sis
change in th e co nditions of repr od uction of capital in genera l: hence th e

th eoreti cal importance of Chapter 3, where we study th e transfurm ati on in
th e co nditions of existence of th e wage-earn ing dass. But as already
As we have indicat ed already , thi s essa y on th e th eory of capitalist

regulation will pr oceed via an int er change between co nceptual elabora tion
indicat ed , th e int er acti on between thi s transfurm ati on and th e change in
and hist orical analysis of th e econo my of th e United Sta tes since th e Civil
~Iar . The selection of thi s co ncrete field ofreference fur our analysis calls
furms of co mpetition is at th e heart of th e pr oblems of capitalist regulation .

Chapter 4 th er efure analyses th e causes and furms of th e centralization of
capital. For it is thi s centralization which de te rmines th e fault-lines along
fur a few remar ks.

In th e first place , th e choice of the econo mic histor y of a single co untry
co rpo ration and financial gro up) in which th e co ntrol of property is
as our sta rting po int , ra ther th an th at of the world, is moti vat ed by reason s
of co nvenience as well as pr incipIe . Precise co nd usions can be reached
exe rcised. On th e bas is of th e findin gs of th e first fuur chapters, th e two

final cha pte rs tackle th e furmulation of th e laws of regulation pr op er . Their
only after assemb ling, dassifying and int er preti ng a vas t number of da ta. A
work on world econo mic histor y with a similar aim to our pr esent study
which social capital divides int o fract ion s and th e structura l furms (giant
crux is an analysis of th e co nstitution and operation of th e mon et ar y

sys te m. The furmation of prices can only be adequate ly int er pret ed on th e
bas is of a qualita tive th eory of money , as th e expression of th e tot alit y of
soc ial relations of exc hange. ~'Ie shall show th at th e co ncentration of
capital pro vokes an implosion of th e furms of co mpetition . There res ults a
coe xistence of different pr ice sys te ms representing different mod es of
transfurm ati on of value according to th e nature of th e co nstraints that th e
would be beyond th e capacity of a single individual. It is certainly

necessar y , in th e int er ests of th eory , to take stoc k ofw or ks on segments of
world econo mic histor y . Yet th er e are fundamental reason s fur thinking
th at th e co hesion of social relations un der th e ru le of th e wage relation
necessaril y involves the framework of th e nat ion . Contra ry to th e illusions
fuste red by th e th eorists of genera l eq uilibrium , th e antago nism of th e wage
relation and th e co mpetition between capitals th at fullows from it canno t
be regulated simply by th e laws of exchange . The organization of th e
division of capital int o differe nt fractions imposes on exchange relations.

These co nstraints can only be rend ered co mpatible with one another by
capitalist dass within th e bourgeois sta te , and th e develop ment of th e
an ada pta tion of th e mon et ar y sys tem. But thi s ada pta tion in no way
structura l furms in which it is expr essed , are indispensable fur th e

expanded re prod uctio n of capital across society as a who le . It remains no
fullows automatically , give n th e autono my of th e monet ar y furm of value

from th e valorization of pr od uctive capital. Study of th e relationships
less tru e th at th e int ernati on al expansion of capital furms part of thi s
between mon ey and credit elucida tes th e co nditions of thi s ada pta tion , and
expanded repr oduction , and th at a gap is left ifthis is not studied in de ta il.
INTRODUCTI DN: THE NEED FDR A THE OR\' OF CA PITA Ll ST R
"
1 23
' 2 I 23
~----------------------
-'
(1
Such a sludy, however , demands knowledge of the genera l tendencies of
essential, th er efare , to accord major impo rt ance to qualita tive changes, far
capitalist development within th e different nati on s, and careful atte ntion to

th e relations between sta tes. The gap in ques tion is a sign of th e dialectical
th e int er est of a th eory of regulation is not so mu ch th at it tells us th at a
character of th e th eory developed her e - th e fact th a! it in na way
structure is perpetuating itself as th at it furni shes th e analytical elements

far assess ing th e significance of th at which is new to it . The lon g-run
repr esen!s an axiomatic sys te m pos ite d a p riori.
perspective has sense only in this co ntext oTo int er pret what is new, it is
In th e sec ond place , th e particular selection of th e Unite d Sta tes is
necessar y to insert it in th e co ntradictory movement of its far mation : we
~ oth
must be ab le to account far th e ruptures in histori cal evolution and th e

genesis of new social far ms, befare we can show ha w th ese alte r th e
designed to highlight th e genera l tendencies of capitalism in th e
century . The USA, in effect , experienced a capitalist revolution from th e

Civil ~'Iar onwards. The exte nsion of th e wage relation brought about a
expression of th e fundamental laws of capitalism o
unificat ion of th e nat ion by its Qwn int ernal dynamic alorre. Capita lism
Any scientific study of capitalist devela pment must necessaril y sta rt
develop ed on th e bas is of co mmod ity relations witho ut having to co mbine
fr am th e pr oduction of th e mat eri al conditions of soc ial life . The lessons of
with arc haic social structures far eign to it , which elsewhere acte d as a
hist a ry , th e pr actices of mass organizations and th e most eve ry day

experiences all combine to demonstra te that th e manner in which mat eri al
bra ke on its impetus th at had to be overcome far it to advance.
~'Ie
shall
certainly have occasion to indicat e th e peculiarities of American capitalism

as we encounte r th em . But th er e is no need to fear th at th ese specificities
wealth is pr od uced sta mps quite irrevocably th e lives of individu als, soc ial
will bring us bac k from th e genera l to th e particular . They have rather an
differences, and oppo rtunities far self-development. But th er e are snares in

th e analysis of pr od uction which lead th e majorit y of econamic scheols to
exemplary character far capitalist regulation . For th ey express th e ma st
aba ndon thi s task. For it involves an analysis th at deals with th e meaning of
adequate structura l far ms far perpetuating capitalist relations of

pr od uction th at th e dass struggle has yet created any where. It is in thi s
labour in its ma st fundamental aspec ts. Labou r is a human activity, and

th er efare a tem po ral pr ocess th ro ugh which human beings far m definite
sense, in fact , th at th e Unite d Sta tes co nstitutes a mod el far all

co ntempo rary capitalist countries. The genera lization of thi s mod el ,
relationships amo ng th emselves in th e course of transfarming th eir

mat eri al co nditions. Production is always th e prod uction of social re lations
moreover , in other words th e degree of universalization of th e structura l
as well as of mat eri al objects. To take th ese activ ities and relations as the
farms create d in th e United Sta tes, was a dec isive aspec t of th e global
sta rting po int of scientific research in econamics , inst ead of simply
domination of American capitalism after th e Second
~'Iorld ~'Iar ,
and of its
subjec ts , funct ion s and goods , has a decisive bea ring on th e field of thi s
most pr ivileged regions of geogra phical expansiono The study of US
discipline , its object and criteria of scientificity , and its connections with
capitalism , th er efare , affords th e bes t vantage po int far develop ing a

th eory of capitalist regulation and at th e same tim e th ro ws a sharp light on
other fields of social science.

The aim of th e first part of thi s beok is to establish in what respe ct
co ntempo rary Euro pean soc ieties.
co ntempo rary capitalism reveals th e genera l determinants of capital: a
In th e thi rd place , our study is a long-r un analysis. This doos not mean
social structure th at is pr od uced by labour , but which subjec ts labo ur to

~'Ie
we have sought, in th e manner of sta tisticians, th e longest possible series of

da ta to analyse th e inertias in th em . It would be a sad error if we were to
th e logic of its own repr od uction .
denounce th e red uctionist pr oced ures of genera l equilibrium th eorists
genera lized it to encompass th e tot alit y of soc ial relations. The extension of
wage-labo ur has made society homogenaus as never befare , and yet th e
only to fall int o a pu rely empirical process of red uction of our own .
~'Ie
have already remarked , in fact , th at hist a rical tim e is not a linear

tem po ralit y in which th e variables empirically selected pro gress mutely
shall see th at , far from atte nuating
thi s social necessit y , th e evolution of capitalism in th e
~ oth
century has
enor mou s gro wth of th e prod uctive far ces of collective labou r remains
far ward ; it is rather a tim e th at has to be co nstructed by th eory , whose
entire ly de pende nt on th e accumulation of capital. The antago nism th at

thi s po larization of social activity engende rs is nowadays more and more
subs ta nce is de te rmined by changes in th e farm of social re lations. It is
dearly displayed , and affects eve ry phase of th e cyd e of daily life in which
INTRODUCTIDN: THE NEED FDR A THE OR\' OF CAPITALl ST R
13 I 23
14 I 23
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-'
(1
Analysis of th e sta te has always been th e Achilles' heel of th e social
th e reproduct ion of th e wage-earn ing dass is inscribed .

Qur sludy will proceed in sev era l ste ps. Cha ple r 1 seIs out a genera l
scienees. The very division of th ese sciences int o distinct dom ains, eac h
formalization " f th e law " f capital accumulation. This inevit ably involves a
with very littl e refere nce to th e others, is itself a token of an inabilit y to

co nstitute th e omnipresent yet un-graspable reality of th e sta te as an
high degree of abstraction. The results gained al lhi s degree " f abstractio n
hist orical evolutio n of capitalist accumulatio n in th e United Sta tes. Fa r th e
object for th eoret ieal analysis. As far as economists are co ncern ed, th eir
naivet y vis-a-vis any thing that involves th e sta te is a notor iou s fact . If
mom ent , lhi s is still an abstrae! co n frontation between th eory and
econo mists of th e dassical or neo-d assical tradit ion either ignore th e sta te
empirical reality . It is no! yet an explanation, bu! it genera les a cluste r of
co mpletely or else red uce it to th e role of a palliative ageney in relation to
questio ns which sel th e directions fur th e co ncretization " f co ncepts in th e

subse quent chaplers. The two chaplers th a! follow deepen th e analysis of
th e mar ket , writers daiming allegiance to th e Marxist tradit ion also display
a th eoreti cal incapacity that reveals major difliculties. Yet hist orical
surplus-va lue by study ing th e transform ati on s of th e wage relation in its
mat eri alism doos pro vide an explanation of th e necessit y of th e sta te as a
dual aspec t as both a relation of exchange and a relation of pr oduction .
mod e of social co hesion required by relation s of pr oduction th at divide

society int o co nflicting gro ups with hete ro geneou s objectives and uneq ual
are still meagre , bu! th ey make it possible to pr esent an overview of th e
Cha pte r 2 analyses th e meaning and trend of th e collectivization of th e

labour process un der capitalism o It sho ws how th e abstract character of
labour , as th e creation of value, pr ofou nd ly transform s its co ncrete
characteristics as th e creation of objects. It also sho ws how labour-po wer
in th e wage sys te m is abso rbed in pr od uction as an element of capital, and
why th e pr oduction of surplus-va lue leads to far -reaching changes in th e
organization of th e labou r pr ocess.
Cha pte r 3 studies th e decisive feat ur es of capitalist develop ment in th e
20th century . Capita lism co nsolidated its domination over society and
reached its most rapid imp et us in a very spec ific phase of history . This was
th e phase in whieh it transform ed not only th e labou r pr ocess but also th e
possibilities of actio n. This sta rting po int , however , has not led to th e
de velop ment of a pos itive th eory of th e capitalist sta te , its hist orieal
transform at ions, nation al spec ificities or pr oliferation of economic
funct ion s. It is well known th at Marx's own wor k doos not co ntain a finished
th eory of th e sta te , but only sparse indicat ion s, critical analyses and texts
of po litieal int er vention . This is un doubt edly where th e main difliculty lies.
Marxism sees itself as a pr actiee whose aim is to transform society , and yet
nowher e more th an in co nnection with th e sta te is a divor ce between
scientific investi gati on and pr actical actio n more pr onou need . A
pr ocess of repr oduction of labour -po wer . The social revolutions th rough
co ntempo rary example is th e doc tr ine of sta te mon opol y capitalism, which
ass umes as a sta rting po int what might be pr oduced as the result of a
which capitalism succee ded in pr od ucing th e eharacteristie mod e of
th eory . The sta te is seen as an entity th at is at once objective and
co nsumption of th e wage-earn ing dass, and in int egrating thi s mod e of

co nsumption int o th e co nditions of pr od uction , are th e chief elements
subjec tive , devoid of int ernal co ntradiction, co mposing a single sys te m

together with th e 'monopo lies' . It is th e pr ogressive inst rum ent of th e
needed to explain th e great disturbances of th e first half of th e 20th

century and th e exce ptional gro wth that followed th e Second ~'Iorld ~Iar .
socialization of pr oductive forces, but is also sub ordinate to th e

mon opolies. This is th e sys tem's sole co ntradiction . The sta te must
In th e co urse of th ese revolutions, th e wage relation develop ed all th e

characteristie features th at are implieit in its co ncept oThis is why we shall
th er efore be 'freed' from th e grip of th e monopolies so th at th e forces of
analyse in thi s co ntext th e formation of wages, th e link between th e
ensue. Keyn esianism , mean while , has exe rcised an influence on Marxist
econo mists in th e Anglo-Saxo n co untries. Her e th e analysis of th e sta te is
evolution of forms of wages and th e socialization of co nsumption, and

finally th e lon g-run trends of wages.
5 . T h e Difficulty o f Analy sing the St a te and its The o ret ic al
Co n s e q u e n c e s
15 I 23
pr oduction can also be liber at ed and a gra dual transiti on to socialism can
entire ly sub ordinated to th e pro blem of effective demand , reinterpreted in

a long-r un perspective . The result is th e well-known pro blematie of th e
surplus and its absorption. In this respect th er e is no subs ta ntial differe nce
between Sweezy , an avowed Marxist , and !Caldor , a celebrated neo-
16 I 23
~~---------------------
-'
(1
Keyn esian , except fur th e pessimism " f th e former , co ntrasted with th e
expend iture , amenab le to manipulat ion for th e purpose of stabilizing
optimism " f th e lalter , as to th e ability of th e sta te to overcome th e
cyd ical fluctuat ion s. In th e logic of th e doc trine of sta te mon opol y
supposed tendency of mod ern capitalism to engende r a lar ger surplus th an
capitalism , structura l aspec ts are certainly given far greater pro minence ,
but co nsideration of th e wage relation is tot ally lacking. The sta te is
th e mar ket can abso rbo

In both of th ese doc tr ines, th e sta te is defined by its funct ion al purpose
envisaged simply as a means of regulating inter -capitalist co mpetition and
or instr umental ro le. No diree! analysis is un dertaken " f th e nature of th e

social relations th a! have to genera te th e spec ific form known as th e sta te in
favouring th e mon opolies. Analysis her e is based on th e fundamental
a rder to ensure th eir repr od uction . Mor e fundamentally still, econo mic
pr ocess of co ncentration of capital, but it red uces thi s to th e question of

whether pro fit rates are sta nda rdized or differentiated , without being able
discourse on th e sta te can be no more th an a simulacrum of th eory so long

as int ernal analysis of th e wage relation is neglect ed - th e essential
to tell us what th e forces are th at dete rmine th e level of the genera l rate of
dete rminan! of th e development of th e capitalist mod e of product ion . If
red uced rate of profit or by financing capitalist pr od uction in th e most
our aim is to co nstruct a th eory of th e sta te, it is necessar y first of all to
co ncentrated sec to rs at low cost , th e sta te co ntributes to raising the rate of

profit for th e mon opolies. This th esis, which has been very widely diffused
forget th e apparent unity of its manifest ation s, exhibited by th e centralized

direction of th e gove rn ment, and investi gate in what way th e most
fundamental relations of capitalism involve a separa tion between th e
pro fit . The leitm otiv of th e argument is th at by valorizing public capital at a
in France , is repr esented in th e United Sta tes chiefly by Victo r Perl o .

The th eoreti cal reasons just adduce d should make it olear why we
pr ivate and th e public o ~'Ie shall see th at th ese relations are th e mon et ar y
relation and th e wage relation . It is th en necessar y to show why and how
co nception of th e sta te th at I share is located in th e th eoretical tendency
th e inh er ent co ntradictions of th ese relations give rise to a pr ocess of
repr esented by James O'Connor in th e United Sta tes, Manuel Caste lls in
institution alizati on , or , as we put it in thi s work, to th e creation of
France , Tony Negri in Italy and Joachim Hirsch in Germany, as far as th e

institution alizat ion of th e wage relation is co ncern ed . I also advance a
structura l forms. The type of sociality th at forms th e sta te must thus be

co nceptualized from within th e logic of exposition of th e genera l
dispe nse in thi s boo k with a special chapter on the ro le of the sta te. The
th eoretical analysis of th e transform at ion of mon et ar y co nditions, to
tendencies of capitalism oFor want of resear ch in thi s direction, th e typical

econo mist's vision of th e sta te involves th e artificial co nstruction of a
rend er co ntempo rary inflat ion int elligible . Rejecting th e idea of a

supers tructure th at acts from outside on a similarly auto no mo us
global overview on th e bas is of a very partial found ation . In th e Keyn esian
infrast ructure , I shall see k to sho w rather that th e institution alizati on of
logic , pushed to its extr eme by Baran and Sweezy, it is co rrectly held th at
social relations un der th e effect of dass struggles is th e central process of
th e de te rmination of mon ey wages is not a co mmod ity relation , and th at
th eir repr od uction . The analysis of th e sta te un dertaken in thi s boo k,
thi s quantity is th e pivot of th e circuit of value in its mon et ar y form oAn
th er efore , must inevit ably be incomplete , since it is restr icted to th e field of

th e relations whose hist orical transform ation s are the object of its study.
esse ntial feature of capitalist social re lations is th er eby certainly gras ped.
But th e formation of mon ey wages is not related to th e develop ment of
But a procedure of thi s kind , th e principIe merit of which is th at it doos not
mass co nsumption . The absence of an analysis of th e net work of social
arb itra rily slice social reality int o instances, can readily engage with those
relations th at co mprises th e mod e of co nsumption of th e wage-earn ing
disciplines th at make up th e social sciences. Contra ry to th e econo mic
dass makes it impossible to take int o account the reasons th at lead to a
analyses of th e sta te th at rest on a rationalization of th e appare nt
socialization of th e financing of co nsumption , of th e functi on al usage of th e
characteristics of econo mic po licy, thi s approach is open to int ernal
objects pr od uced as co mmod ities, and of expenditures on pro tection and

insurance . Since th e structura l reasons for th e tendential gro wth in pu blic
analyses of th e po litical field such as th ose of Ralph Miliba nd, which study
expenditure fall outside th e field of macr o-econ omi c arguments, th e sta te
forces that repr esent social gro ups, and th e relationships that form within
th em . The unificat ion of th ese valuab le descr iptive investigation s with
figur es mer ely in th e form of an auto no mous and un differ entiated tot al
17 I 23
in deta il th e organization of th e sta te appara tuses, th eir penet ration by th e
18 I 23
~-----------------------
-'
(1
mor e fundamental analysis of the determinants of social

institution alizati on sho uld probably take its co ncepts from th e work of
econo mic po int of view; th e int ernati on alism of th e technical co nditions of

pr oduction is suflicient to establish a hom ogeneou s world econo my in
Gra msci. By developing th e Gra msc ian co ncept of the hegemon y of a social
which th e capital of th e multinati on al firms is free to seek valorization.
dass in th e spec ific co nditions of eac h nati on , it may be possible to

overcome th e various traps of a structura lism of insl ances, a sovere ign
Finally , th er e are th ose far who m imperialism resides in th e exploita tion by

capital from th e 'centre' of th e retard ation of th e societies of th e
sta te mani pulating macro -econ om ic variables, or an instr umental sta te in
'periphery' , in th eir des tructura tion and int egrati on into th e world market .
All th ese viewpoints can legitim at ely c1aim to account far one aspec t or
th e hands of the mon opolies.

6 . Imperiali sm , an Ambiguous Notion Not Stu died in this
another of existing int ernati on al relations, and yet non e of th em can gras p
th e full significance of imp eri alism oLike th e po wer of which it is th e most
Work
global expression, imperialism is not a noti on th at can far m th e object of

any
Imperi alism is a ter rible reality , experience d by million s of people in th e

world and descr ibed in hundr eds of books. It is also a term lh at unleashes
explicit
definition
th at
originates
from
econo mic
co ncepts.
Im perialism can only be gras ped on the bas is of a fully developed th eory of
po litica l passions witho ut to da te eve r having unified struggles against th e
th e sta te, capable of study ing th e significance of int er -st at e relations in all
th ese mediati on s and showing that th ese express th e most co mplex far m of
dominant centres of capitalist decision-making. But it is not always a
capitalist socialization. Hen ri Lefebvr e's recent wor k goes furthest in thi s
th eoreti cal noti on . For her e again, dogmatism has long ste rilized
direction . He pos tulates a bas ic hist orical tendency th at would invalidate
th eoreti cal research . Im perialism is typically seen in an red uctively
all econo mic int erpret ati on s of imp eri alism o For Marx, th e int ernati on al
solida rity of th e pro letariat was th e pr ocess by which a uni ver sal society
econo mistic per specti ve th at disto rts its significance. There is har dly a
domain in which unswer vin g fidelit y to Lenin has been more da maging. The
would emerge , inasmuch as th e bourgeoisies of different co untries were
canonical text in which Lenin far mulated what he deemed to be th e five
incapable of rising above co nflicts of privat e int er est . Marx's int er pret ati on
defining characte ristics of imperialism was essentia lly a po litical
of th e wage relation predict ed a frontal struggle between bourgeoisie and
int er vention against his oppo nents in th e Marxist movement of th e tim e .

Swiftly written , its econo mic co ntent resumed results reached by Hobson
pro letariat th at would spill over nat ion al frontier s and break up sta te
institution s. Lefebvr e , on th e co ntrary , co ntends th at th e uni ver salizati on
in his hist orical analysis of developments on th e world mar ket at th e end of
of humanity has taken th e far m of th e establishment of a system
th e 19th century . Essential as th ey are far th e hist orian , th ese co nc1usions

are non etheless simply empirical observations on th e int ernati on al
On thi s po int, he sees Hegel as co rrect rather th an Marx - an ineffectual

superiority, since Hegel believed int er -st at e relations would realize
circulation of co mmod ities and capital at a certain epoch in th e
absolute harmony . The global hold , however , of th e sta te far m of
int ernati on al division oflabo ur . Like eve ry other empirical phenomenon ,

th ey have not surv ived th e co nditions th at un derl ay th em . Yet th e
institution alizat ion of social relations reinfarces existing antago nisms and
gives th em th e tremendou s violence of a co nflict of sta te po wers.
econo mism th at pervades th em has pers isted, although far Lenin th e

functi on of his econo mic analysis was lar gely to susta in his imm ediat e
Conse quently a study of imp eri alism must involve analysis of th e net work
po litical pos itions of th e tim e . Tod ay , th e co mmon feature of econo mic
repr od uction or disappea ra nce, and their roo ts in th e most genera l

dete rminants of th e wage relation .
studies devoted to a pos itive analysis of imp eri alism is an ec1ecticism in

which no co nvergence can be detected . For writers such as Magdoff,
imperialism could be descr ibed as th e extension of a th eory of oligopo ly
01 states.
of asy mmetrical po litical influences between sta tes, th e co nditions of th eir
The great movement of dec olonization th at fallowed th e Second
~'Iorld
onto a global terrain . For others, such as Emmanuel , it is un equ al
~'Iar has seen th e tot al triumph of the sta te, and th e weakening rather than
th e stre ngthening of pr oletarian int ernat ion alism . This was no accide nto
exc hange. For others again, distinct nati on al spaces no lon ger exist from an
For th e effect of decolonization was bas ically to re move obstac1es to th e
19 I 23
20 I 23
~>----------------------
-'
(1
development of th e wage relation . Now lhi s wage relation is no! a privat e
structura l co nditions th an ks to which th e logic of accumulation of th e
transact ion th a! can be int er pret ed in co rnmod ity terms. It deno tes th e
transnat ion al firms pr od uces th e econo mic eifects th at are now so well
dispossession suffered by a dass in a society dominated by privat e
known .
property . This is no! a co mmod ity relation . It is th e logical co ntrary to a
commodity relation, fur it doos no! involve any exchange of equivalents. It

is curious th a! Marx maintained th e classical fict ion oflabo ur-power as a
co mmod ity in his Qwn co nceptual sys tem, even though his decisive pages
on pr imitive accumulation abundantly preved th a! it was th e very
opposite . This fict ion is abando ned in th e co ncept ual framework used in
lhi s volume, in which th e wage relation directly gives rise to a division in
~'Ihen
we take into account what was said earlier of th e difliculty of
analysing th e sta te, it will readily be seen th at th er e co uld be littl e question

of analysing in th e pr esent work th e sys te m of co ntempo rary sta tes and th e
transfurm at ion that th e crises of th e
~ oth
century have pr od uced in int er -
sta te relation s. It sho uld never be furgotten , however , th at th e rise of th e

Unite d Sta tes to world hegemon y furms an int egral part of th e social
transfurm at ions th at we are going to study in mor e de ta il below. Fro m th e
th e abstract space of value. The essential po int, as we shall see in th e first

sec tion of thi s boo k, is th at th e wage-earn ing dass is involved in a mod e of
furmulation of th e 'Open Deor' doc tr ine at th e turn of th e century , th ro ugh
access to labou r and a co ndition of life whose co ntinuity goos far beyond
' 97' , th e stra tegic co ncern of th e US financial co mmunity and th ose

indu strial interests with an overseas orientation has always been to de ploy
th e relations of co mmod ity exchange th at are reflected in th e costs of

repr od uction bo rne by capitalist firms. ~'Iithout a set of social norm s,
which are always relative and remou lded by dass struggles, th e co nditions
Bretton
~'Ioods
and th e Marshall Plan to Nixo n's mon et ar y manoe uvr es of
po litical influence to ensure th e pr evalence of th ose types of social
of capitalist accumulation would have no regularity . It is tru e th at
organization in other nati ons and pr oced ures fur settling int ernat ional
co nflicts th at would safeguard th e exp ansion of American capital. That is
capitalism , which can be red uced in th e pu re sta te to th e abstractio n of
why th e United Sta tes fuught so bitte rly in Vietnam . It fuught not just fur
value relations, makes use of th e tissue of solida rity and recipr ocal
certain limit ed economic aims, bu t against th e danger of a dete rior ation in
obligation of traditi onal societies. But th e capitalist dy namic tear s apart

thi s social ethos which furms th e substa nce of an older civil society. It doos
th e set of ru les th at had stabilized th e sys tem of sta tes since th e

establishment of 'de tente', th e creation of th e EEC and th e extension of
so pr ecisely to th e exte nt that it exte nds th e wage relation to th e de triment
Japan's econo mic influen ce . If thi s aspec t of American hist ory is ignored ,
of all other relations of pr od uction , and transfurm s th e mod e of life of th e

wage-earn ing dass by des troying all co mmunal co nduct oNew social norms
th e milit ari zati on of th e US econo my cannot be gra nte d th e impo rt ance
must be centrally instituted , and th ese take on a sta te furm . The sta te thus
th at it deserves. Yet milit ari sm sho uld not be int er pret ed simply as a
co nvenient means of abso rb ing a surplus with which th e mar ket is unable
develop s by penetr ating civil society and profuund ly restructu ring it . This
penetr ation and restructuration show th at the state fo rms part of the very
to co pe . It acq uires its full meaning only in an analysis of th e mod aliti es of

American hegemony within th e sys tem of sta tes. Yet however major th e
existen ce of the w age re/ation. This is why th e genera lization of th e wage

relation on a world-wide sca le is accompanied by th e co nsolidation of a
impo rt ance of militarism in thi s perspective , it should not lead us to furget

American mon et ar y domination , which req uires pr otr acted th eoreti cal
treatment of its own . Rather than superficially treating all th ese pro blems
sys te m of sta tes. ~'Ie can now catch a glimpse of the full meaning of
imperialism : a hegemon y diflicult to exhibit th rough which one sta te
together , I have chosen to return to th e sources of Marxism in order to
manages to influen ce a series of other sta tes to ado pt a set of rules th at are
co nstruct a set of co ncepts as a pr econdition of such investi gat ions.
favourable to th e sta bility of a vas t space of multilat er al co mmod ity

relation s guara ntee ing th e circ ulation of capital. It is not th e multination al
firms th at give rise to imp eri alism o Their existence would be impossible
witho ut a sys te m of sta tes maintaining stable relation s of unequal
influence . It is thi s sys tem as a who le which is imp eri alist . It pr ovides th e
21 1 23
T.. l> " h;,h " .",. n t " , . ... , ... ."," . n . , . n 1 fu -,.., h m, " ;t ,,u. . .fth .
. " ..;Hn " 'n.. -d . ,,;,,!' <on". ".n , ;ndu. .. J.. n R";n..n , I:, o" omi, R.""'...., L.n n ,
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22 I 23
~>----------------------
-'
(1
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t. '1. ,h " qu''m um " n,j," , n f ",,' 1 . "nom. " .. "mnu 1. m u P'" t b. s . l." . . .n
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t. n n , ." F. Pm .ux, Pou, 'o""" I:, onom , Pu" , " 74 .
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" m m , t. .., 1< n, n . , t> . " . n n , . un. " ..., hh. m , h u. o..n . no l. ... O. o . ku
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" h . l.
INTRODUCTI DN: THE NEED FDR A THE OR\' OF CAPITA LlST R
---<0 >--
2 3 123
Part One
The
Transformations of
the Wage Relation:
The Laws of Capital
Accumulation
PART
O ~ E,
THE TRA "ISF OR,t,lATl O,"S OF THE ......GE RElATI O
1 I 1
A T HEOR\' OF CA PITA LIST REGULAT ION
political economy .
The Production
of Capital
l . T h e Creatlon and Accumulatlon of Surplus-Value
lba COllIuol1 COllc-epll'vmZ lbeoret>Cili expressiOll re C<>pll.ilist reL1tlons of
prodUCbOll , COllIuol1 bec.>11S'> '1 de/in"" Iha economic form m which lbe
labcur of K>ciM)' is appropnaled, IS lba ccacept of WrpllLS-.:alue. lbe
st.utmz pcint of ~y mv<lStlgat>on of Ih L1w of capllol1 accumw.t>on is
IherrilTe an uoliysis of lb... CN!<l11on of aurp1usvol1ue and lbe hmtts t:h.1
this enccunters. But surp1U5-va1ue it5elf depende on a mor... zen...ra1
ccncept, that of " a/llt , ..hich ...xpresses the relations by ..hich particular
labou r perfurm9d in di!ferent . ite...here productiva furces are zatherecl
together beco mes social labour . The. e relation. are tho.e of the
commodity economy. It is essential therefure to define precisely ho..
capital dependo on the commodity and how it introdu ces new
l . Ahe tract La bour a..d th.. G......r al Equl v.olen l

for ~ 10 be experim..nlal, il mus[ be abJ. te m........ lhe phenom..na
.1 studt"". The aCl of brrt:b of a SClellttfic w.e.phne consists m lb..
id<!tltlficat>on of certam general propettl."" thal mab of the obJecI lo be
stud,ed a measurabJ. space. Ir IS .Is f.u1ure m th.. l/Unal task. of abstraction
tbat has re nderl neocLusiCili lb>ry ineapable o f dealmz wtlb concrele
pheoomena ud <:ond..mnec! il lo o ff..r UlI ..mply a lleneral "'Iuihbnum
establisbed from aU etemll)' , sm"" fcr '1 prices are homOlleneous vanabl...
fcr an eeeeeeae subjects onIy 011 COllWIJOIl ola 1l&ll'ltol1 "'Iuihbnum. ' In
economics, lbe task. of abstracl>OII is pc:a:Ible bec.>1lH a process of
hotnOlleDWlllOll ..JDStS m lb.. t<!aIll)' 10 be studted, mahnll lb.. objects
under inveshlla11<m <:omm"nsurabl....1<!meDlS m a ;pace 10 which a
meuure can bea pphed. T1us ptoC<!SS ofhomo"TII:ilion IS J::nown as .'o/Ut,
and ilSccnce pt "as first produced by Marx .
(<1) Definlrlon 01 obstro<:' /obour. The proc&Sl! of homogenization o f
economic object. is a social relation. It il the general c haract<>ristic of

commodity-prod ucinz societies, and denote. a mode of division of labou r
that transfcrms lhe products of labou r into commodities. These produ cts
of labour are commodilies when they are the prcducts of privale labour
determinaticns in the zeneral field of value. 11e . hall therefure proceed

from concepl lo concepl, aiminz lo sho.. their preci.e order of lozical
depend ence , in order lo idenlify Ihe ..hole sel Ofrelalion, ..hich conslilule
intended for sociely in zeneral, ..ho. e underlying social character is

ackno..ledgl only in an operabo n of exchange. The exchanze transacb on
realiz... lhe uniformily of producI. a. commoditi... by ...Iablishinz an
Ihe invariant kernel of Ihe capilalist mode of produchon, defininz il as a

mode of oranUilion of social Lobour . Thi. procedUA is necessary if..e are
tquil'al,"Cff in ..hich prival.. Lobour appears simply as a fraction of Ihe

overan lebeur of fOCi..ly. Thisunifurm charaeter ofL1hour,as a fracl>on of
uot te bedeceived as lo lbe signrlicance of lhe historicol1 chanZ""' we inl"nd

lOllIldy. One _nnal aun of a Iheory ofr"flllal1on, in toCl, IS 10 provid.. a
overaUsocW L1hour , is whatlS I:nown a. abmaCf labOllr. Th.. products of

L1hour are co mm..nsurable only from Ibis standpoml. Abstract L1bour IS a
socW reL100n t:h.t tunsfOrms lb<! products of L1hour mto eqUlvalenl
scientlfic inlerpre1a11<m of 1M appear.aooe of novelly in lhe socW reaIm.

The theory mU5t .....1:. lo iIlSW<!t lb.. question as lO ..hetb-er a n...phenomenon is a chanze in rorm o f th<l determma.n t relaOOnshlps or
ilIStNd lhe amerence o f relaOOns ..hich u n, if tlwy develop , U~rm
Iha mode ofprodUCbOll it5elf. There .. lllCirc.ly uy need lO em~e lbe
socient>fic and pobllCi1 ""portan"" of Ibis questlOll. BUI " e cannot embarl:.
0lI il wtlhoul havm z al O\lt <bsposaI a soIid IheorellCi1 foundal1on which IS
Ihe ~Ih_ of a lonz coIIectlve expenence alld alonzst.mdmz cnt>qu" of
1. TH E PRODUCTION
or CAPITAL
_ 1 1 71
ut~ories,
blown as <:ommod.tt>es, m a holtlOlle_ ~ to which a

measure blown as value can be apphed. It .. qUita COITect, lb"refure, to
laY that c:ommoo:bties have a value,jus[ u ,t il! COITect to say tba l matenal
boches sub;.et ID universal zraV1latiob hava a ...gbl. The utih l)' of a
commoebly hu 110 more lo do wtlb ilS vol1ue Iban lhe colour of an obJect
hu wtlh ,le ....gbl. fmally, lt IS "" absurd re speaI:. of lbe vol1u.. ofL1hour as
lO speaI:. of lhe ..eigbl of zravtl)'. lt is onIy thear empmctst tracht>on and
2 I 71
-'
(1
th eir ignor ance of th e co nditions of th e mathemat ical operation of
VE~ =
b VE", we can co nvert thi s int o :
measurement , co nditions th a! req uire th e measurable space to be

co nstructed befare it is possible to measure , tha! have led econo mists to
such abe rra tio ns.
In a rder to un der st and th e significance of abs trae! labour , let us
Only actual exchange makes th ese quantities hom ogeneou s. The
examine th e fullowing formal sys te m, called a sys te m " f values. Le! th er e
meaning is co ntained in this particular relation , and not in any other . But
be n het ero geneou s pr od ucts of labour. Le! q". be th e quantity of pr oduct j
th e eq uivalence is not symmetrical. It expr esses th e realized value of A
needed fur th e pr oduction of quantity q, of pr od uct i. These quantities are
re/ative to B, which plays her e th e ro le of repr esentative of abs tract labour

because th e act of exchange is th e pr ocess by which pr oducts are
het ero genou s as soo n as differe nt pr oducts are
co nsidered . No
math ematical operation can be perfor med on th ese numbers considered by

th emselves; th ey do no! belong to any measurable "pace. The
homogeni zati on of pr od ucts as co mmod ities is then expressed by the
fullowing sys tem of equations:
s..
~ q
VE
"
Commodity B, a quantity b of which has enab led th e value of A to be

realized th ro ugh an act of pr actical exc hange, is th e eq uivalent co mmod ity .
Natura lly, when th e exc hange equation refers simply to a single isolat ed
act it might seem possible to reverse th e pr eceding argument and say th at
VA . q VE
"
labour . The ratio v(A/BJ is thus th e exchange -value of A in terms of B.
It plays her e the ro le of th e measuring unit of value.
VE , +q " VIi , +. . + q" VE. +VA , .q , VE ,

q" VE, +q " VJ,:, +. . . + q,. VJ:. + VA q, VE ,
q., VE , + q. , V-";, +. ..
recognized as co mmod ities, i.e. as bea re rs of a fraction of society 's tot al
"
where VE" VE" ... , VE" are th e values of co mmod ities. These values are
determinable because the space is rend ered hom ogeneous by th e abs tract
labour VA " VA" ..., VA. ,which fulfils thecondition :
it expresses th e value of B in terms of A, co nsidering A as th e equivalent

co mmod ity . But thi s pos ition would be incorrect oFor exc hange is not in
fact a co nfrontation of subjec tivities, it is rather a social pr ocess by which
th e pr oducts of independent pr ivate labour s are int egrat ed with one
another and furm fractions of society 's overall labou r . The universal
VA , + VA , ~ . . . + VA V A,
alienation of th ese pr oducts as co mmod ities is necessary to th e

manifest ati on of thi s int egrati on . The exc hange eq uation is thus th e furmal
where VA is th e tot allabour of th e society over a certain period o It is
repr esentation of the elementa ry act of exc hange as a link in general
esse ntial to bea r in min d that th ese quantities are homogeni zed by values
which th emselves f10w from a unifurmity resting on abs tract labou r .
commo dity circulation. The law of value, or th e genera l law of eq uivalence,

is th e furmal representation of th e pr ocess of hom ogeni zat ion of economic
objects. Its field is th e genera l circ ulation of co mmod ities as th e
hom ogeneous social space of abs tract labo ur . This is why th e
(b) Exchange re/ation and general equiv alent . In order fur th e

co mmensurability of co mmod ities to be co mpletely defined , it is necessar y
to know th e unit by which value is measured . This might seem to be the
working hou r , as th e 'natural' unit of homo genized labour . But it should not
repr esentation of abs tract labou r is fixed on one single co mmod ity th at
bec omes the genera l equivalent and is known as money .
be furgo tte n th at the unit of measurement is in no way something to be
As th e permanent and excl usive repr esentative of abs tract labour ,
arb itra rily chosen ; it is created by social pr actice . Abstract labour is an
mon ey is expelled from th e set of co mmod ities pro per . Ever y co mmod ity
operator expressed in pr actice in th e pr ocess of co mmod ity exchange. It is
always expr esses its exchange-value in mon ey . Money, fur its part , never
th er efure by analysing th e furm th at eq uivalence takes in thi s exchange
expresses its value relative to any other co mmod ity , since it never faces
that th e unit of measure can be elicited.

Let us co nsider an exchange effected between two co mmod ities A and B.
any eq uivalent. It is because it is th e pivot of relations of eq uivalence th at

th e measuring unit fur values is expressed in thi s co mmod ity . If we call th e
Let a and b be th e quantities exchanged. Examining th e exchange equation:
mon ey co mmod ity A and fix a unit to which a name is given (fur example
. A8STRACT LA 80 UR A ND THE GENERAL EQUIVALE NT -
3 I 71
4 I 71
---<0 . - - - - - - - - - - - - - - - - - - - - - -
-'
(1
th e do llar), th en th e exc hange rati os of th e infinit e series of particular

co rnmoclities C"
e" o,., c" take th e for m :
v(C ,/A) _ a L_ o(C, IA) . a, . . . " .(C. IA) .
pro blem to be investi gat ed is th e organization of a traflic sys te m, it is

necessar y to take int o account not just th ese laws of mot ion but also th e
number and th e frequency of journ eys, which depends on a net work of
<l."
Exchange values are expressed by pos itive real number s which are
'quantities' of mon ey , because mon ey is th e hom ogeneou s co mmod ity
which is th e explicit form " f abs trae ! abour . This sta tus of mon ey has an
implicit coro llary ; it is the monetary expressi on of the U' orking hour th a!
indicat es of how many mon et ar y units th e quantum " f abs trae ! labour , th e
hom ogeneou s element of soc iety's overall labo ur , is th e equivalent. This
quantity is in sorne respects th e synthes is of th e relationships of
eq uivalence. It is only fixed fur certain give n co nditions of co mmod ity
pr od uction , a genera l co mmod ity equivalent determined by th e repeated
pract ice of exc hange, and a unit of thi s selecte d co mmod ity - in fact th e
sum tot al of equivalence relations which enab le th e realization of th e tot al
abs tract labour by th e uni ver sal alienation of stabilized co mmod ities. The
description of th ese co nditions is already suflicient to show th at mon ey is a
co nnections in space and doos involve th e moti ves behind th e jou rn eys.
~'Ihat we are co ncern ed with here is th e sys te m of exc hanges , and we
know th at th e pr incipIe of exc hange is a relationship of equivalence in
which value is pr eserved . Ever y agent of exc hange is equipped with a value
mat eri alized as a pr od uct of labou r , and must find in th e genera l
co mmod ity circ ulation, by means of th e exchange transacti on , a
co mmod ity (one or more) th at has sorne utility fur him . This utility has
nothing in co mmon with sorne mythical and generic ophelimity, th e
phantom of a human nat ur e . It is rather a social utility characteristic of th e
division oflabour . It indicat es th at eac h isolat ed pr ivate pr od ucer has to
find th e co nditions fur th e repr oduction of his activity in th e genera l
circ ulation . These co nditions are both person al, fur his labour -po wer must
be susta ined , and directly depend ent on th e pr od uction pr ocess th at he
sets in moti on .
unit fur measuring values which is variable over tim e . In th e tot al set of
The relationship of exc hange equivalence , as it operates in an organized
co nditions, we can define th e monetary system as th e sub-set of th ose
sys te m , realizes this co ndition by developing int o a pr ocess th at Marx calls
co nditions affecting th e furmation of th e genera l eq uivalent and th e choice
the metam orphosis 01the commo dity. This met amorph osis is th e unity of a
sale and a purc hase. The exc hange agent , owner of cQmmodity C, sells thi s
of th e measuring unit . This definition refers to th e variability of th e value

measurement th at is caused by th e inst abilit y of co nditions of co mmod ity
co mmod ity, i.e. th er e is an exc hange against mon ey , which must th er efure
be a means of effective exc hange and not simply an ideal equivalent. This is
pr od uction and exc hange processes. It is ev ide nt th at thi s furmal definition

is in no way suflicient to characterize capitalist inflat ion . But we shall see
th e act C- M , th e first phase of the met amorphosis, and at th e end of it th e
when we co me on to investi gat e thi s phenomenon later on in thi s boo k th at
value has taken fur him th e furm of mon ey . In thi s furm he possesses an
element of abs tract labou r which is by nat ur e a value th at remains co nstant
it can only be rend ered int elligible on th e bas is of th e genera l

determination that fullows from th e nature of th e co mmod ity econo my.
as long as th e monetary expression of th e working hou r is un changed . He

can th er efure expec t to find in th e sphere of circulation a co mmod ity C,
(e) Moneta ry constraint and the definiti on 01 total income. Let us return
now to th e exc hange pr ocess and study th e mod alities of realization fur th e
th e utility he req uires, and thus realize th e sale M - C', th e sec ond phase of
th e met amorphosis. The co mplete met amorph osis C- M - C' thus involves a
value of a co mmod ity C, mon ey being co mmod ity M. This pro blem brings
do ub le change of furm fur th e value , a change which is realized by means of
us to th e organization of exc hange and int rod uces the not ion of utility ,
which has no place in th e definition of value. There sho uld be nothing
a sepa ration between sale and purchase. This separa tion is made possible
surprising in this. To unde rstand th e pos itio n bette r, let us take an example
from outside econo mics. The laws of mot ion in Eudidean space are
separa tion th at makes th e uni ver sal alienation of co mmod ities int elligible
by th e sta tus of genera l eq uivalent possessed by money . It is thi s
determined by the fundamental eq uation of Newto nian dy namics. They
as a social process of circ ulation capable of repr od ucing th e entire set of

co nditions of pr od uction . By thi s we can well measure th e abs urdity of the
owe nothing to th e reasons we might have fur movin g aro und. But if th e
neo-d assical view which would have us believe th at exc hange is a simple
,A 8STRA CT LA80 UR AND THE GENERAL EQUIVALENT -
5 I 71
6 I 71
----<0 . - - - - - - - - - - - - - - - - - - - - - -
-'
(1
pr ecess of barte r C- C'
between subjec ts eac h pro vided with a pr e-
exchange , in which labour itself is viewed as a co mmod ity .
esta blished and ophelime field of choice , mon ey being no mor e th an a
Conce ptio ns of tim e are very d ose ly bound up with th ose of th e social
mer ely techni cal intermediary.

~'Ie can now gras p th e unity of th e soc ial pr ecess of exchange. ~'Ihen al!
th e co mmod ities in th e sys te m of values whose product ion f10ws from th e
sys tem and th e ro le th at exchange plays in it . In th e dassical and neo-
division of th e overal1 labour of society VA have co mpleted their
further explanation. Capita l sta nds on its own footing, because it fills th e
met amorphoses, th e abstrae! labour VA has bee n realized in mon ey . The
entir e social space. The irrever sibilit y of econo mic tim e is incon ceivable ,
amount in money VP, as thu s defined , is the total income 01soci e/y. This is
th er efore th e exc hange-va lue of th e net pr od uct created by social labour,
known as value added. If th e abstrae! labour is co mpletely realized in th e
exc hange, and if we cal! th e mon et ar y expression of th e wor king-ho ur m,
since eve ry thing is hom ogeneou s and no qualita tive change exists to create
th en th e tot al incom e must satisfy th e equatian:
'price'. This co nfusion between pr esent and ete rn ity is expressed by th e
dassical co nceptions alike, if in different forms, th e existe nce of both

co mmod ities and capital are seen as self-ev ident fact s th at req uire no
any tem po ral rhythm . In th e genera l equilibrium, th e pr esent is

distinguished neither from th e past nor from th e future . Time is simply one
exchangeable good amo ng others whose equilibrium is what de te rmines
co ncept of disco unting. The logical tim e of discounting is th at of an
automatic valorization of capital. It is daimed th at what exists tod ay has
"
m _ _
VA
existed before and will exist for all tim e .
This equatio n is the monetary constrai nt. It is a co nstraint for th e
The co nception of tim e th at abs tract labour implies is rad ically
realizatia n of value and not a defining equatian. In actual fact , th er e is a

formation of mon et ar y incom e whenever th er e is pr oduction for exchange.
differe nt . It is only th e tim e of socially necessar y labour th at is
But product ion and exchange are two separa te processes in th e social
th e division of labour . The distinction of product ion and exchange in th e
division oflabour . If th e genera l co mmod ity circ ulation doos not succee d
pr ocess of socialization of private activities genera tes th e qualita tive
in realizing th e full series of met ama rphoses, th en one po rtia n of th e labour

co ncretely spent in pr od uction doos not fulfil th e co nditions of
pro blem of th e social valida tio n of privat e labours. There is no necessar y

co rrespo ndence between past labour and pr esent abstract labour . This
equivalence. This labour th en doos nat form part of soc ial labour. Sorne
non -cor respondence , which issu es from th e transform ati on of th e
pr od ucts are not sold, th ey do not bec ome co mmod ities and th eir
co nditions of pr od uction , is th e characteristic feature of a social

organizatio n in which privat e labours can acq uire a social character only a
producer s incur co rrespo nding losses.

One esse ntia l po int must still be stressed. Social labour is an activ ity
co nstantly recr eated by product ion .
~'Ihen
co mmod ities have completed
th eir met amorphoses and leave th e circ u lation sphere to be des troyed by
co nsumption , th ey are also annihilated as values. The social incom e thus
disappears as soo n as it is realized . There is no way exchange can pr eserve
incom es over tim e.' It is th e co ntinuity of product ion th at de te rmines a
new tot al incom e as th e realized mon et ar y form of a new expenditure of
hom ogeneou s, un derlining th e pr edominance of th e pr esent conditions of
po st eriori. It genera tes th at irrever sibility of tim e th at is manifest ed by a

social non -validat ion , in other words a devalor ization , of greater or lesser
scope, of th e past labour embodied in th e means of pr od uction . So far as
th e future is co ncern ed , it exists only at th e level of project s, imaginar y
spaces of pr ivate econamic agents which are by nature het ero geneou s and
incommensurable with th e space ofvalue.
social labour . It would be ridiculous to believe th at tod ay's incom e
2 . Rate and Mass o Snrplns_Valne
co ntains a certain fract ion th at existe d in th e days of J ulius Caesar and has
been preser ved down to th e present oThis fantasti c nation de rives from an
~'Ie
inabilit y to co nceive ofl abour as an activ ity th at creates value on th e bas is
mod e of producti on by a spec ification of th e genera l space of value. This

relation is th e w age re/ation th at makes labo ur-po wer a co mmod ity . Social
of a spec ific social organization . The econo my is seen solely as an
,A 8STRA CT LA80 UR AND THE GENERAL EQUIVALENT -
7 I 71
shall now int roduce th e fundamental relation defining th e capitalist
8 I 71
----<0 . - - - - - - - - - - - - - - - - - - - - - -
-'
(1
A THEOR\' OF CAPITALlST REGULAT ION
labour ther eby bec omes wage-labour . This relation has a da uble condition
of existence: on th e ,m e hand th e society in questio n mus! be co mmod itypr od ucing; on th e other hand a deavage mus! take place within th e
co mmunity " f independent producer s such as radically to change th eir
situation vis-a-vis pr od uction. New relations of pr od uction are th en
created , th ose capitalist relations of product ion th a! we shall sludy in more
detail in Chapler
~.
The fundamental co nstituent of th ese relations is th e
th at th ese determinations do not alfect th e genera l space of value. They

bea r on transform ati on s co nducted in th at space, which develop and
spec ify its fundamental laws but are no subs titute for th em . These
determinations will be investi gat ed in due co urse as we pro gress from th e
abs tract to th e co ncrete . For th e pr esent , what is essentia l to not e is th at
th e division in th e space of value elfecte d by th e wage relation in its genera l
determination is th e th eoreti cal found ation of a macro -econ omi cs.
appropriation of th e ensemble of co nditions of producti on by a ne sec tion
This caution applies eq ual!y to th e analysis of surplus-va lue. The mass of
of society, and th e cor relative transfurm ati on of th e " ther sec tion int " a
wage-earn ing dass. The wage relation thus fully defines social capital, i.e.
surplus-va lue (SV) is appropriate d by th e capitalist dass as a who le . This is
capital in its most genera l de te rmination. Capita l is th e social relation 01
appropriation, as commodi ties, of product s of labour and labour-po wer

sold by fr ee ind ividuals. Defined in thi s way , capital po larizes society int o
two social dasses whose situatio n in pr oducti on is qualita tively dilferent .
(a) The effe ct 01 the w age relation on the fi eld 01 value. It fol!ows
imm ediat ely from th e precedin g argument th at labour-po wer is not a
co mmod ity like al! others. If labour-po wer is a co mmod ity , and
co nsequently has a value, its use is labour itself. This is why th e wage
relation is both a relation of exchange and a relation of pr oduction . The use
of labour-po wer in product ion un der th e wage sys tem is th e creation of
abs tract labour VA , and thi s use pr oceeds un der capitalist direction . ~'Ie
may co nd ude th at th e wage relation elfects a division of th e genera l space
of value by dividing tot al abs tract labour (VA) into value of labou r-po wer
(V) and surplus-va lue (SV) :
th e found ation for th e solida rity between al! mem ber s of thi s dass, a
solida rity imposed as a co nstraint on th eir divisions as co mmod ity owners.
The rate of surplus-va lue e = SV/ V, a non -dim ension al number as it is a
ratio between two quantities defined in th e same homogeneous space, is
th e ratio of its division . Many reade rs of Marx have been asto nished to see
him implicitl y pr esuppose , witho ut eve n justifying his ass umption, th e
same rate of surplus-va lue in al! bra nches of pr oducti on . They sho uld not
be so surprised, for th e pro blem doos not eve n arise. The rate of surplusvalue is a global co ncept defined in a hom ogeneou s space. It precisely
makes dear that capital arises from social labour th rough th e mediati on of
th e wage relation . If it is legitim at e to spea k of th e rate of surplus-va lue for
an elementa ry prod uction precess, it is so only to th e exte nt th at thi s
precess is an element in th e valorizatio n of capital in genera l, not in so far
as it is spec ific and tied to an individu al capital. It can never be repeated
often enough th at not al! econo mic pro blems can be treat ed at th e same
level of abs traction. Value and th e co ncepts directly bound up with it do
not enab le one to preceed imm ediat ely to th e pro blems of co mpetition .
VA - V + SV
This pro posit ion is fundamental. The wage relation is defined in th e

hom ogeneou s space of value. The deavage th at it int roduces is defined
directly , and only has any meaning at th e macro -econ om ic level. The
precess of hom ogeni zat ion th at value involves is applied ful!y to th e value
of labo ur-po wer . It is impo rt ant to pay particular atte ntio n to th e
(b) Relations 01pr oduction and relations 01 distribution. Marx strongly

insist ed th at relations of distr ibution are th e reverse side of relations of
producti on . This bea rs in particular on th e division of th e tot al income by
th e wage relation . ~'Ie know in fact th at thi s incom e is th e mon et ar y form of
significance of abs tract labour in its applicatio n to labour-po wer . It is tru e
abs tract labour . The division in th e field of value necessaril y co nfers on it

thi s mon et ar y form , which defines th e unit of measurement . How doos thi s
that workers are het ero geneou s in th e co ncrete operatio ns of producti on ;
take place? Here we can only olfer th e most formal and most genera l
thi s bea rs on th e analysis of th e labour precess. It is further tru e th at

individu al labour-po wer can per form work which is simpler or more
determination . As an exc hange relation , th e wage relation is expressed in a
co mplex ; thi s bea rs on th eories of wages and pri ces. But it is essentia l to see
co mplex and will be investi gat ed in Chapter 3. Here we can only furni sh a
2, RATE AND MASS OF SURPLUS -VA LUE -
9 I 71
relation of mon et ar y equivalence , th e w age. The de te rminatio n of wages is
10 I 71
- ---(O r - - - - - - - - - - - - - - - - - - - - -
J
A THEOR\' OF C A ~ I TA lIS T RE GULATION
formal ,," pr_ion which will l uffice to indicate the prin cipIe o f
d il tri buti on, "ven if not itl co ncrete content oIn o rder to understand il , _
must He he.. wages forro
ti
ve ry l pecial ..xchange telatian , o ne completely
dc mmated by lhe relatiolLl e f production.

Tb.. qlUlitllive d ifferenc. betw....n lb.. positions of th.. capitalist ,"Ddlb..
w.. ge-earner in .,(c hanga iI .ti follows. r Ol lb.. oo.pit.lltst th" mon"t.1ry sum
~d.tl " ..ges is QdwlIlCfiJin lb.. sense
that Lobour-power is incorpout..d

m io lhe production pfOC'ftll Ind prodUC'i!S valu.., which th.. Olptt.ahst Ius al
hiJ: dupoNl in the fonn of lb.. commodtti.... produced; fur th.. wag........m..r ,
thts sum ~ 'PMt 00 th purchu. of commodl tl.... wlnch are d<lSlrOyoo ID
COO$IUllpl1On.
nu. ddf~oeDc. iI: ..xpressed ID the m..t.omorphC!S'OS o v.o!u...
For lb. Cilptlol1ul lb.. p.lltt<!l1:l of m<!l.omorphostS IS mv..ned. JI IS
tr.ansfonn.d {roro C- M - C" ilIto M- C- M ""th mOlley appeMtIlg a' tb.. two
elltTem... n . puTC!lue pr'!Cedoes Ihe sale, .."d no!..,ce V<>rs.I , becoUH lb ..
J>b.o-of lb.. met.unorpbom .u.sepuate<! by product>on. 11 follows from
thts WI lbe wige cootr.tet does lIOt form ~ of lbe re.ilizab oll of v;llue in
lener.ol ooaunodIt)' ciJeuLtiolI. 1t is onIy Ib e expendltures of Ib e w~g'"
~"" Ilwl lQrm pe rt cl thll r N lWtiolI . Ilow Ib e mOlletary expresslOll cf
Ibe worblll bcur IUes s1wpe in Ib e l en er..J ctreU1aoon tbat realizes over..n
v.ol<HI in propcrttolllO 1!J prodllcttOlI. l is dn elopmen t over ll.me evolv...
S
V
_ ~_
m
VA V +S V
l ' +S V
l + t
Profit is deternuned by the differenct : p " VP ~ S . The resultant macro-
The nominal reference wage
eecncmc thecr)' o f d isttibu tion pl'1!S<'nls a di"ision o f to tal re ve nu..

cc rr... po nding te the specific c hu acte r of the wage re lation. Ir is IinW to ~
theory o f
v~lue
and te
conception of the wa ge re lation tbat .l1r...d y
..nabl... us te dnw two cond U$ions.

(1) Th.. foundltion of this d",uion 1S ~ socia1 relallon of production. l IS
qu.antiUt,v.. e KpTea:ion is lhe Ule of surplus-value; but it anses frem
qlUhut,v.. cWferenc. tU tbe poJ:Il1Ons of th e two socia1 classes VIS-oi-VlS lb..

condttions of produetiotl . This
qlUht~llve
<Wfurence will. en.ilbl. us to
...w)'M tb ctors d~emllhIh the evoIul1on of the r~te of surplus-v..Ju. ,

.ond thu. to Ibow tlwt tbe ov.,u ll dJstnbution of rev"nu" depends 0Il lb.
Ir.ansfonn.ahen of tb COUdll1OhSof productton .
(::) Th.. cbstnbution of incom. depends cruci.illy en Ib e form.onv.

condltlOhS el tbe elIer.ol eqwv..JelIt. '..f e have ..Jr... dy mdlco te<! tbat Ib e
m"..r I fIIl'9f.ol d~enn in.iltioll el infi.otiOll wu the instabili ty of Ibe r" lal>ons
of ex c!l.on e eq w v.olellce under the tm p.ilct of Ib e transfcrmatlon of Ib e

condlticnll of productiOll alld tbe d a rKteristic properties of Ib e monetary
rystem . ','le U n now confirm m more detall tbat tIus instabili ty h.o..s ~
w~ge
relaticn . Th.. dJstnbution o f mcom. i.s
..lb th. cr..ttoll 0 1 v.ol<HI whic h is at 1M lOuroe o f lbe lIew incom.. whKoh
d.termining inll.ue nce o n tbe
tU. 1M pLtc. o f tlwt ~nnihiLl.tf wh..n commodJtles maLe lb..... eXlt frn m
funct>c n o f th. evoluttoll 0 1 tbe monetary ..xp rt!SSlo n o f Ibe wor bllg bour,
1M ciJeuLtion sph..re . SlllCt , t does no! " lIter m to r..lationships of

eqlUv~ tlwt d~eMmM th.. Pl'fteIlt mon..ury ..xp resslOlI of
th.
..mou of lb.. v;l1U<! of labour-pow;!r into w~g'"
worblll hour ( m), the cou..
depends 0Il ~ qu.anttty (-1 which 15 ~ functton of lb.. p.1st:magmtud.... of tIus

v~ble.
In order te 1IUd)' tbis functton, ,t 1S n<!CesSH)' to
...wys;t
incr_ in m than _ \.e.ads to ~ de prec:i.ation in 1M

reu tiolls ot e xc lwn e of tb=e n gbls .alIoca te<! to tJi.o wa ...
becallM a more
eqlUv~nce
r~pid
~rs in llIOlIetary liorm.
(e) Ab, olll(C Illrplll$-i :III11C o"d .n hm.n . Le! us start by offenn
.lll
Ibe
alteruanve liormuLittotl. of the tate of surplus-value. Le! N be Ibe toul
coucrete modihh'" of the w~l. coutr~ct ~nd th.. constramts tmpos.ed hy
number of WOTI:ers Ibann in tb.. form.ottotl. of th.. toul value VA. lbe
th. l"9COfIII' tuhOll oflabourpow...., which wu hall study m Chapt"r 3.
Y~lle sp.ac9
betn bomogeneous, w.. moy wnte :
Th. p!"9C9dtnl ~n.il])'N INeis 10 tb.. follOWUlI formahzatlon. 1.<>t VA be

the total mus of v~]ue tlwt th e socj..ty produc<>s. lbe total rev"nu. VP is
linked to it by the mon~uy const u int: m " VP / VA . lbe wal e relation
determin...
division in the
""rp]ll"v~]u" t"
S, an d tb
c~Jl
w~g"
v~]ue
5J>Oct which is define<! by the
r~t.
of
SV/V, with VA " V + SV. 1.<>t u. call the total wales p.ilid
related to the qu antum of abstuct ]abour , . lbi. w... h~ll
th9 nominal re{trence uag".
Th.. total wag" s .
1ft '
O,
SURPLUSVALUE -
11 / 7 1
t~l:e
the worl:in day , of app.ilren t dutation r , as r"presentahve of ~ unimrm

worl:inl penod during which the total va]ue VA i. <:rea te<! . lb" time l. i.s
Ih en lo be int..rpr..ted as th e time sccially nec es...ry to recen.titute
]~bour-pow ..r , and
2 , RATEA NO MASS
i.e. relatin the magnitud... to th . unit of SCCLO]labour-pow" r. 1.<>t us
th.. time l. as th e un iform time th at prcxluces value . The
12 / 7 1
-'
(1
difference t,. - l. is th e surplus labour-time . These tim es satisfy th e da ub le
terms of abs tract labour-time . Two different int ensiti es are in fact two
inequ alit y in the wa rking-day : l. < t,. < T.
different de nsities in the expe nditure of labour -po wer during eac h hour's
I,.-t./t."In lhi s form it is
work. An increase in labour int ensit y is obtained chiefly by sub ordinating
read ily appare n! tha! th e rate " f surplus-va lue is defined by a relation of
labour -po wer to th e co ntinuous and uniform movement of the machine
pr od uction . It is possible in fae! to int er pret it as th e rate 01 return on

social labour-po wer. Und er give n co nditions of pr oduction , th e dura tion of
sys tem and increasing th e sys tem's speed of operation . But th e
labour has to be T so th a! lhi s rate of return can be obtained . The difference

T-t,. furms what might be called th e 'peres' of labo ur . These are such losses
period s to an average int ensit y . Inte nsity is transform ed int o extensity. In

th e overall sys te m of co mmod ity pr od uction , labour s of different
of tim e as re sult from th e organization " f th e labour pr ecess and th e
int ensiti es and effected at differe nt da tes are distinguished in th e different
capacity of th e workers to susta in th e pace " f work. The inerease in th e rate
tim es of abs tract labour t,. and t,.' performed in th e same space of labour -
of return is thus a funct ion of three fact ors:
tim e T. The int ensificati on of labo ur can more th an make up for a mod er at e
sho rte ning of the working day.
The rate of surplus-va lue can be written as: e =
- a dec rease in t.
- a rise in t,. by way of a rise in T
- a dec rease in T - t,. with T remaining co nstant : i.e. th e atte mpt to
make th e entire working-day actually prod uctive of value.
The set of pr eced ures leadin g to a dec rease in t. is known as th e
pr od uction of relatit'e surplus-va lue. The set of pr eced ures th at increase t,.
with t. remaining co nstant (whether by a rise in Tor a fall in T-U is known
as th e pr oduction of absolute surplus-va lue. Deta iled analysis of th ese two
types of surplus-va lue depe nds on an investi gati on of th e labour pr ecess
and th e co nditions of existe nce of th e wage-earn ing dass, which will be
treat ed in Cha pte rs ~ and 3. The pr esent th eoret ical pr eced ure is simply
designed to articulate th e necessar y co ncepts which will enab le us to
pr eceed to more co ncrete develop ments. The creation of absolute surplusvalue by th e exte nsion of th e working day is th e earliest method , and
played an essential ro le during th e first stage of capitalist indu st rial
expansiono But it still has a ro le to play in lat er stages too , in th e form of
resistance to a sho rte ning of th e working day despite th e imm ense gro wth
hom ogeni zat ion effected by exc hange involves a reduction of labour
Abso lute surplus-va lue in th e strict sense, however , i.e. co nsidered in

th e absence of any transform at ion of th e labo ur pr ecess, encounte rs
definite technicallimits, since a given machine sys tem can only operate
within a relatively nar ro w range . It also and above all encounte rs secial
limit s, when th e working dass succee ds in endo wing itself with a permanent
organization. So far as th e int ensificati on of labour is co ncern ed , th e
possibilities open to workers in resisting a spee d-up are far from negligible
when th e definition of job pos itions and th eir organic connection remain
un changed . But thi s resistance can be broken if th e pace of work is
increased for th e individu al worker by simplifying his moti ons and
coordinating th em more eflicient1y in a different allecation of jobs.
Abso lute and relative surplus-va lue are thus indissociable from one
another. They are what co mpels capitalism to co ntinuously revolutionize
th e co nditions of pr oduction . In investigating th e pr oduction of surplus value as a permanent pr ecess, we shall study th e direction in which
technical pro gress develops, and sho w th at this is sub ordinated to th e
exte nsion of capitalist relations of pr oduction .
in th e social forces of pr oduction . It reminds us that th e prod uction of

surplus-va lue is an int ernal necessit y of capital, inscribed in th e field of
3 . Productivity o Labour and R<-lative Surplus_Value
value. Capita list pr oduction is not a prod uction of pr edetermined utilities

in a universe of hetero geneous and original needs.
In study ing relative surplus-va lue we shall be deepening our analysis of
It is somewhat more co mplex to int er pret th e method by which t,.
capitalist relations of prod uction . This analysis raises new th eoreti cal
increases while T remains co nstant . This is th e phenomenon of th e
pro blems. Up till now we have operated in terms of th e homogeneous field
intens ification of labou r , a po werful meth od for raising th e rate of return .

The int ensit y of labour doos not seem at first sight to be expressible in
of value, in which we have de monstr ated th e genera l determination of
2. RATE AND MASS OF SURPLUS -VA LUE -
13 I 71
capital. The pro blem now is to take int o sys te matic account th e
14 I 71
- ---(O r - - - - - - - - - - - - - - - - - - - - -
'"
-'
A T HEOR\' OF CAPITALIST RE GU LAT I O ~
tunsformation of lhe condition. of production, a material and therefure
of effeclive exehange, and have thu. beoen rend..re<! hom og..neou. by th e
heterogeneoul transformahon, and lo . ho.. ho.. lhis formo ""rl of a
exchange "'luation. 110 scientifie procedure co uld in any ..ay COneelVe of
procesa that modifi" vah.!, r.lalion. in Ihe direc\ion of an inetea... in Ihe

Ule of surplus-value, '.... sIla]] Ih,refer.. be tacl:ling Ibe problem of Ihe
evolution of the standard of m..-sure over time, aad tbereby wiU be le<! lo
id..nti fy Ih. inma.t ""UNl Mqll"llces of lhe capitalist dyn.omic_
lec:hnological syJleml , co nvex or olher..i , lh al ....r.. co nstruele<! on lhe
(o) D4illitioll o{ labOllr prodl/cti~' itlJ. In lhe product:lon process Labourpcwer appoNn u ..n elfln"lll of captt.ol, inumuch as il ""ts mat..rial m....ns
of Llbour in motion "'1hin work ooll"CtlVlt1es_ Thes<> coll<!ctlVltt"", aroo
sys\fllU of productrve ti:>rew whos<t ooh_on denv""" from th.. coopn-ation
of Ih. Labourpow invclved. But t1us caopeutlon. wlnch e XJSts m any
oranlN<i ecllectwe p~, \lI only v_o .. <ftr.ectIDn by th.. soc:iaI
d.. t~tion on wlnch it is buood. Under Clpttilism. tIus 15 th.. subJ'!!ct1on
of the work colltlVllWS to .. UIlOnn process of ."a/onzaholl tlw.t
produc. UId re produc. tM ~ r..u.tlo n o f product1on. This la tt er IS
lbe reore . dulecttc.&1 re latio n . On tM O"" b.md, lbe pn.n<.'lple compo M nt
o f the re lation , C p1t,J. ~ rom labour by wy o f ya.1ol"lL1tlon: lb e
inhen! . ntgoell. m bto~n Ul8 lWO iJ COl>C<!ptu.a.li:..d "" lh e rte of
surp!us-v,Jue . On the !ler h.lnd . lh e S9C0ncWy co mpo nent. labour
poooer. iJ incorporl e<! inlO COpll; 15 w.ge--labour m <'<!rtiltn d..finite
labour pl OC I'U' . N<:h ol whieh iJ dw~enzed by prn,cu1ar lechni ca.1
COIllpoJltiOll 01 COpll;. i.e . camhtn.otion of m<W>J of labour d....gnood for
specifi c UHJ IJld labOOJr-poooer lb.ol sellI lh ese in mollOn . f or lhe
neocl;us,c; K'ObOIlUJtJ, onl y lhis sec<>n<Ury campan""l ..xistJ, IJld IJ
refened lO IJ 'tedmolOlY'. Tbe probl<tlll lhen iJ lo d..fine lbe econODlle
cl egoneJ of mcame on lbe biJtJ of lbe heler<>g..neous lechnica.1
OOlIlhtn.ol1ObJ lb.ol lTe empu"ic;)ly o1>Hrnble. Tbe c..mbndg.. school b.ls
demotlJlTled lb.ol lhe attempt lO do JO l'UlIJ inlo lb.. obs\de of lbe
JIndud of m.uuremenl, lJl obstde tho.llJ lIllIlloybl.. 15 long 15 lhe
malhemiltlc.&1 1pIC't of meuuremenl d"'llLll to lb.. obj<Oct under
in veJlt tion b.ls not been defined t lhe Jlm. ~oJ c.an dd tho.l!bis d..tect
iJ itself the result o f In ideologiCli refusal, I r...fusal to Idmowloodg... th...
>CiI1n,ture o fCl pitll.
MuxiJt I nalrN has identified the .paC<! of mearur..men t IJ th...
homogeneoUl field o f vale. In this field, the quantiti... that are melJurable
and have .ignifieanC't are ndu.ively those that ha..e bee n made the o bject
]. PROD UCTIV1TY OF LABOURA ND RELAT IVE SURPLUS-VALUE -
15 I 71
basi. of imaginar y combinaliollJ of qu.onlili
AD lhal can be d..fine<! i. lhe
orgollie compo.ilioll 01 cop ilo /. For any production pr oceso , lh ... org anie
composi lion of capilal iJ lbe awegale expression of lb... l<>chmeal
compoJllion reduced lO Ibstract labour_ttme. This ""Pr'>SSlon ha. a
m...ning bec:ause aD lhe elemenlJ enleriog inlo il ar ... commod!b..... Tb...
value of lhoM cammOChl.es lb.ol lTe mearlS and objects of labour IJ I:nown
IJ roMI,M I COpilO/. Tb_ commodin es form one ...ctIon of th... tot; "" of
C'OU'UllOd1beJ, d1Jtmguubed by lhe f.oet tho.t lbey IN! do!lStrOyood during lhe
pt'<XflI of C'OU'UllOd1ty produetlon. M this product1on IJ a pl'<>C<l55 of
valonu!:lOn, and ..alonu!:lOn IJ lbe form uun by lb... chVlSlOD oflabour
undet eapltalmn, Nc:h C'OU'UllOd1ty owner must be ab'" to pur<:h.a~ from
unong the lllIJI o f oommocht>es lb cu=latlo n th-e miMbl of production
tb..l.t e n,ble him to re pNt hiJ productlve iClIVlty . This IJ why constant
eaplt;J IJ va.1ue tr allJlll.ln ed to !he va.1ue o f lb.. produet in lb... course of
productioD . lt ilI tr anmuned in lUll _hen lb.. means o f product1on IS
ent>rely OOllJUmed alld lhus chJapp8M5 15 v;u.... This IJ b=a1lR lb e
~ chV1Jion ollabOOJr ilI . _ le PfOC"'S5 of y;onzabOll and r....hubon of
vlllue lb.ol ilI par!:I!JOIle<! mIo d1Jtmct oommod!ti.... As. this socW prtX'ES '
COlItlll\l8l, v;\le iJ destrayad by productly... OOllJUIIlpbOll. b\lt ,t
Jlmultaneously rNppeaT'J in chfferenl sector of lb ... socW prO<:'<I55 by lb ...
prod\letiOll of rommodlll81 d....gned lO r"Piace tJms" =ood . M
evoerythmg iJ homog~eoIIJ m lhe 6eld of Y;\le, lb ... fuct tbat prod\lctly...
actl Vlty tu.. plac:e m det erminale oonchl1ObJ of prod\lc!:lon tbat hoy... lo N
reproduce<! m oonfomuly Wllh lhe la_ of y;\le J>T"S"nts .ts..lf ... II J>l'OC""5
of tnuJIllinion of v;ue which iJ .added lo lbe n.,. cre.obon of Y;\I... by
~ labour-power,
~oJe are now in I poJItion to ve this 1Jlll1)'5IJ IIformal """PN5Slon . Le! U5
C'OtIJId." sociIl prcducticn ... an OVet" pl'<>C<l55 of y;onzation. ~oJ... I:now
thot this proc:eJ:l is the cr....ricn of II totahb'lnct labour VA oyer IIe<rrtain
giv...n penod . Lec UI ce ll e rhe consto nt eapital which IJ th.. valu...
crystallized in those m....ns o f production that tal<.. part in th... produclion
procesa and are ecnsumed in it in the cout"S<> of th i. p"'riod. The o .....rall
valoriution isexpreued as:
"
I 71
-'
(1
e + VA = VE, or alternative ly
COn.ta n\
cap it a l
SV
~ ari8 b l~
'" '1'lu;o-
csp i. a l
v a Jue
VE
tOC~ ) v ~ lue
lh~
of
pmduct
The struc ture " f th e soc ial pr oduct ion pr ecess is expre ssed by th e
following value relations:
~
sv
- -v-
rate of .urplus- value
k
k + l + ~
VA being given. It is th er efore a fall in V for a given qua ntity VA of abstract
labour . The tran sform at ion of th e producti ve forces which it be to kens is

thus necessaril y a modification ofthe technical compositio n ofcapital that
econom izes on labour-pow er. This modificati on is tran slat ed int o an
va lue eomposition of Ihe ptoduct

,
SV
C+ V
,1, +1
-- .-~ .
<1 1-q)
-l + eq
ques tion th e co ncept of va lue itself.

(2) Labour producti vit y can be identifi ed at th e overall level with
relative surplus-va lue, th at is , an increase in th e rate of surplus-va lue with
ev - value ~om p""iti()n of ca pital

q.
VE C + V(l + .)
labour productivity invol ves a continuous series off eedbacks fro m the set
of exchange equivalence classes onto itself. It defines an irreversible
tem po ral tran sform ati on . It is possible for th eory to co nceive thi s real
movem ent , rather th an simply virtual displaceme nts around a genera l
equilibrium, because th e va lue space is always a measurable homogeneous
space. The tran sform at ion of equiva lence relations in no way puts in
increase in th e organic co mpo sition of capital, th at is th e va lue expression
.
rate of retur n on
of th e techni cal co mpo sition according to th e equiva lence relations th at

prevail at th e mom ent when th e tran sform ati on of th e producti ve forces
~ a p i l al
occurs. But throu gh gene ra l co mmod ity circ ulation thi s tran sform ati on
Al! th ese relat ion ships are defined in th e hom ogen eou s "pace of va lue, and
gives rise to a disturb ance in th e equiva lence relations. To th e extent th at
have no meaning outside of lhi s "pace. If th e rate of surplus-va lue indicat es
thi s change goes in th e direction of a reduction in the unit value of
th e origin of capital, th e rate " f return re flects th e nature of wage-labo ur , in
commodities, th en th e gro wth in th e organic co mpo sition of capital, as

measured in th e initi al sta te of th e va lue sys te m, may ve ry well not be
expr essed by an increase in th e va lue co mpo sition of capital once th e
distortion indu ced in th e va lue sys te m is taken int o account. ~'Ie are thus
led to identify and pay close attention to th e causal chain of pr oc esses th at
characterize th e tran sform ati on of pr od uction co nditions.
" ther words th e fact th a! labour-po wer is incorpo rat ed in th e tot al capital
as an ingred ient of va lorization according to th e struc ture expr essed by th e
va lue co mpo sition of capital.
Labo ur p roducti vit y is de fined as th ose pr oc esses of tran sform ati on of

producti ve forces over tim e th at raise th e rate of surplus-va lue by
modi fying th e struc ture of th e soc ial pr oc ess of pr od uction . This de finition
can be made more pr ecise by two very impo rt ant remarks .
(b) Significance of relative surplus-val ue. To deepen our ana lysis of
(1) Labour pr od uctivity has a soc ial significance in th at it bears on th e
relative surplus-va lue, it is necessar y to not e th at tran sform ati on s of

pr oductive forces to econo mize labour -po wer are pr oc esse s of
overall pr od uction of surplus-va lue and can only be measured at thi s level.
col!ectivizatio n of labo ur by th e applica tion of lar ge-scale and indivisible
It is a po te ntial of th e organized pr od uctive forces which th e wage relation
mean s of pr oduction . Now th e overall equa tion of va lorization, e + VA =
tran sform s int o a property of capital in genera l. But it originates in loc al
VE, leads us to distinguish be tween th e co mbination of pr od uction
mutat ion s of th e sys te ms of pr od uctive forces because capitalism is a

co mmod ity econo my. Hen ce th e centres of produc tion are auto no mo us as
pr oc esses th at for ms th e de partme nt pr od ucing mean s of pr od uction

(Department I) and hen ce th ose co mmod ities th at are eleme nts ofconstant
far as th e initi ati on of labour pr oc esses is co ncern ed , th ou gh th ey are
capital, and th e co mbination of pr oduction pr oc esses th at pr oduces other
bound
Labour
co mmod ities and forms th e dep artm ent pr od ucing mean s of co nsumption
pr od uctivity thus only acquires its soc ial character by pr ovoking
(Department Ir) . To avoid any ambiguity it is necessar y to not e
together
by
th e
genera l
co mmod ity
circ ulation .
inst abilit y in th e relationships of exc ha nge equiva lence.
~'Ie
may say th at
3. PRODUCTIVlT Y OF LA 80 UR A ND RELAT IVE SURPLUS-VALUE -
17 I 71
18 I 71
-------<O~--------------------
-'
(1
irnmediat ely th a! lhi s th eoreti cal distinction bears on th e nature " f th e

valorization of capital in genera l as we have analyse d it above. It has
exp ansion of free tim e and an increase in th e surplus co mmod ity pr od uct o
not hin g to do with th e division int o br anches th a! bears on th e mod e of
Capita list relations of pr oduction can only lead to an increase in surplus
division and regroupment of individu al capitals, and which can only be
labour -time . Mor eover , th e same transform at ion s of th e labou r pr ocess

which increase labo ur pr oductivity are also those that permit its
int roduced in th e investi gat ion " f co mpetition .

The distinction between th e two departments is of great impo rt ance fur
th e bas is of an increase in th e collective po te ntial of labo ur , between an
int ensificati on . Time T remains co nstant or slightly declines, while th er e is
th e social leve l. The moti ve impulses in th e transform at ion of th e forces of
a simulta neous fall in t. and a rise in t,.. The return on labour -po wer thus
increases very co nsiderably , and with it th e mass of surplus-va lue. But
pr oduction , in effect, derive from Department 1. There is th er efore a
surplus-va lue mu st be incorpo rat ed int o capital; it is capital's very
tendency fur th e two departments to develop unevenly , as a result of th e
suste nance. The more th e socialization of th e forces of prod uction has

expanded th e share of past surplus-va lue in relation to th e overall value of
relative surplus-va lue, and co nsequently fur th e accumulaton of capital al
accumulatio n int ernal to Department 1. The increase in th e organic

co mposition of capital inscribes thi s tendency int o th e structure of social
capital. But we know that relative surplus-va lue represents a raising of th e
th e labour -po wer pr oducing surplus-va lue, th e more capitalist relations of

pr oduction de mand th at thi s expansion be co ntinued int o th e futur e .
rate of surplus-va lue by a red uction in th e tim e t n needed to reconstitu te

social labour-po wer . It can only be pr od uced by transforming th e
(e) Effects of labour p roductivity on the stru cture of social capital. To
u.
formalize th e causal co nnections co nstituting th e pr ocess of relative

surplus-va lue, let us distinguish three ste ps which we can denote on our
co nditions of pr oduction of th e co mmod ities pr od uced in Department
For thi s to happen , Department U must be able to absorb th e co mmod ities

pr od uced in Department r , and incor po rat e th ese as co nstant capital in
those prod uction pr ocesses th at lower th e value of means of co nsumption .
The development of the two de partments must thus necessaril y proceed in
a certain harmony . Yet th e social co nditions that pr omote th e un even
develop ment of Department r and th ose th at make possible thi s
harmonization
are
not
imm ediat ely
co mpatible ,
since
th ey
are
sponta neo usly independent . They can only be made co mpatible

tendentially , by way of a tem po ral development of the two departments in
which thi s harmon y is created by rad ical changes in th e equivalence
relations affecting exchanges between th em . Social capital can only
accumulate by such radical changes in th e value relations th at co nstitute it .
~'Ie
shall see that thi s th eoreti cal mod el makes it possible to read th e
hist ory of capitalist accumulation and int er pret th e major crises th at

pu nctuate it .
The profound significance of relative surplus-va lue is readily appare nt.
At th e overall social leve l it represents an economization of th e labour tim e directly and indirectl y necessar y for th e prod uction of th e sum tot al
of all means of subsistence co nsumed by prod uctive workers. The free time
th er eby
released
is
transform ed
int o
surplus
labou r-time .
This
transform ati on in no way results from th e choice of a society deciding, on
19 I 71
variables by th e indices 1,
~,
3. The first ste p define s th e sys te m of
equivalence relationships as th ese exist prior to any change; th e sec ond is

th at imm ediat ely following from a change in th e organic co mposition of
capital; th e thi rd is th at which takes int o account th e effects indu ced by th e
revolutionization of th e eq uivalence relations.
~'Ie
shall sta rt by
co nsidering th e value co mposition of th e pr od uct , q = e/VE. Qur pr oblem

is to define th e increase in th e organic co mposition of capital as an
autono mo us increase in q, such th at q, > q" and to determine th e
develop ment of q, as a functi on of q" q, being a fixed parameter . By th e
definition of relative surplus-va lue, it is th e overall structure of
valorization th at changes, th e abs tract labo ur th at is newly pr oduced
remaining co nstant . ~'Ie thus have VA , = VA, = VA, . By th e definition of
labour prod uctivity , we know th at thi s involves a transform ati on of th e
equivalence relations of exc hange th at has an effect on th e social pr ocess of
valorization. ~'Ie can repr esent thi s effect by a funct ion,{ q" q, - q,J. For the
pr oblem we are co ncern ed with her e , th e genera l laws of relative surplusvalue and not th e study of a particular rate of gro wth in pr od uctivity , it is
unnecessar y to spec ify fwith any degree of pr ecision .
~'Ie
shall co nsider a
very genera l class of functi on s of q, - co ntinuous, differe ntiable and

increasing for all magnitudes of q, and q, such th at o < q, < q, < 1. ~'Ie need
20 I 71
-------<O~--------------------
-'
(1
only add th e initial co ndition : f =
fur q, = q,. The results we shall now
(1) The transmission of a local mutati on in th e pr od uctive forces is
obtain da no! depend on th e pr ecise form off.

~'Ie have already seen why th e overall effect of labour producti vit y
effecte d by a har moni zat ion of th e development of th e two de partments of
social pr oduction . If th e new pr od uctivity is excl usively a funct ion of th e
and 3 are
development of th e departm ent prod ucing means of pr od uction , then its
distinctive only by th e incidence of lhis producti vit y on th e value field , so

th a! we can write:
only overall effect co nsists in red ucing C, in relation to G,. The rate of
passes by way of its influence on co nstan! capital. Ste ps
surplus-va lue remains unchanged :
e,
e,. The exclusive
development of
Department I , moreover , is also restr ained by th e mar ket de mand for thi s
de partment. The difliculties encounte re d in realizing th e value of th e new
co mmod ities bra ke th e fall in th eir unit value. The outco me is th at , apart
from very spec ific histor ical periods when capitalist pr od uction is rapid ly
It follows from lhi s th a! :
expand ing geogra phically, th e decline in value indu ced by labour
e,
e, -
e,
~'E
_I ..-
, C,. VA,
0,- -
- ,
q , + f (l -q, )
pr oductivity doos not fully make up for th e rise in th e organic co mposition

of capital which is at th e root of thi s increased pr od uctivity . The situation is
0,
th en certainly q, < q" but nevertheless q, > q,. In thi s case z dec reases. It
is incorrect th en to claim that technical pro gress is auto matically

favour able to capitalist accumulation. The unet'en det'e1op ment 01 the
since f > 1 fur q, > q,.

~'Ie
mus! stress th a! lhi s formalization co ncern s social pr od uctivity ,

which has a rigoro us meaning in th e Marxis! co nceptual sys tem. It is
effecte d entire ly within th e measurement space. It avoids any reference to
use-value , which always leads int o th e swamp " f oliose debates over th e a
p riori co mparison of hetero geneou s quantities independently of any

process of homogenization .
~'Ie still have to see what analytical res ults can be obtained at thi s degree
of genera lity. In capitalist pr od uction , subjec t as it is to th e pr imacy of
valorization, th e resultant effect can be synthetically expressed by th e
evolution of th e rate of return on capital in th e value space. This can be
written as:
<,- C,SV,
+ V, -
th ro ughout the field of co mmod ity pr od uction , two effects th en make

th emselves felt . On th e one hand , th e f10w ofcommod ities from Department
I und ergoes massive expansion, with the result that th e rise in q, aboye q,
is greatly red uced and may even be cancelled altoge ther. Finally , and
aboye all, th e genera l change in equivalence relation s leads to a fall in th e
value of labo ur-power such th at V,/V, = 1/f. Since VA ,= VA" it follows
th at 1 + e,/ l + e" = f. The rise in th e rate of surplus-va lue can co unteract ,
"
. ,(l - q, )
k.,+l - l+ q,',
and even more th an co unteract , th e already red uced effect of th e increase
The develop ment of z" clea rly enough, can only be analytically known if
1 is
depar tment p roducing me ans 01 p roduction exer cises a dep ressing

injluence on the rate 01return to capita l, despite the technical progress it
engen ders.
~'Ihen the development of th e department prod ucing means of
co nsumption permits th e new level of pr od uctivity to be genera lized
in q. The rate of retu rn capital can th en remain stable or eve n increase .

(2) The Marxist th eory of accumulation is thus indeed a th eory of th e
mathemat ical expressions for thi s funct ion . The pr oblem is rather to
co ntradicto ry development of capitalist relation s of pr od uction . It is quite

co ntrary to any dialectical pr oced ure to seek a genera l formal law of
descend to a more co ncrete level of analysis by investigating th e historical
evolutio n of th e rate of retu rn . The co nclusion we obtain her e is far more
movement of th e forces of pr od uction and see king to summarize th eir
significant as a guide to histor ical analysis. The develop ment of th e
th e functi on
spec ified. But it is not a question of dreaming up
effect on th e hom ogeneous value space.

following genera l co nclusions.
~'Ie
can , however , establish th e
pr oductive forces is, in effect, give n a social rather th an a tech nical

co ntent oCapita list accumulation necessaril y co mes up against obstacles. It
21 1 71
22 I 7 1
-------<O~--------------------
-'
(1
de rives its impulse from th e uneven development of Department 1. Bu! lhi s

un even development meet s a barrier in th e co urse of accumulatio n. This
to be investi gat ed in th e space of mon et ar y quantities and forms part of th e

transform at ion of value int o price . The coe flicient of division (a) is as it
barrier, which is always lat ent , can only be raised if capitalist p roduction
were th e effect of an inver se transform ati on of th e laws of distribution of
rwo/utionizes the conditio ns 01 existen ce ofthe w age -earning c/ass. It is

only by lhi s social transform ati on th a! commod ity product ion can achieve
a rhythm of expansion which permits al leas! a tendential realization of th a!
tot al profit on th e space of value. It is only th e division of profit th at

expresses a social law. The image of thi s law within surplus-va lue is simply
harmoniou s developme nt of th e two departme nts which is a necessar y
To simplify th e formalization we shall operate with discontinuo us tim e .
co ndition fur a regular rhythm " f accumulation. As we shall show lat er a n ,
Let us ass ume th at th er e exist unit peri od s of product ion separa te d by th e
lhi s gives us a th eoreti cal basis fur characterizing th e hist orical epoch th a!
da tes of th e realization of value in exc hange. At date t + 1, co mmod ity

exchanges take place which incorpo rat e th e changes in th e value relations
has arisen since th e First
~'Iorld ~'Iar
as a new stage in th e development of
capitalism o It also gives us an analytical inst rument for int erpreting th e

cyd ical crises of capitalist accumulation.
an ex p ost result without major significance.
deriving from incr eased labour prod uctivity . These are superimposed on
th e gro wth in th e orga nic composition of capital which is at th e roo t of th e
gains in producti vit y of per iod t + 1. The relationship we have established
4 . Accumulation of Ca p it a l and Growth in So c ia l Labour_Power

The found ations of capitalist accumulation have now been co nceptualized .
To express th e law of capital accumulation in th e field of value, all th at is
further needed is to translat e int o a tem po ral dynamic th e phases of
transform ati on of th e value relations that we have identified . This involves
between q, and q" at two successive ste ps in th e modificati on of th e value

relations, co nsequently bec omes th e link between q,., + 1 and q" on which
th e increase in th e organic co mposition between th e period s t and t + 1
co mes to operate , thi s being q" + l ! q" < 1. ~'Ie th en get th e following laws
for th e evolution over tim e of th e variables defining th e value structure of
tot al capital:
th e co nstruction of th e tem po ralit y int rin sically characte ristic of capitalist
e,
pr od uction , in a pr oced ure radically opposed to any artificial

'dynamization' of an equilibrium sta te. This formalization of tem po ral
evolution will enab le us to define th e rate of tot al capital formation in value
terms, and so ded uce th e law of development of th e value of social labourpo wer, i.e. th e bas is of th ose fiuctuati on s in th e labo ur market th at are
characteristic of th e capitalist mod e of pr od uction .
(a) The temp oral dy namic ofcapital accu mula tio n as a wh ole. In order to
study accumulation as an on-going process, we need to add a further
hypothesis to th e results already established. This co ncern s th e division of
surplus-va lue int o a po rtion a SV which is accumulated and a po rtia n (1 -
q, .~l . ~,)
V, -
q"" , -
q,.,
q. ,
' ) .( I ~ q' ,1I
q" , + f
ftq.,
l + ~, + \ .
1 + ~,
h, (/,),
where th e functi on h de notes th e degree of harmonization between th e

development of th e two departments of producti on . In th e genera l case , h
is located between 1 and f; h = 1 in th e extre me case where techni cal
pro gress is exd usively locat ed in Department 1.
~'Ihen
th e co nditions of
a)SV that is co nsumed by th e capitalists or allocated to finance th e genera l
producti on do not change ,f, = 1, and we th en get q3l+< = q" +,, since th er e is
overheads of society. This is th e only hypo thesis th at can be made at th e
no modificat ion in values resulting from producti vit y gains.

The above relationships determine th e tem po ral pr ofile of accumulation
pr esent level of abs traction, but it is not satisfacto ry as it sta nds. ~'Ihile it is
d ear enough that surplus-va lue is indeed divided in th e manner just
as a funct ion of th e increase in th e organic composition ofcapital, once we
indicat ed , it is no less dear that th e coeflicient of thi s division is
know th e functi on s fa nd h th at summarize th e effect of the development of
end ogenous and not exogenous. In po int of fact , th e division of surplus-
th e producti ve forces in th e field of value.
value bea rs on th e division int o fracti on s of the capitalist dass itself. It has
4 , ACCUMULAT ION OF CAPITAL AND GROWT H IN SOCIAL LA8
23 I 7 1
24 I 7 1
-----(o~-------------------
-'
(1
(b) Rot e 01groU' th 01capital in value terms. The rat e of capital furmation
ev idently for ms par! " f th e tem po ral pattern of accumulation, once th e
hypothesis co ncern ing th e distr ibution of surplus-va lue is int roduced . Le!
us call 9',1 th e rate " f gro wth of capital in va lue terms be tween pe riod s t
and t + 1 . This is defined in th e fullowing way :
R', / A
1 +1/" , .
k, + 1+ 0<",
" , +
, and x".,
k ,- k, . , + 0,,",
k,., + 1
Now, 1;. , is genera lly greate r th an 1;. From th e relationship be tween 1; and
q" in fact , we can de duce:
h C+ AV
_
V , ...,tht> C _ C,. , _ C" aml J\ V _V, . , _V,.
e-, +
Subs tituting for g. ,,, we get:
k, . , _ ~, _ ~
k,
q,
_l - q,
'
1 - q",
The distr ibution " f surplus-va lue al th e end of pe riod t is th en :

SV, _ de . "'V .
(1
- al
S ~',.
or ahe rnatively a-S V, _
~C +
Each of th e three ratios on which 1;+,/1; depend s is genera lly greater th an 1.
t.V.
~'Ie
in q,. ~'Ie can th er efore co nd ude th at apa rt from certain tran sient ph ases in
From lhi s we de rive :

fI' .I
also know th at it is a sha rp rise in /, th at ten ds to neutralize th e increase
V,
(}., ' ~,
a, ' . ~
C
- \ - 4.
., +V, ,- _. _,+
which q, un der goe s a sha rp de d ine because of th e devalorization of

co nstant capital, th e va lue co mpo sition of capital rises in th e co urse of
~,'
accumulation.
~'Ie
sha ll see, moreover , in investi gating crises , that th e
capital should remain co nstan! over tim e . The pro file of capitalist gro wth is
de valorization of co nstant capital repr esents a rupture in th e struc ture of

social capital, makin g it possible to find new relations which re -es tablish a
th e pattern over tim e of a movem ent created by th e int er act ion of th e

antagonistic forces which we have identified . It is only possible to speak of
viab le rate of return on capital and set capital for mation in mot ion again.
In th e per specti ve of th e law of accumulation as for mulated up till now,
relative ly balanced gro wth, as a movin g av erage, for hist orical ph ases
where th e soc ial co nditions of pr od uction are tran sform ed in a way th at
th e dete rmination of g"l leads to certain genera l co nd usions co ncern ing

th e ten dential ev olution of soc ial labo ur-po wer.
co unteracts th e ten den cy to un even developme nt of th e departme nt
(1) To th e extent th at th e evolution of 1;may be accompa nied by violent
As we have already explained, th er e is no reason why th e rate of gro wth of
oscillations bound up with th e un even developme nt of th e two
pr od ucing mean s of pr od uction .

(c) Evolution 01variable capital. Let g"1 = A V/V, be th e rate of gro wth of
va riable capital. ~'Ie can dispense her e with th e index in th e not ati on for th e
va lue co mpo sition of capital and write simply 1; inst ead of
k,1"
~'I e
have
th en :
departme nts of producti on , th ese oscillations have th eir effect on th e rate

of gro wth of wage-labour . They create movem ents of relative expa nsion
and co ntraction . It may ev en happen th at in certain pe riod s th er e is an
absolute fall in th e rate of gro wth of employ me nt.
(2) The gro wth of employme nt is slower in ten den cy th an th at of soc ial
...V
capital, reflecting a relative de d ine in th e va riab le po rtion th at follows
V, "
11"' V V, - I .
imm ediat ely from th e saving on livin g labour . This ten den cy cannot be
fully co mpe nsated by th e possibilities of expa nsion ope ned by increases in
~~V~'~'j',;;;::(~C:'~':':.~v:,:.:",--.
C,. , + V, ,,
1+1/" , -
'v
e" ,
(C, + ~',)
labour producti vit y . This is th e found ation for th e creation of a relative

surplus po pulation in indu st ry on a gro wing sca le, with ever greate r labour
being absorbed by unproducti ve employ ment create d by non -accumulat ed
k, + 1
k,. , + 1
4 , ACCUMULAT ION OF CAPITAL AND GROWT H IN SOCIAL LA8
surplus-va lue.
(3) The rate of gro wth in tot al capital for ms an up per limit on th e
exte nsion of th e wage-earn ing dass.
25 I 7 1
26 I 7 1
- - --<0 " " - - - - - - - - - - - - - - - - - - -
-'
(1
The spec ifical1y capitalist law of po pulation is th er efure in no way a
atoms of reality to be dassified, linked and assembled. Fact s must rather be
naturallaw, bu! forms par! " f th e law of capital accumulation, as Marx

un am biguou sly maintained . 'The appropriate law fur mod ern indu stry ,
treat ed as units in a pr ecess, or articulatio ns between relations in moti on ,

which int erfer e and fuse with one another. They can only be gras ped by th e
with its decennial cycles and period ic phases which , as accumulation
collabor ation of different mod es of investi gati on , and thi s is why th e
advances, are co mplicated by irregular oscillations following eac h " ther

more and more quiek1y , is the law of th e regulation " f th e demand and
co ncrete can be reached in th ou ght only at th e end of a globalizing

pr eced ure in which deductive and critical moments int er act .
supply of labour by th e alternate expansion and co ntraction of capital, i.e.
These few met hod ological indicat ion s are int ended to avoid any
by th e level of capital'. valorizatio n req uirements al th e relevan! moment ,

th e labour mar ket sometimes appea ring relatively un der -supplied because
misunder st andin g in th e pages th at follow. The main aim of our preliminary
capital is expanding, and sometimes relatively over-supplied because it is

co ntracting. It would be utterl y absurd, in place of thi s, to lay down a law
according to which th e movement of capital depend ed simply on the
movement of th e po pulation.' (Cap ital, Volume 1, NLR/ Pelican editio n, p.
co nfrontation between th e th eory of accumulatio n and th e genera l lessons

pro vided by th e histor y of US capitalism is to genera te questio ns th at will
ena ble us to develop our th eory and make it mor e co ncrete in th e
subse quent chapters. This is a legitim at e ambitio n, since our pr ior
formulation of th e law of capital accumulation already takes int o account
7 9 0. )
th e transform at ion of th e pr oductive forces as a necessar y co mpo nent of

th e expanded repr oduction of th e wage relation . This is th e meaning of
11. An o v e rv ew o Ca p it a l Ac cnmn lation in tite Un t e d
relative surplus-va lue. This endogeno us character of th e pr od uctive forces
States
arises from th eir social determination . ~'Ie saw that th eir transform ati on
involved two different aspec ts: th e transform at ion of th e labou r pr ecess
By formalizing th e law of capital accumulation in th e first sec tion of thi s
and its co nditio ns, and th e transform ati on of th e co nditio ns of existe nce of
th e wage-earn ing dass. These two aspec ts are not br ou ght int o harmony by
chapter , we int roduced th e co ncepts needed for an overall pers pec tive on
its hist orical movement . These will now guide our investi gati on of 'stylized
any social ration ality ; it is rather th e dass struggle th at here de te rmines
fact s'. The task of th e th eorist in approaching hist orical analysis is to
th e actual movement of histor y . This movement is all th e more gove rned
investi gat e what is fundamental in th e evolution of a social formation over

a certain hist orical period , th e limit s of which have th emselves to be
by th e logic of accumulation, th e mor e th e dass struggle eccurs in

mod aliti es th at are co mpatible with th e ex te nsion of co mmod ity exc hange.
justified . Resear ch of thi s kind doos not sta rt from raw fact s, bu t rather
The co nditio ns for such a canalization of th e dass struggle involve th e
from an elabora tion of results already pr od uced by hist orians. There is

th er efore a dialectical relationship between differe nt aspec ts of th e
tot alit y of soc ial relations at any given tim e , and it is th eir study th at forms
scientific pr eced ure , which can be int er pret ed as a passage from the
abstract to th e co ncrete . This is no royal road where th e most abstract
co ncepts magically co mmand th e movemen t of seciety. There is rather a
two-way pr ecess mar ked by frequ ent mishaps, often uncertain in its
th e co ntent of th e th eory of capitalist regulation .

The first task is to investi gat e whether it is possible to give co ncrete
form to th e pr incipIe of accumulation formulate d in highly abs tract terms
in th e first sec tion of thi s chapter . Qur aim will not be to period ize th e
histor y of th e United Sta tes by identifying epochs th at are allegedly
results, where th e objective is th e develop ment of co ncepts and not the

'verification' of a finished th eory . This de velop ment of co ncepts involves a
hom ogeneous and separa te d by dates seen as marking events th at indu ced
irrever sible changes. Such a daim would be ridiculous co ming from a non-
permanent ques tio ning of received judgements on th e fact s. It rejects as

illusory th e daim th at an inducti ve pr eced ure can 'go beyond th e fact s' and
hist orian . It co uld only lead , moreover , to unend ing co ntro versies amo ng
reach co ncepts in a linear itin er ar y . The need for a dialectic in the

relationships between th ou ght and reality arises because fact s are not
11 . A N OVERIIIEW OF CAPITA LA CCUMULAT ION IN THE UNITE D
27 I 7 1
spec ialists lacking th eoreti cal criteria . History as actually lived is infinit ely
pr olific and het ero geneou s. Historians have developed a method of
scientifically investi gati ng thi s reality , but in no way any overall pr incipIes
28 I 7 1
------<O~-------------------
-'
(1
of int erpret ati on . Such principIes, moreover , oCluId only belong to th e
present chapter , we shall analyse th e histor y of th e United Sta tes not so as
philosophy of hist ory , since th ey necessaril y involve jud gements on th e
to period ize it , but rather to define a th eoreti cal object , th e regime of
final goals " f human societies. There can be littl e da ubt th a! a vision of such
accumulation.
a kind is contained in th e work " f Marx , fur whom capitalism inevit ably
A regime of accumulation is a form of soc ial transform ati on th at

increases relative surplus-va lue und er th e stable co nstraints of th e most
leads to th e abolition of social dasses, i.e. th e end of hist ory in genera l,

since history is nothing bu! th e history of dass struggles. The present work
genera l nor ms th at define absolute surplus-va lue. This definition requires
doos no! keep fait h with lhi s philosophic visio no It simply accepts tha! th e
us to dee pen th e co ncepts of absolute and relative surplus-va lue which we
dass struggle pr od uces, transform s and renews th e social norm s which
have distinguished analytically in th e pr eceding arguments. It might be

th ou ght from th ese arguments , whose aim was to gras p th e quantita tive
make economic relationships int elligible. These relationships have

co nditions of validity which are nar ro wly limit ed by th e persistence of th e
norm s which gave rise to th em . At our pr esent level of knowledge of th e
pro blems of social transform ati on s, we can accept her e th at if th e dass
struggle pr oduces norms and laws which form th e object of a th eory of
aspec t of surplus-va lue , th at absolute and relative surplus-va lue were two
alte rnative mod aliti es, forms th at co uld be subs tituted one for th e other in
th e pr oduction of a soc ial surplus. This is in no way th e case . The
distinction between th ese two forms of surplus-va lue denotes an
soc ial reg ulation, it is itself beyon d any 'law' . It can neither be assigned a
articulation of soc ial relations th at indu ce differe nt but co mplementary
limit , nor be co nfined by a de te rminism whose legitimacy co uld only be
pr actices.
met aph ysical. In a situation of hist orical crisis, all th at a th eory of
A bso lute surplus-value, as we have seen , is th e effect in th e

homogeneous field of value of th e wage relation as a genera l pr ecess of
separa tion between individu als, and separa tion of th e po wer of disposal
regulation can do is not e th e co nditions th at make certain directions of

evolution impossible , and de tec t th e meaning of th e actual transform at ion s
un der way . Thereafter, however , th e future remains open . Hist orical
develop ment is tot ally different from biological evolution inasmuch as it is
over th e means of pr oducing th eir conditions of existe nce. Ind ivid uals are
transform ed int o wage-earn ers, i.e. th ey are made indiffer ent and
gove rned neither by chance nor by a hereditary determinism o Histo ry is

initiatory . But it is only possible to co nstruct a th eory of what is already
engend ered by social separa tion , an abs traction which alone makes it
initi at ed - which pu ts a dec isive limit to th e social sciences.
possible to spea k of labour in genera l and notjust sorne trade or other th at
The reasons why it is impossible to reconstruct th e movement of past

histor y are th er efore th e same as th ose th at pr event any pr ed iction of
~'Ie
int er changeable as far as pr od uction is concern ed . This is an abs traction
is qualita tively defined , access to which derives from particular pr eced ures
th at are ritualized and codified by craft organizations. Access to wage-
can act in hist ory , but not calculate it . Even
labour , on th e co ntrary, derives from genera l norms, th e exte nt of whose
though it is rooted in existing co nditions, th e dass struggle goes beyond

th em in pr od ucing social institution s and pr eced ures th at are not
application depends on th e organization of po litical and judicial po wers ,

but is in any case delimited by a nat ion al ter rit ory . The wage relation can
rearrangements of th ese co nditions. It is a pr ecess of creation in th e strong

sense. The object of th eory cannot be to pr escr ibe what is going to hap pen
be fully established in such a territorial space only if th e sovere ignty of th e

sta te co mes to be identifi ed with th e nati on . Such norm s are inh er ent to th e
or what must happen in this creation , but rather to show how un der
wage relation : th ey are social pr actices that are partially co ntractual and
capitalism thi s creation is a permanent precess. Accumulation repr oduces
partially coe rc ive . It is th an ks to th em th at surplus-va lue can be pr od uced
th e relations of pr oduction by co nstantly transforming th eir operation . In
as an on-going precess. They are th er efore th e de te rminants of absolute
order to achieve a pr ecise analysis of th e forms of regulation un der

capitalism , it is necessar y first to define an int ermediat e co ncept , less
surplus-va lue. In Cha pte rs ~ and 3 we shall be study ing th e hist orical
evolution of th ese nor ms and th eir organization int o a wage sys te m. For th e
abs tract th an th e pr incipIe of accumulation so far int roduced . This is th e
tim e being, we formulate th em simply so as to define more pr ecisely th e
co ncept of th e regime 01 accumulation. In th e sec ond sec tion of th e
th eoreti cal co ntent of a regime of accumulation:
hist ory in th e making.
11 . A N OVERIIIEW OF CAPITA L ACCUM ULAT ION IN THE UNITE D
29 I 71
30 I 7 1
- - ----(O r - - - - - - - - - - - - - - - - - - - -
-'
(1
~'Iith
regard to th e utili zati on of labour-po wer in pr oduct ion : th e
work collectives to th e abs tract and exd usive objective of capital
fixing of th e legal duration of labour on which th e basic hourly wage is
valorization. As we shall see in detail in th e fullowing chapters, a
reckoned , as well as th e rate fur overtime ; maximum working hours; th e

limitin g ages fur individu als to enro l fur wage-labo ur ; th e exte nt of
c1assijicato ry and identiji catory logic, in other words abs tract institution al
codes fur social pos itions , partakes of th e very essence of capitalist soc ial
relations. It is th e pr incipIe of th e sys te matic institu tionalization of society.
It is radically opposed to th e unification of so man y tradition al societies by
way of myth, custom, and a tight network of interpersonal obligations, by a
solida rity of co mmunity and neighbou rhood . It is because capitalism doos
not simply utili ze in its pr od uction workers who still co ntinue to live
capitalist freedom to hire and fire ; and th e regulation of legitim ate tradeuni on practi ces.
- ~'Iith regard to th e determination of wages: genera l procedures fur
negoti ation of th e basic hourly wage ; regulation of its applicatio n; and th e
arb itra tion of "onflicts th a! arise.

- ~'Iith regard to th e socialized management of th e reprod uction costs
according to th e rules of a traditi on al co mmunity, but penetr ates int o th eir
of th e wage-earn ing dass: sta ndardization of th e insecurity due to mobility
who le mod e of life , th at it necessaril y breaks up civil society and
of individual labo ur-power by means of unemploy ment benefits and pu blic
recombines it according to th e logic of abs tract dassification and
job-cr eation or retr aining pro grammes; sta nda rdization of risks of
stra tification. It is th e sys te matic operation of thi s logic that defines th e

pr oduction of relative surplus-va lue.
tem po rar y disability by sys tems of insurance , whether co mpulsory or

co ntractual; sta nda rdization of deferred wages by retirement schemes.
Relat ive su rplus-value is th e co ncept th at defines th e unity of th e
These explanations make it possible to indicate th e argument that will
relations which structure th e co ncrete organization of th e pr oduction and
fullow in th e sec ond sec tion of thi s cha pte r. ~'Ie shall atte mpt to
characterize two regimes of accumulation which we call th e predominantly
repr od uction of th e wage-earn ers. Based on th e genera l pr incipIe of
exte nsive and th e pr edominantly intensive . It sho uld be d ear by now th at
abstraction inh er ent in abso lute surplus-va lue, a pr incipIe th at involves a

fundamental lack of differe ntia tion between individu al wage-labo ur units,
th ese are co ncepts req uired fur th e develop ment of a th eory of social
relative surplus-va lue structures th e wage-earn ing dass according to a
histor ical period un der consideration , th e two regimes of accumulation
spec trum of des ired differentiations th at are pu rely quant itatit'e : output
norm s fur th e work of spec ific collectives as divided up int o br anches of
were co mbined together , and yet th e process of capital accumulation

ass umed a differe nt pattern according to whether one or th e other
pr od uction , sys te ms of gra ding fur skill and wage hier ar chies, rates of
dominated . There are th eoretical reasons fur thi s co mbination, since

absolute and relative surplus-va lue are distinct but associated co mpo nents
possession and th resholds of access fur differe nt types of use-values, etc. It

is th ese differentiations within a measurable space inh er ent to th e wage
regulation , and not fur a period ization of co ncrete history . Throughout th e
of th e sys te m of social relations th at makes up wage-labo ur . The
relation that make it possible to use sta tistical tool s in th e socio-econo mic
co mbination of th e two is effected in th e organization of labour and th e
analysis of capitalism oYet such analyses do not yield th e sec re t of its social
mod e ofl ife of th e wage-earn ing dass.
dynamic . Their scientific interest is to give a repr esentation of th e influence
The predomin antly extensive regime 01 accumulation is that in which

relative surplus-va lue is obtained by transfurming th e organization of
of social norms of different degrees of genera lity, or th eir co mbination ,

which de te rmine th e oflicial pr incipIes of dassification of socio-econo mic
categories. These latter are not livin g collectivities, but rather abs tract
gro upings defined by sta tistical mani pulati on s within th e und ifferentiated
mass of th e wage-earn ers. Mor e fundamentally , th e dassificato ry
pr oced ure that assigns social pos itions according to abs tract criteria is th e
mar k of th e penetr ation of th e sta te int o civil society. This mod e of sta te
organization , in fact , exte nds to all ente rprises th at subo rdinate major
11 . A N OVERIIIEW OF CAPITA L ACCUM ULAT ION IN THE UNITE D
31 1 7 1
labour ; th e traditi on al way of life may persist or be des troyed , but it is not
radically recomposed by th e logic of utilitari an functi on alism . Only
agric ulture is affected , by th e furmation of th e agricultura l-foodstuffs
co mplex o The division of society effected by dassificatory and
identificator y logic operates on working tim e in pr oduction in th e strict
sense. Its materi al support is mechani zati on . The genera l movement of
accumulation that fullows from it is th e build-up of indu st ry in success ive
32 I 7 1
- - ----(O r - - - - - - - - - - - - - - - - - - - -
-'
(1
layer s. The co mbined development of th e two de partments of pr od uction is
The characteristic mod e of existence of de velop ed capitalism is large-scale
ac hieved only with difliculty , th e pace of accumulation encountering
indu st ry with its mass pr od uction . Yet capitalist relation s of pr od uction do
recurren! obstacles.
not just arise from thin airo They de rive histor ically from th e formation of
th e wage-earn ing dass by the gra dual disso lutio n or des truction of
The p redo minantly intenslt' regime 01 accumulatio n creates a new

moo e " f life fur th e wage-earn ing dass by esta blishing a la gio th a! " perates
a n th e tot alit y of tim e and space occupied or traver sed by its individu als in
daily life . A social co nsumption norm is formed , which no longer depe nds
in any way on co mmunal life , bu! entirely on an abstrae! cede of
utilitari anism . This norm is stra tified according to pr incipIes th a! d ose ly
cor respo nd to th e stra tification of social gro ups within th e wage-earn ing
dass. The int ensive regime of accumulation accomplishes an int egrati on of
th e two departments of prod uction th at makes possible a far more regular
pace of accumulatio n and a far more rapid increase in th e rate of surplusvalue.
Befor e pr oceed ing to de ta iled study of th e different noti on s that have
just been int rod uced , it must also be not ed how thi s th eory of
accumulatio n is distinguished from th e neo-d assical co nception of gro wth.
The th eory we shall seek to elabora te her e is in reality a th eory of
develop ment of th e wage relation . Qur aim is to gras p th e source of thi s
dynamic in order to be ab le to int er pret th e mod es of societa l co hesion
from which econo mic relationships can be derived. The neo-d assical
co nception of gro wth is devoid of any bas is, since its th eoreti cal schema is
th e genera l co nfiguration of market adjustments from th e sta rting po int of
ru les of individu al dec ision. Adjustments of thi s kind are only rational if th e
structura l co nditions of th e choices involved are give n and inva riant. Now
th e transform ati on of th ese structura l co nditions is not only certain , it is
th e very ration ale of capital's dy namic. This is why th eories of mar ket s are
tot ally unable to account for pr ocesses of develop ment . The co hesion of
pr evious mod es of pr od uction . This movement , moreover , can never be

th e pr od uct of an exd usively econo mic logic . It req uires po litical relation s
adequate to th e domination of th e indu strial bourgeoisie, and decisively
involves the ro le of the sta te. The co nditions und er which sta te po wer is
exe rcised may be more or less favour able to th e implantat ion of capitalist
relation s of pr od uction on th e ter rain of the co mmod ity econo my. The
rhythm and forms of penetr ation of th ese capitalist relations of pr od uction
form the spec ific infrastr ucture of a particular social formation . It is this
social infrast ructure th at enables us to gras p th e differences in th e
development of th e pr oductive forces between different social formation s.
From thi s po int of view, th e Unite d Sta tes displays major or iginality.
(a) The fr ont ier prin cipIe as a sp ecijic mode 01capitalist pen etra tion . All
forms of pr ecapitalist pr od uction have agriculture as th eir pr oductive
base. The fundamental econo mic co ndition for indu st rial capitalism to
develop is th e formation of a gro wing agric ultura l surplus pr oduct and its
realization in co mmod ity form o In th e United Sta tes thi s co ndition was
eno rmously favoured by th e existe nce of an imm ense reserve of
un ap pro priat ed agricultura l land. Yet it was made a reality ab ove all by th e
po litica l origins of th e American nation , which united petty prod ucers with
th e co mmercial and financial bourgeoisie in a co mmon struggle against
English colonial rule . This struggle, whose aim was freedom of ente rprise,
left a permanent mar k on th e ideological repr esentations of American
social relations and create d po litical institut ion s gove rned by th ose genera l
pr incipIes th at are th e legal formalization of relations of co mmod ity
th ese pr ocesses canno t be found in th e market s th emselves, but only in a

soc ial logic, which we call her e th e regime of accumulation. For want of any
exc hange.
direct analysis of th ese pr ocesses, mod els of gro wth are simply formal
The type of ju ridical subjec tiv ity th at reflects th e genera l reification of

co mmod ity-producing societies was all th e mor e dec isively imposed within
exe rc ises in which techni cal pro gress has no co ncrete significance, soc ial
demand plays no ro le, and time itself has nothing in co mmon with th e
th e new American nati on inasmuch as th er e were no organic ties to
spec ific irrever sibility of a genuine social dy namic.
pr ecapitalist forms of pr od uction . This ju rid ical ideology co ndensed th e

formal liberty and eq uality of individu als as econo mic subjec ts endo wed
l . General Con dit ions o De v elopment o t he Fo rce s o
with initi ati ve , as po litical subjec ts electing th eir repr esentatives, and as
cultural subjec ts giving and receiving opinions. All social activities were
Prodnct ion
1 , GENERAL CONDIT IO NS OF OEVELOPMENT OF THE FORCES
33 I 71
34 I 71
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(1
co nceived as exc hange relat ion ships form ed and un furm ed by th e will of
estate . Such spec ulatio n was fuelled by any major change in econo mic
th e co ntracting parties. This co nception " f social relati on s involved an

irrepar able rift between th eor y and pr act ice . Al a rre pele th er e developed a
co nditions, in particular irrigati on proj ects and th e co nstruction of
pos itivism bea ring within it econo mic utilitari anism and pr agmati sm , al th e
other an idealism which in th e Unite d Sta tes took an essentially religiou s
war, th e per iod 1846- 48 saw th e incorpo rati on of Califurn ia into th e USA
and th e simulta neo us discovery of gold th er e . These events unl eashed an
form oThis representat ion of soc iety was ab le to impo se itself so uni forrnl y
extraordinary wave of speculation, plund er and mon opoli zati on of land by
in th e USA because it was no! mer ely a sta lio ideology , bu! was linked to th e
every ava ilable means of violence. After 1848, moreover , th e world

capitalist economy emba rked on a lon g phase of expansion which
dynamic expansion of th e frontier . The energy th a! individu als expended in
railways from th e 1840S onwards.
~'Iith
th e end of th e Mexican-American
th eir econo mic co mpetition did no! mer ely repr od uce a stable social
a rder , it actually created new social relations. The frontier pr incipIe was
stimulated American agricultura l product ion . The space of co mmod ity
more th an is impli ed simply by its liter al co ntent , in other words th e mer e

domestication of a geogra phical space. It was rather an ideological
immi grati on and migrati on to th e
prin cipIe expr essing th e ability of th e American nati on to po larize

individu al activ ity in a direction of pr ogress . In deed th e indu st rial
bourgeoisie was lat er able to get th e who le of th e nati on to accept th e
circ ulation expanded , and agricultura l pr ices rose. A massive wave of

~'Iest
in sea rc h of oppo rtunities fur profit
shock frontier society. Land prices rose rapidly , and with th em th e sums
paid in settle ment of inh eritances. The more land prices increased , th e
more mon et ar y resour ces were needed by new would-be pr od ucers or old
producer s seeking to extend th eir holdin gs or move int o regions where th e
technological transfurm at ion s indu ced by relative surplus-va lue by
possibilities of expansion were more pr op itious. The upshot was th at in
presenting th ese as th e building of a 'new frontier '. The development of
order to bring its owners th e mon et ar y yield th ey needed th e agricultura l
capitalism and th e co nstruction of th e nati on were thus identified as one
surplus pr od uct had more and more to take co mmod ity furm and to
precess in th e po pular co nsciousness. The ideological institution s of
circ ulate in a wider space , th er eby stimulating th e exte nsion of means of
capitalism absorbed int ellectuals or iginating from all social stra ta;
bourgeois representations of th e world were co nstructed witho ut
transpo rt o
These were th e ideal econo mic co nditions fur capitalism to take hold in
resistance ; th e juridical pr incip Ies of th e sta te tock on a sac red and ete rnal
character . Any questioning of free ente rpr ise was per ceived as a threat to
th e new econo mic spaces in co urse of furmation . Commercial and finance

capital was already well established in th e eas tern sta tes , where it
Liberation from colonialism thus re moved th e po litica l bra kes from
flourished on th e bas is of int ernati on al trade . From th e 18S0Sonwards, th e

de velopment of th e transpo rt sys tem led to th e creatio n of new ur ban
bo th geogra phic and economic expansiono Expansion became th e
centres to th e west of th e Appalachians, which became tradin g sites and
dominant phenomenon of American life ; it co uld almos t be ide ntified with

th e co untry's hist ory . This expansion was th e co nscious work of br oad
foci fur th e furmation of new capital, illust rat ed by th e multiplicati on of
masses of th e po pulation over success ive genera tions. The co mmunity of

petty pr od ucers who built up th e frontier econo my were never th e agents
latifundists gave rise to an explosive centralization of capital. But th e major
th e int egrit y of th e nati on .
banks. In Califurn ia , mining operations and th e expropriation of Mexican
of an agricultura l economy geare d to mer e subs istence. As th e frontier
part of thi s economic expansion , de pending as it did right from th e sta rt on

th e centralization of financial resources fur th e exte nsion of th e railways
expanded, and th e co mmunications net work became de nse r in th e
net work, was directed by th e financial po wers of th e East . The spea rhead of
geogra phical space behind it , th e relative econo mic co nditions of th e

different regions un der went a change . The mobilit y and mutual
capitalist encroach ment on agra rian pr operty was th e establishment of
co mpetition of producer s was sharpened by th e permanent influx of new
associations fur engrossing land . These co mpanies obtained hu ge
arrivals. Competition fur th e pr ivate appropriation of th e bes t situated and
co ncessions fur th e co nstruction of th e transcontinental railways; th e

Feder al govern ment made th em gifts of imm ense swathes of land on either
most producti ve land lent extraordinary impo rt ance to spec ulation in real
1, GENERAL CONDIT IO NS OF OEVELOPMENT OF THE FORCES
35 I 71
railway and mining co mpanies, which were above all else capitalist
36 I 71
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(1
side of th eir lines. The railway companies were financed by vas! share
mer chants and bankers. This led to th e rapid spread of mort gages and
issues and sta te loans. The same ente rprise th a! owned th e railway thus
increased indebt edn ess because mort gage loans had to be repaid . By th e
typically also carne to own al! natural resources on th e soil gra nte d il .
outbreak of th e Civil ~'Iar , capitalist do m ination over petty co mmod ity

pr oduction was already well established. The transpo rt infrast ru cture th at
These lands, obtained gra tis and now mon opoli zed , were now increased in
value by th e railway line , whose co nstruction cost th e co mpany's initi al
pro moters nothing. They were subse quently sold off in smal! plols al very
high pri ces, oc alternatively leased .
In th ose regions where land was already apportioned, th e co mpanies
pro vided its preconditi on was in full development , and th e mon opoli zati on
of mining resour ces was also well un der way . The Civil ~'Iar was at once to
accelera te and to modi fy th e process qualitatively .
managed to buy bac k th e land th a! th ey needed al low cost , using every
The American Civil ~'I ar was th e final act of th e struggle against colonial
domination . This is why it is legitim at e to see it as th e origin of th e mod ern
possible means of intimidat ion , a ne of th ese being to th reat en th e

po pulation of th e towns and sett1ements along th e pro posed ro ute th at th e
epoch in th e overall traject ory of th e American capitalist revolution . The

slave furm of prod uction in th e South owed its existe nce and its prosperity
railway would be dive rted elsewhere if local authorities did not gra nt th em
to its tot al int egrati on int o an English- dominat ed int ernat ion al trade . It
th e land th ey wanted on th eir own terms. The inh abit ants of th ese towns
bloc ked th e unificat ion of th e American nati on at every level , and
were also furced to subsc ribe to loans issued by th e co mpanies and
th reat ened to put an end to th e frontier expansiono The lon g phase of
guara nteed by pub lic authorities; municipaliti es likewise had to devote a

good po rtion of th eir fiscal resour ces to railway finance . From th e
indu strial gro wth in England after 1849, with its strong de mand fur
Mississippi to th e Pacific coast , railway and mining co mpanies, along with
agric ultura l raw mat eri als, indudin g co tton , incited th e slave owners to
expand th eir ter rit ory . Hence slavery gained new fuotholds in th e lands
other financier s involved in mon opoli zing land , also had at th eir disposal
th e tru st y weapo n of water co ntrol. It was enough to seize th e watersheds
co nquered in th e Southwest. In thi s way slave ry br aked th e expansion of
overloo king th e rich valleys either side of th e Rockies in order to ensure
and pr evented th e exploita tion of imm ense mining resour ces. The
dominion over imm ense territories; it th en became possible to buy up
slaveowners also exercised a pr epo nde rant influence in Congress, suflicient

to th wart any pr otectionist po licy. In du st rial capitalism thus suffered as a
particularly pro fitable land , or land with a stra tegic impo rt ance , and to
hold th e rest to ransom . The western sta tes pa ssed very flexi ble legislat ion
th e textile indu stry and other indu st ries using sub-tropical raw mat eri als,
whole , fur th e pilot indu st ries of th e econo mic division of labour were
th at d ose ly met th e req uirements of th e dominant financial gro ups.
un able to withstand English co mpetition . ~'Ihat was at sta ke in th e Northern
Eventually , th e increase in land pri ces br ought small-sca le producer s int o
war elfort was thus simulta neo usly th e direct penetr ation of capitalism to
int ensified co mpetition to sell th eir agricultura l pr od uct oLocal co mmod ity
circulation rapid ly became insuflicient . The mechanism by which petty
th e entire ter rit ory of th e Union , th e establishment of tariff pro tection , and
co mmod ity pr od uction was sub ordinated to capitalism was now d inched
by severa l processes th at supplemented th e direct mon opoli zat ion of th e
land which we have just outlined . First1y th e need to expand th e circ ulation
th e po litical and ideological unificati on o f th e nat ion un der th e leader ship

of th e indu st rial and financial bourgeoisie. The reasons fur th e po litical
alliance between th e capitalists and th e small agricultura l producer s are
dear eno ugh. The latter fear ed above all else th e exte nsion of th e slave
railway co mpanies fur transpo rting th eir goods; th ese appropriated a
sys tem to th e free lands of th e ~'Iest, and th e bloc king of th e sale of pub lic
land by a Congress dominated by th e slave owners ' repr esentatives. Finally ,
po rtion of th e agricultura l surplus in th e furm of prohi biti ve and
th ese fier cely individu alisti c petty producer s were also very strongly
discr iminator y tari ffs, an additional arm in th eir stra tegy of expansiono
attac hed to th e ideology and institution s of bo urgeois democracy . Yet th ey

were soo n to find out to th eir cost th at thi s was an alliance with th e devil
of agricultura l product s put small-sca le producer s at th e mer cy of th e
Subsequent1y th e gro wth of taxes and rents, and th e need to take out loans
to finance th eir own subjugatio n to th e co mpanies as th e pr ice of land
purchase escalated , furced th e small producer s int o deb t vis-a-vis
37 I 71
himself.
The Civil ~'Iar gave a vigoro us imp etus to th e development of th e furces
38 I 71
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(1
of prod uction in th e Unite d Sta tes. Econ omi c exchange between North and
South was disrupted , and imports from England red uced . The war elfor! in
(b) Transforma tion of the conditions of existen ce of the w age-earning

c/ass. A lon g histor ical precess which bega n at th e sta rt of th e ~ oth century
th e North mobilized al! indu st rial resources and pro moted accumulation in
has see n th e penetr ation of capitalist pr od uction int o th e int ernal
th ose bra nches " f Department I involved in th e pr od uction of armaments,

explosives and weapo ns, as well as th e exte nsion of co mmunications
organization of towns, and int o th e pr oduction of means of individu al

co nsumption fur th e bro ad mass of wage-workers. These two
m utes. There was also major milit ar y demand fur th e artides of th e textile
accomplishments have been dosely linked together . They enable us to

un der st and how capitalist relation s of pr od uction co uld spread over th e
indu st ry and fur food pr od ucts, while arrny recr uitment led to a great
sca rcity ofl abo ur-power . This circumsta nce favoured a very rapid advance
ofcapitalist method s of prod uction in th e department pr od ucing co nsumer
entire field of secial activities, and subordinate th e rationality of th ese

activities to th e equivalence of co mmod ity exc hange - th er eby realizing its
goods. Mechanization was un dertaken in th e textile and leather indu st ries,

enabling women and children to be employed . In agriculture th e increase
full po tential across th e whole social furmation . As lon g as capitalism
in de mand gave a bigger stimulus th an eve r to pr oduction fur exchange-
pr oduction ,
value. Prod ucers became indebt ed to th e banks , who lent th em pape r

mon ey (greenbacks) issued as legal tender to finance th e pu blic de bt. The
accumulation still pro gresses only in fits and sta rts. The regime of
imm ediat e pos t-war period saw expansion co ntinue at a rapid rate ,
heavy indu st ry sec tion by sec tion. The resultant jerkiness is a funct ion of
propelled by th e co nstruction of th e transcontinental railways. Only with

th e outbreak of recession in 187 3, and th e long phase of depr ession th at
th e uneven develop ment of Department I , which lower s th e overall rate of

return on capital and requires phases of depression in which th e value
lasted until 1897 , did it bec ome evident th at th e artic ulation of mod es of
co mposition of capital is red uced by th e destruction of a po rtion of th e
pr od uction in th e soc ial furmation had been profu und ly changed . Petty
capital invested in pr oduction .

In th e Unite d Sta tes, th e most po werful heavy indu st ry in th e world was
commodity p roduction had gradual/y been integrated into capitalist

p roduction. This int egrat ion create d a permanent tendency fur labour
pr oductivity to rise in agriculture, and indu ced a major expansion in th e
output of agricultura l equipment. There develop ed a strong tendency fur
farm pr ices to fall , settling at th e minimum level required to pro vide
suflicient money to maintain a farming famil y , plus th e valorization of th e
capital lent by mar keti ng firms and banks. The downtu rn in agricultura l
pr ices was in turn decisive in bringing about a fall in wages. It not only
favour ed accumulation in th e department pr oducing means of pr oduction ;
co mpetition in agriculture also permitted th e develop ment of a po werful
foods tuffs indust ry . One of th e main pattern s of int er act ion between th e
two de partments of pr oduction thus fuund th e co nditions fur its
transfurm s th e labou r pr ecess by th e creation of collective means of

but
without
reshaping
th e
mod e
of co nsumption ,
accumulation is principally an extensit'e one , based on th e build-up of
built up at an exce ptionally rapid pace in th e last thi rd of th e 19th century .

The spee d of thi s precess resulted from th e spec ific social co nditions which
we have briefly resumed as th e frontier pr incipIe . It was also related to th e
peculiar mod aliti es of th e furmation of th e wage-earn ing dass in th e Unite d
Sta tes, which we shall sho rtly examine.
~'Ie
shall see that th ese mod aliti es
favour ed th e hist orical transiti on of th e USA to a regime of pr incipally
intensive accumulation, based on th e transfurm ati on of th e co nditions of

existe nce of th e wage-earn ing dass. Here we pu t furward th e fullowing
pro position , to be demo nstra te d in th e further co urse of thi s work: when
th e accumulation of capital finds its co ntent no lon ger simply in a
transfurm ati on of th e repr oduction of th e labour pr ecess, but above all in a
transfurm ati on of th e repr od uction of labour -po wer , a new stage in
develop ment mu ch earlier and mor e th or oughly in the United Sta tes than
in th e major Euro pean capitalist nati on s. This int er act ion by way of
capitalist development has arrived. This stage bea rs with it quite new furms
foods tuffs reinfur ced th e radical separa tion between town and co untry
of th e wage relation . It alte rs th e stability of equivalence relationships in
req uired fur th e exte nsion of co mmod ity circulation over a vas t econo mic
exc hange, and mod ifies th e mon et ar y sys te m. The pr ecise operation of th e
space, and fur th e deepening of th e social division ofl abo ur in th e USA.
law of value, th er efure , th e fundamental pr incipIe of co mmod ity

regulation , depends on th e co nditions in which th e wage relation is
1 , GENERAL CONDIT IO NS OF DEVELOPMENT OF THE FORCES
39 I 71
40 I 71
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(1
genera lized across th e whole of society.

~'Ihen
co nsumption of co mmod ities, a phenomenon genera lized to emb race th e
capitalist relati on s of production spread by th e manufacture of
collective means of producti on , th e resultan! creation and expansion of th e

wage-earn ing dass genera les a da ub le structura l change: a separa tio n
between labour-po wer and means " f pr od uction , which are co mbined
solely in th e labour precess un der th e autho rity of capital, and a
destr uction of th e spatio-te mpora l env iro nment moul ded by pr ecapitalist
sum tot al of activities of social life.

To develop th e law of capital accumulation and int er pret th e
fundamental characte ristics of ~ oth century capitalism , we must analyse
th e transfurm ati on s of th e wage relation from a fuur-fuld sta ndpoint:
(1) The sta ndpoint of capital -
in other words th e co ntradictory
evolution of accumulation in its dual tendency to an uneven development
forms of pr oducti on . This env iro nment is characterized by clase

relationships between town and co untry , by a rhyth m of work punctu ated
in Department I and a deep ening of th e social division of labour in
by season and stabilized by custom , by an incomplet e separa tion between
increases. This involves a study of th e changing furms of co mpetition in th e

co ntext of th e increasing density of exc hange relation s between th e two
pr od uctive and domestic activities, and by a do mina tio n 01 non -
Department
n , as
th e co mmod ity co nsumption of th e wage-earn ing dass
commodity re/ ations over commodity re/ ations in the mode 01

co nsumptio n - non-commodity relations findin g th e co nditions fur th eir
existe nce within th e extended famil y and neighbourhood co mmunity .
There is no reason why th e two co mpo nents of thi s dual structura l
departments of pr od uction .
( ~) The sta ndpoint of th e prod uctive furces - in other words, th e
change sho uld oceur together . Capita lism can implant itself fur a lon g
histor ieal period witho ut destro ying traditi onal ways of life , indeed eve n
transfurm ati on s of the labou r pr ocess and th e hom ogeni zati on of the mod e
benefiting from th e reconstitu tion of labou r-po wer by a non -capitalist
transfurm at ion of th e organization of pr od uction un der th e co nstraint of

relative surplus-va lue, involving an int er act ion between th e
of co nsumption of th e wor king dass.
~'Ie
shall see, in fact , th at th e
env iro nment in which it is still inserted . For th e latter makes it possible to
socialization of co nsumption in th e furm of th e genera lization of

co mmod ity relation s influences th e furmation of wages and th e use of
pay very low wages and impose very lon g wor king hour s. In thi s period ,
labour -po wer in pr od uction .
however , th e wage relation is not fully established. The des truction of th e
(3) The sta ndpoint of wage labour - in other words, th e prod uction of
tradit ion al social env iro nment is only acco mplished by th e develop ment of
infrast ruct ur es and th e creation of new furms of th e wage relation th at
heavy indu st ry , which enfurces th e tot al upr oo ting th at is characteristie of

th e wage relation : th e separa tion ofl abo ur-power from all its co nditions of
enab le th e wage-earn ing dass to purchase all th e co nditions of its existe nce
existe nce. The mod e of life of th e wage-earn ing dass th en suffers a deep
int er pret ed as th e furmation of a social co nsump tio n norm .
in th e genera l circ ulation of co mmod ities. These transfurm at ion s can be
degradation . This degradation is th e bas is of th e gigantic structura l
(4) The sta ndpoint of th e commod ities co nsumed - in other words, th e
transfurm ati on th at all th e capitalist co untries experienced from th e end of
ada pta tion of th e use characteristics of th e objects of co nsumption to mass
th e 19th century th ro ugh to th e middle of th e ~ oth, with th e exce ption of

England , which experience d it somewhat earlier and over a more
pr oduction , and th e diffusion of a functi on al aesthetic th at structures th e

co nsumption norm ; th e rate of penetr ation of new co mmod ities as a
pro tr acted period o The logic of thi s structura l transfurm at ion is th e

pr od uction of a new mod e of co nsumption expressing th e co mplete
funct ion of incom e differentiation , and th e soc ialization of co nsumption

expenditure by th e wage-earn ers th ro ugh credit , to overcome th e
realization of th e wage relation . This mod e of co nsumption is characterized
difliculties of wage-earn ing households in pu rchasing co nsumer goods
by th e do mina tio n 01commodity re/a tio ns over non-comm odity re/a tio ns.
whose exc hange-va lue is relatively lar ge in relation to th eir current
There is no such thing as a co nsumer soc iety, but th er e certainly is a
incom e , and to regularize th e renewal of th ese goods by a collective
uni ver sal exte nsion of th e capitalist mo de of prod uction in th e social

furmations in which it is implanted . Capita lism can repr od uce itself only by
responsibility fur th ose risks th at give rise to exce ptional expenses.

All th ese various pr ocesses will have to be th oro ughly investi gat ed if we
an incessant accumulation which develops as a mass pr oduction and
are to develop th e th eory of capital accumulation int o a genera l th eory of
1 , GENERAL CONDIT IONS OF DEVELOPMENT OF THE FORCES
41 1 71
42 I 7 1
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(1
capitalist regulati on . Fortunately th er e are already severa l sludies in th e
pr incipIes of th e co mmod ity-prod ucing society itself, rather th an th ose of
different fields listed above. In th e remainde r " f lhi s boo k, we intend

mer ely to sta r! to utili ze th em in th e framework of th e law of capital
any pro letarian ideology . Conducted on a stric tly econo mic bas is, th ese
struggles gave a po werful impetus to th e transfurm ati on of working-d ass
acoumulatio n already furmulated , with th e aim of co nstructing th e more
livin g co nditions in th e direction of co mmod ity relations.

Complete ly deracinated when th ey arrived, th e workers of th e new
co ncrete co noep!s needed to int er pret th e regulation " f capitalism in th e

~ oth
century .
First of al!, however , we mus! pursue our sketc h of th e spec ific
indu strial centres had to struggle against co nditions ofli fe entire ly imposed
by capitalism , in towns where no pr evious urban co mmunity had eve r
characteristics of American capitalism o The frontier pr incipIe has alrea dy

revealed tha! its peculiar trait s made th e United Sta tes th e exemplary
nation of capitalist develop ment , justifying " ur selection of it fur th e
co nstruction of a th eory of regulation . These pec uliarities were
existed. In th e last three decade s of th e 19th century , th e accelera te d
co mpo unded by th e particular furmation of th e American working dass
disorder . In genera l working-d ass housing was frightful: dose to th e
and th e very rapid disso lutio n of tradit ion al ways ofli fe in th e Rep ublic .
fact ory , it typically belonged to th e fact ory owners. The latter rented out
Between th e Civil ~'Iar and th e First ~'Iorld ~'Iar , th e broad mass of

unskilled labour -po wer in heavy indu st ry was co mposed of success ive
th ese dwellings at pro hibitive rents, and if dismissed , th e workers lost th eir
stra ta of immi grants of quite disparate languages and cultures. ~'Ihen th ey

joined th e American wage-earn ing dass, th ey had no roo ts in th e co untry .
pro voked very har d-fuught strikes, and disturbances th at seriously
Benefiting from th e po litica l and legal equality enshrined by th e
accumulation in Department I co ncentrated capitalist pr oduction around

mining resou rces, waterways and railway ju nctions. ~'Iorking-dass
co ncentrations were established at a rapid pace and in th e greates t
homes as well. In th e 1890S, th ese spec ial co nditions of exploita tion

disrup ted pr oduction (e .g. th e Chicago Pullm an strike of 1894). The
co nstitutio nal pr incipIe and American de mocratic traditi on , th ese workers
unhealt hy co ndition of th e indu strial slums also became da ngerous fur th e

indu st rial towns as a who le . Finally , th e imm ediate pro ximity of working-
sought above all a cultural assimilatio n according to th e ethical norm s of

th e subjec tive idealism th at was th e co mmon bas is of ideological
dass housing to th e fact ories bega n to imp ede freedom of indu st rial
location and tim e-savin g co ncentratio n of int er connect ed pr od uction
repr esentation fur all social gro ups in th e United Sta tes. This aspira tio n was
activities in single sites. There was also an acute need fur serv ices in th e
all th e more intense in th at th ese immi grants carne to a lar ge exte nt from
new indu st rial towns: sales outlets and ur ban transpo rt , impro vement of
th e co untries of Centra l and Southern Euro pe ,' and were fleeing th e
co mmunications between business oflices, and organization of co mmercial
oppression of absolutismo The norm s th at th e immi grants had to int ernalize
districts.
to accomplish th eir cultural assimilatio n were individu alism , stable famil y
Towards ' 90 0 , wor king-d ass struggles fur decent housing linked up
with th e po litical campaign of th e new bourgeois stra ta prod uced by th e
life , and monetary gain as th e mark of social success and th e spur to labour
discipline . But th ey also encounte re d extre mely har sh co nditions of
econo mic exploita tio n which materi ally negated th e pers pec tives offered
th em by po litical and religious liber alism o The resultant co ntradiction is
fundamental fur an un der st andin g of th e spec ific furms and objectives
ass umed by th e American labour movement . This movement too k root in a
co untry where po litica l democracy was far mor e advanced th en any where
indu strial revolution fur th e creatio n of certain infrastruct ur es which th e

lar ge and rap idly develop ing American cities lacked . Despite resistance
from th e financier s and real-estate owners who co ntro lled th e municipal
authorities and strictly limited local taxes, po litica l pr essure on th e city
and sta te assemb lies of th e major indu st rial sta tes in th e East and Midwest
genera ted a beginning of pu blic int er vention in housing and ur ban
else in th e 19th century , and where working-d ass organization meant at th e

same time fur th e immi grants th e awakening of th eir cultural ide ntity as
amenities. The fruit of po litica l compromise , pu blic housing advanced in

waves whenever movements of indu st rial activ ity and po pulation
American citizens. The bitte r dass struggles of th e 1890S were fuught
necessitated building operations on a very large sca le. Four major waves of
against th e degra da tio n of th eir living co nditions, largely in th e name of th e
expansion occurred : at th e turn of th e century , after eac h of th e two
1, GENERAL CONDIT IO NS OF DEVELOPMENT OF THE FORCES
43 I 71
44 I 71
----~o~------------------
~'Iorld
-'
(1
~'Iars,
and al th e beginning of th e ' 960s, when new hou seholds multiplied
surplus-va lue. To th e exte nt that th e centralization of capital pr ogresses, so
as a result of th e rise in th e birth rat e from ' 94 0 onwards. On tap of lhi s,
too doos th e sum of surplus-va lue th at is not accumulated, and in

particular th e dispe rsion of thi s po rtion of surplus-va lue amo ng a larger
th e ' 920S and th e enlire period after th e Second ~'Iorld ~'Iar saw a strong
demand fur business oflices due to th e gro wth in bureaucratic per sonnel
caused by the increasingly complex administra tive structure of big firms and in th e pos t-war period , th e gigantic expansion of th e Feder al
govern ment.
The exte nsion of cap italist pr oducti on of pri vat e co nsumer goods alsa
pose d other pro blems. The adva nce of th e economic division of labour in
lhis field certainly depended on th e transfurm ation of the housing situation
and on th e pro vision of ur ban infrast ru ctures. But th er e were more direct
co nstraints on it co nnected with th e product ion of surplus-va lue. The
number of individu als. It is essential th er efare to not e th at
the
centralization 01 accumulated su rplus-value has as its corollary the

dispersion 01 the surplus-value sp ent as ret'enue. This is how a gro wing
social demand is created far co nsumer goods th at were pr eviously
co nsidered as luxuries, so th at th ese goods can now be produced by
capital. However , th e movement of th ese br anches from th e subdepartment producing far surplus-va lue co nsumption to Department II as
a whole doos not take place auto matically. ~'Ihen it is realized , in other
words when th e co nsumption norm of th e wor king-d ass success ively
mat eri al means of co nsumption pr od uced on a capitalist bas is are
incorpo rat es co mmod ities already in existe nce, th en capitalist relations of
co mmod ities resulting from a mass pr oducti on process and designed far
pur chase by individu als. Their incorpo rati on int o th e norm of working-
producti on dramatically quicken. All technological progress can be

deployed in th e transfarm at ion of th e social co nditions of pr od uction .
dass co nsumption is thus th eir co ntribution to th e far mation of wages.
Advances of pr oducti vit y in Department r find th eir out1ets in th e
These co mmod ities can only farm part of th e co nsumption norm if th eir
unit exc hange value is on th e dedine and already suflicient1y low. The
expansion of Department II . The fall in unit exchange-va lues in thi s

department suflicient1y increases th e product ion of relative surplus-va lue
co nditions in which th ese co mmod ities are produced must th er efare be
to ena ble real wages to rise . Accumulation can thus pro gress at a rapid
th ose of th e sta nda rdized labour process o f mass product ion . For thi s to be
pace in both de partments. Commodity product ion invades th e entire life of
th e case , th e social demand far th ese br anches of output must be
society; all social relations bec ome co mmod ity relations. The limit s to thi s
suflicient1y lar ge and rapidly rising.

The squaring of thi s particular cird e occurs dynamically in a non -linear
accelera ted and regular accumulation are th ose of th e extension of

capitalist relations of pr od uction to th e who le field of social pr oduction .
process of co ntradictions, with success ive advances and bloc kages. The
It is to th e genera lization of capitalist pr od uction relations to th e entire
pr ocess is as fallows. The social division of labo ur in Department II results

from a differentiation of thi s department int o a sub-de partment producing
social division of labour th at th e United Sta tes owes th e advanced social
co mmod ities bo ught by th e po rtion of surplus-va lue co nsumed as revenue
absence of cultural traditi on s of sede nta ry or subsiste nce pr od uction , th e

rapid far mation of indu st rial towns un affect ed by pr ecapitalist far ms of
and a further sub-de partment producing co mmod ities bought by th e

mon et ar y equivalent of th e value of working-d ass labour-po wer . This
differentiation of Department II itself depends on a development of th e
division ofl abo ur . To th e exte nt th at capital is accumulate d in Department
r and th e division of labour th er e progresses, a centralization of capital
relations th at we have analyse d: th e rapid int egrat ion of agriculture, th e
ur ban life , th e homogenization of success ive waves of immi grants on th e

basis of th e livin g co nditions of th e wage-earn ing dass in large-scale
indu st ry , th e po werful centralization of capital th at indu ced th e early
ado ption of new method s of management and sales which th en gave rise to
results. This makes th e job of capitalist management far more co mplicated ,

creating new social functi on s both in indu strial firms and in th e
int ermediat e wage-earn ing stra ta (the famou s American middle dass int o
autonomous activities of th e serv ice, co mmerc ial and financial sec to rs.
These structura l co nditions were further reinfarced by th e particular
These social funct ion s are th e basis far th e increase in th ose salaried social
categories who are paid in part from th e appropriation of centralized
45 I 71
which th e whole po pulation was supposed to melt !).

ro le played by th e United Sta tes in th e two
~'Iorld ~Iars .
These milit ar y
co nflicts co nsiderably enlarged th e pr od uction capacities of Department r ,
4 6 I 71
----~o~------------------
-'
(1
bro ught new manufacturing method s to maturity , and furced rapidly
At thi s po int we co me up against th e delieate problem of co nstrueting
gro wing incom es int o sav ings, and herree int o po tential expe nd itu re fur
sta tistieal indieat ors th at are derived from our fundamental co neepts and
so able to repr esent th eir development. ~'Ie know th at th e rate of surplus-
pos t-war reconversion to civil pr oduction . The ' 9 ~ OS were yea rs of

expansion of the sub-department pr odu cing commoclities absorbed by th e
various incomes issuin g from surplus-value. This expansion was th e work

of th e auto mobile, of electromec hanical consumer durables, and of th e frs!
electronic pr od ucts. The develop ment po te ntial of th ese br anches was
19~6
value de notes a division in th e field of value, th e hom ogeneous spaee of

measurement . But thi s measurement is realized in th e pr ocess of exehange,
i.e. in th e form of mon et ar y quantities. Now in study ing th e relationship
between relations of pr oduetion and relations of distr ibu tion we have
onwards threat ening signs indicat ed th a! it was
already shown th at th e wage relation is sueh th at when abstraet labour is
nearing th e limit s " f social demand o The output of co nsumer durables

sta rte d to stagnate. The working-d ass mar ket co uld no! yet be reaehed
expressed in mon et ar y terms th e division of tot al ineom e is not th e same as
enor mou s, bu! from
un der th e social co nditions of pr od uetion of th e tim e . But th e
th e rate of surplus-va lue. The first indieat or th at suggests itself, th er efore ,

th e division between wages and pro fits, only indieat es th e rate of surplus-
transform ati on of th ese co nditions by th e advent of th e New Deal and th e
value in a biasse d way . Is it possible to find a more faithful sta tistieal
esta blishment of colleetive barga ining permitted capitalist accumulation to
indieat or? It should be borne in min d th at we are not see king to measure
go forward on th e entire front of Department Ir imm ediat ely after th e
th e absolute magnit ude of thi s variable , bu t simply its lon g-run trend .
To co ntinue with th e notation used in th e pr eviou s see tion , when we
Seeond ~'Iorld ~'Iar (whieh created greate r possibilities of subse quent

develop ment th an did th e First ). This aecelera te d accumulation began to
investi gat ed th e formation of tot al ineom e and its division int o wages and
falt er again in th e mid 1960s. To explain this crisis, we shall analyse th e
pro fits, let us take two periods separa te d in tim e whieh we will de note by
limit s to th e sav ing of living labour and th e exte nsion of surplus labour in
th e indiees o and t. The fundamental relationships are VP = m . VA, where
th e framework of current labo ur pr ocesses, th e inereasing diflieulties in

further revolutionizing th e co nditions of existe nee of th e wage-earn ing
VP is th e tot al ineom e , VA th e tot al abs traet labour spent during thi s
period , and m th e mon et ar y expression of th e working hour as formed in
dass in th e direetion of an eve r more tot al depende nee on co mmod ity
th e co mmod ity circ ulation of th e period;
pr od uetion , and th e signifieant rise in social overheads th at is linked with
wages and m th e funeti on of th e past values of m th at expresses th e overall

balance of forees co ntributing to de te rmining th e bas ic wage by way of the
th e genera lization of co mmod ity relationships.
S~m
. V , where S is th e sum of
wage co ntraet . The basie wage or nominal referenee wage is itself

2 . General T e n d e n d e s in the Accnmnlation o Prodnctive
determined by ;;. m,l(I ~
Ca p it a l
th e co ntractual relation and th e infiuen ce of th e capitalist relation of
~'Ie
pr oduetion , i.e. th e dual aspee t of th e wage relation .

Let us now investi gat e th e change in th e share of wages in value added.
know that th e rate of surplus-va lue is th e pivot of capitalist
aecumulation. ~'Ie have also seen th at thi s aecumulation neeessaril y

reeeives its greates t impetus when th e two departments of prod uetion
develop simulta neo usly th ro ugh a transform at ion of th e co nditions of
existe nee of th e wage-earn ing dass. ~'Ie pro pose , as we have said, to make
th e adv ent of thi s pr ocess th e criterion of a new stage in th e hist orieal
evolution of capitalism o If thi s period ization is co rreet , it should be
possible to observe an aecelera tion in th e lon g-run rise in th e rate of
surplus-va lue. This will pro vide a sta rting po int for a quantita tive
examination of th e tendeneies of aecumulation.
2. GENERAL TE NDENCIES IN THE A CCUM ULATI ON OF PRODU
e ) . This
relation ship involves bo th th e infiuenee of
This is expressed as:
(S,Vi',)
(S.jVP. (
,_._,_V_,_lm
_ , _V_A_,) _ (_m_,I_m_"
(m . V.lln. VA . ) {m.JmJ
It appea rs as th e pr od uet of two indiees. One of th ese is th e inver se of th e
index of th e rate of surplus-va lue. The other expresses th e share of wages at

a co nstant rate of surplus-va lue. In actual faet , mim., on co ndition th at
e is
co nstant, gives th e change in th e nominal hourly wage at a co nstant rate of

surplus-va lue , and is th er efore simply a funeti on of th e evolution of th e
47 I 7 1
48 I 71
-------(o~------------------
-'
(1
opposite direction to th e rate of surplus-va lue over th e long run , but
contractual relation . Moreover ,
rn.
exhibits the same changes of rhythm.
VP,/VA ,
~'Ie
shall now pr oceed to study th e
latter , in a rder to identify th e success ive phases of capital accumulation in
", \-"P. IVA.
th e United Sta tes.
is the index of the net monetar y value added per hour of produ ctive
labour . Bu! al a constan! rate of surplus-va lue, th e soc ial product ivity of
labour is itself co nstant , as we have seen in study ing relative surplus-va lue.
Le! us th en co nsider th e fullowing sta tistical indices:
(a) The ev oluti on 01the real social w age costo The evolution of th e social
wage cost and its sta tistical components, ave rage hourly real wages and net
value added per man-hour in real terms, is given by Diagra m I for th e
s'"
in dex of averaz . r ea l h ourly waz e.
per iod ' 90 0 to ' 9 7 ~ .

Calculations of th is variable, however , have bee n exte nded forward to
in dex of averaz . h ourly pro ductivity
1':
' 97 4. Moving bac kward, th e evo lution of value added per man-hour from
pr ic. in dex fur valu e a dded
1850 can be sketc hed in from estimates made by Kendri ck; th ou gh th e two
kinds of calculation do not coincide.4Nevertheless, cutting th e evolution of
.,
1':.
c:..
pr ;c. in dex fur pr ivat . cons u mptio n
S:. ,1 ~J
in dex of r ea l .ocial waz e co.!
net value added per man-hour at th e points where th e gra ph shows a break,
The evo lutio n of the monetar y expression of th e working hour is

expressed as mJ"'
~;'
PJ.
~'Iith
we get th e following results:
pr od uctivity constant , it is indicat ed by
averaz e a n n ual
th e genera l price leve!.

The evo lutio n of th e share of wages in value added is expressed in th e
fr om 1 85 0 l o 1 8 8 9
following way on th e basis of th ese sta tistical indicat ors:
fr om 1 8 8 9 l o ' 9 0 0
~. 5"
fr om ' 9 0 0 l o 1 91 8
1 .0 "
fr om ' 9' 9 l o ' 9 3 7
~. 5"
fr om ' 9 4 7 l o 1 95 8
3. 0"
fr om 1 95 8 l o 1 9 6 6
3.~"
fr om 1 9 6 6 l o ' 9 74
1 .6 ..
(S,/VP,)
(S"i VPJ -
Pi .
pI
-Si . _ C<
~J
o,,
. 1';.
PJ
Comparing th is expression with th e th eoreti cal definition of th e same

index , it is poss ible to deduce th at th e rate of surplus-va lue changes
inversely to th e real socia l wage cost , on condition th at th e index of th e
share of wages at a constant rate of surplus-va lue can be repr esented by th e
index of consumer pr ices. This is a reasonable hypothesis if we con sider
th at changes in th e balance of forces th at influence th e wage contract are
bo und up with transform ati ons in th e conditions of producti on and in th e
conditions of existe nce of th e wage-earn ing dass which form th e content of
surplus-va lue.
~'Iith
th e rate of surplus-va lue constant , th e social
consumption norm is maint ained . Calculation of th e evolution of th e share

of wages at a constant rate of surplus-va lue via th e index of consumer
prices reflects th e conservation of th is norm .
~'Ie
are thus led to th e following pro position : th e sta tistical indicator

most appropriate to represent th e evo lution of th e rate of surplus-va lue is
th e ev oluti on 01 the real social w age costo This indicator varies in th e
2, GENERAL TE NDENCIES IN THE A CCUM ULATI ON OF PRODU
49 I 71
r a t e of z r owt h
The yea rs of the Second
~'Iorld ~'Iar ,
1 .0 "
as well as th ose immediat ely before
and after, gave rise to maja r disturbances with causes spec ifically linked to
th e war econo my and th e pro blem of reconversion. The per iod 1889 to
' 90 0 saw a temporar y accelera tion due to th e creation of th e foods tuffs
complex , which transform ed product ion methods in agriculture and in
particular swiftly expanded th e circulation space of its commod ities.
Setting th ese peri ods aside, th e essential brea k in th e pace of development
is located at th e end of th e First
~'Iorld ~Iar .
This witnessed th e sta rt of a
tendential accelera tion continuing up to 1966, th e yea r in which a new

change of pace of maja r significance can be per ceived . It should not be
surprising th at ' 9' 9 is th e watershed date. This is th e beginning of th e
histor ical period in which th e transform ati on of th e conditions of existe nce
of th e wage-earn ing dass got seriously under way .
50 I 71
-------<O~------------------
-'
(1
Diagra m
1.
Real hourly wages, value added per man-hour , and real social
wage ces! in pr ivate non -farm activities ( 19 0 - 19 7 2)
.I
L .................. """. }
'
.............
~
.... -- M _
~--.
..I . . .. _ .
Englan d as his bas is. His co mparison is based on oflicial inqui ries int o
int ernat ional differe nces in co st of living. These were des igned to find out
what percentage more or less was needed in th e mon ey of a particu lar
.._''''''' -
"- "'- - ~ '
1/ ,/
-: ..
"
!, ,
..
V
.- - ,
" ,"
S O" ",. .,
'v
co untry and th e English leve!.
('1;'"
- - - -
....
us Dop . ......." ' 01 Comm.",.
from th ose reflected in mon et ar y paritie s with differe nces in th e parities
eq ual to 10 0 over th e period 1890 - 98. For thi s period , th er efure , what we
get is strictly th e relation be tween the level of th e indicat ors fur eac h
"
results , co mbining struc tura l discre pa ncies in th e va lue of labour -po wer
be multiplied to relate to th e co rrespo nding indices fur Englan d , taken as
co untry , at th e oflicial exc ha nge rate , to purchase th e same bas ket of bas ic
artides fur th e repr od uction ofl abo ur-power which in Englan d co st El . The
th em selves , which were stable over this pe riod, lead to the de finition of
av erage coe flicients by which th e specific indices fur eac h co untry have to
1// '
has been und ertaken by E.H. Phelp s Bro wn' fur th e pe riod 1890 - 99, taking
Comp arison 01average indiceslo r the period 1890 -99 in different

countries, assessed in English money and re/ated to the same indices as
establishe dlo r England.
ln dex of,a!ue
US B u.... " ojLobor S '. " st'<,
The ten den cies in th e ev olution " f th e real soc ial wage co st , movin g
inver sely to relative surplus-va lue, were as fullows:
very rapid inerease during th e two
~'Iorld ~'Iars ,
bu! witho ut any long-
ru n significance;
co nstan! between ' 9 0 and ' 9' 7 ;
mod er at e dec rease in th e int er -war yea rs (with sharp fluctuat ion s during
ln dex of a,erag e
added p er
pro<1ucb,e
ln dex ofr< al
hourl r<allLag <>
lLorlee""
. 0clallLag e <o.t
0 90
Ger many
0 59
0 .66
Sw ed en
0 .69
0 76
0 .8 7
Un it ed stat e.
1.0 8
1 5 7
0 .6 8
En z land
1.0 0
1.0 0
1.0 0
* It " ..
n o' po",'l. fr om '1, . 01 '1;, p,,;o. ' o ..,., 1;, 1 "o;km, 1 0u," ;n . ll ' 1 .
" u n " ;.. u n." " mp u ;..n .
th e 1930S), al a ra te of 0 .9%pe r yea r;

more rap id and far more regular decrease in th e pos t-war yea rs th ro ugh
highest rate of surplus-va lue. This co mparison in int ernati on al space is as
to 1966, at arate of 1.4 %per yea r;

co nstant on av erage as from thi s last da te.
~'Ie
can thus disce rn ve ry significant alte ra tio ns in th e possibilities fur

extr action of relative surplus-va lue, which pro vide a key to th e amplitude
and limit s of successive phases of accumulation.
Befur e co ntinuing thi s investi gati on , it will be inst ru cti ve to co mpare
th e United Sta tes with certain other capitalist co untries fur which th er e
exist estimate s of th e lon g-run tren ds of real soc ial wage costs. This work
The United Sta tes already appears as th e soc ial fur mation with by far th e
51 1 7 1
significant as a co mparison in hist orical time fur th e purpo se of illust rating

th e th eory of accumulation based on relative surplus-va lue. A rise in real
w ages is induced by the processes that raise the rate 01 surplus-value

th an ks to th e penetr ation of capitalist relations of pr oduction int o th e
pr oduction of th e co nditions of existe nce of wage-labour . ~'Ie sha ll develop
thi s observation in Chapter 3 by showing how thi s pe ne tra tion int egrat es
th e repr oduction cyd e of labo ur-power int o th e co nditions of pr od uction
52 I 7 1
-------<O~------------------
-'
(1
'9~a
'9~9
1~%
and tr ansfurms the so cial co nsumption norm . The tendency fur real wages
recipients rase be tween
to rise is th e eifect of lh is depe nde nce. An iner ease in wages is ac hieved
apprapriated by th e ta p 5%rase fra m q %ta 33.5 %. Over th e same period ,
only to th e exte nt th a! th er e are no structura l obstacles in th e way of
incom es received in th e for m a f indu strial prafit , inter est and rent
relative surplus-va lue. Once th e fal! in th e real social wage cos! slows clown,
increased by 45%, while ea rned inca me increased by a nly 13%, this

increase resulting chiefly fram th e develapme nt a f unprod uctive wark. If
th en real wages begin to stagnate or to fallo
and
fram
ta 18% while th e sha re
we simply take th e pr oductive wa rkers in man ufact uring industry , i.e.
Le! us now l""ate lhi s result in th e co ntext of the tem po ral evolutio n of
real social wage costs in th e Unite d Sta tes, so as to test th e law of capital
th a se wha suffered th e full blast a f th e rad ical tran sform atian a f th e laba ur
accumulation formalized in th e frs! sec tion of lhis chapter . ~'Ihat we know
pr acess , th en we see a virtual stag na tia n a f haurly real wages Ca rise a f
of th e co nditions of de velopme nt of th e producti ve forces in th e Unite d
be tween
Sta tes, summed up above, seems to us a legitim ate founda tion fur th e
hypo thesis th at th e ten dency ta decline a bserved in th e sacial wage cast a n
th e a verall da ta a n incame distributia n and its devela pme nt , th at be tween
th e marraw a f th e First
~'Iarld ~'Iar,
'9~a
and
1 9 ~ 9) .
~%
It can thus be estima ted , taking due acca unt a f
4a and 45%a f all ha useha lds remained a utside th e mar ket for all cansumer
after it had remained canstant since the
gaads except th e ma st bas ic req uirements. The aggravatia n a f inequ alities
beginning a f th e century, reflects th e hista rical tran siti an fram a regime a f
attenda nt on th e inst allat ian a f mass prod uctia n methads ran strictly
pr ed aminantly exte nsive ta a ne a f pr ed a minantly inten sive accumulatia n.

Let us na w try ta expIare thi s hypo thesis by taking int a acca unt th e
caunter ta th e need ta expa nd th e markets for Department U .
pr incip al feat ures a f accumulatian in th e inter-war yea rs and th e period
cantradictia n . The ir expa nsia n required th e canstructia n a f ha usin g and
after th e Seca nd ~'Iarld ~Iar .

saw a certain prasperity
th e co nsumptia n a f durable gaads a n a sca le capable a f tran sforming th e

canditia ns a f existe nce a f th e wage-earn ing class. Suc h a tran sform atia n
mar ked by th e expansia n a f Departme nt U , th raugh th e creatia n a f

effective de ma nd a n the bas is a f th e expe nditure a f a po rtia n a f surplus-
multiplies inter -indu strial co mmadity relatia ns; it creates la ng eca no mic
chains uniting the twa dep artm ents a f pr oductian , with th e result th at
va lue as individu al incame . This gave an imp et us ta th e pr od uctia n a f
savings on labaur co mmunicate th eir influen ce from sec ta r ta sec ta r. By
ha using, ha useh al d cansumer gaads , mata r ve hicles and ass aciate d

bra nc hes. In cannection with th e extension a f capitalist pr od uction in
19~6,
The decade folla wing th e First
Depa rtme nt U
th er e was
~'Iarld ~'Iar
a tran sform ati a n
in labaur
int egrated machine sys tems and a subs ta ntial increase in applied energy.
But th e dispraportia n be tween expa nsia n in Department U
already met its limits:
and
'9~9
lncr< au/rom
D<cr< au/rom
' 920 lo ' 926
' 926 lo ' 929
Hou . in z const r uctio n

Cons u mptio n of du r a ble Zood.
and
accumulatia n in Department I rapid ly inc reased , since th e forces th at were

reva lutianizing th e laba ur pr acesses were alsa th a se red ucin g effective
'9~3
th e expa nsia n a f th e cansumptia n a f durable gaads had , ha wever ,
pr acesses
characterized by a subs ta ntial saving a n livin g labaur and an expa nsia n a f

pr oductive capacity : the sys te ma tic int rod uct ia n a f ass emb ly-line wark,
de mand for co mmod ities from Depa rtment U . Betwee n
The ev a lution a f th ese mar kets reflected th e maturation a f thi s
th e
These rigid and br uta l ba rriers were reached because th e warking class was
still large ly exclude d fra m th ese mar kets and th e link be tween method s a f
mass pr aductia n and methads a f mass co mmerc ializatia n was still unable
a utput a f pr oducer gaads increased by s a %, while indu st rial prod uctian as
ta resa lve th e prablem by a rena vatia n a f th e mar ket . The Creat
a whale increased a nly by ~s %. Massive savings on livin g laba ur , co mbined

with th e crushing defeat a f the warkers' ma vem ent after th e First ~'Iarld
Depressia n, whase caurse we sha ll ana lyse in a ur final chapter, was a maja r
crisis a f accumulatia n because th e tran sform atian a f th e labaur pr acess
~'Iar,
itself set up a bstacles ta va la rizatia n. ~'Ihat was ultimately at sta ke in th e

crisis was th e tran sform atia n a f th e canditia ns a f existe nce a f th e warking
rapid ly increased inequ alit y a f incom es. Accarding ta studies late r
carried a ut by th e Raosevelt administra tia n's In tern al Revenue Serv ice ,'
th e sha re a f dispo sable incom e apprapriated by th e ta p 1% a f incom e
2. GENERAL TE NDENCIES IN THE A CCUM ULATI ON OF PROOU
53 I 71
class. This requ ired far -reachin g changes in wage for matia n and wark
54 I 71
-------<O~------------------
-'
(1
organization . These changes fullowed two fundamental preces"es th a! we
other compo nents of unit value added, without fur all th at preventing a
shall investigate in Cha pler 3: th e det'e1op ment 01 contractual relations

between capitalist managements and working-d ass organizations, and th e
decline in unit pr ofit , due to th e rapid rise in th e value co mposition of
socializatio n 01 one sectio n 01 the expen ses invol ved in np roducing

labo ur-pow er as th e necessar y co ndition fur th e reign " f th e co mmod ity to
flourish . The change in social relations th a! th ese pr ecesses implied made
necessar y a major exte nsion and diversification of th e econo mic
int er vention s of th e sta te.
The period fullowing th e Second ~'Iorld ~'Iar presents a far more regular
decline in real social wage costs, altho ugh a ne th a! accelera tes in th e yea rs
1960 - 66 and th en co mes to an end. The last ten yea rs are a phase in which
th e prod uct ion of surplus-va lue encounte rs serious pro blems, while direct
pressures on real wages make th emselves felt amidst heightened social
co nflicts.
For th e pos t-war peri od , more co mprehensive sta tistical infurm at ion is
capital.
Diagra m
~.
Composition of gross value added per unit produced in non -
,....
financial co rpo rations ( 19 4 8 - 7 ~)
'"
,ro
,~
V+--++-H
ava ilable on th e evolution of th e various co mpo nents of unit value added.

This variable is defined as th e gross annual value added (in dollars) by non financial ente rprises, related to th e same aggrega te at 1958 pr ices.
Diagram ~ ,
,ro
which summarizes thi s infurm ation , defines indices from th e
195 8 base of 10 0 fur th e costs in current do llars per unit of value added, in
order to dete rmine th e structura l variation of th e cost of product ion and
th e unit mar gin o Here we can observe th e modificat ion in th e value
co mposition of th e average soc ial product th at is an inevit able part of th e
""
'00
regime of intensive accumulation, and th e bas is fur th e success ive phases

in th e co ntradictory movement of accumulation. The growth in th e value
co mposition of capital in th e co urse of thi s peri od is reflected in th e fact
th at th e gro wth in th e amo rtization of fixed capital per unit of product is
more rapid th an th at of th e wages of prod uctive workers per unit of
.
ro
product o ~'Ie may also not e how spec tac ularly relative surplus-va lue
developed between 1958 and 1966, co nfirming th e accelera te d fall in real

social wage costs th at was depicted in Diagram 1. Both wage cost and
amo rtization per unit pr od uced declined , thus releasing a very rapidly
gro wing profit per unit produced fur th e purposes of accumulation. In
,.-
,
,
ff
r#
ljU8 19.'00
,~,
1~7 0
co ntrast to thi s, we have a sudde n major break in 1966 in th e rhythm of

development of labour producti vit y and in th e decline of real social wage
s ou,'" " us D.p.""'."'01<:0""'''''

us Bu.... u o/L.bor S'."sI'"
costs. This break gave rise to a very severe co mpression of th e unit wage
This modification in th e value co mposition of th e social co mmod ity

product must now be situate d in th e co ntext of th e investi gati on we have
cost fur producti ve workers, which has gro wn mu ch less quickly th an th e
55 I 7 1
56 I 7 1
--------<O~------------------
-'
(1
alrea dy made of the conditions of development of the forces of produ ction .

~'Ie know th a! th e pos t-war epoch saw th e uni ver sal extension of capitalist
th e gro wing demand addressed to th e sub -de pa rtme nt pr oducing mean s of
relations of prod ucti on to th e entire ty of pr oductive activities and th e
accumulation.
cor relative develop ment of commod ity circulation . The fundamental

moti ve force her e was the transfurm ation of th e conditio ns of existence of
Diagra m 3. Ind ustrial prod uction by volume in th e departme nt prod ucing
th e wor king dass, which enabled methods of relative surplus-va lue
pr oduction . 1966 saw th e impendin g blockage of thi s mod e of
pr oducer goods (1957 - 1959 = 10 0)
pr od uction to be gene ra lized th ro ughout Depa rtme nt II . ~'Ie have already

shown in th eory th a! lhis dynamic makes poss ible a certain harmonization
I
1'rDdu<.. .-.;.
of expansion in th e two departm ents of pr od uction , by increasing th e
'
l ,f><lu"nol. <om",..,., 001. ' ..n'p:>r\. ""~ Il u' OI)
I"'..."..,. .. """" .
density of th eir exc ha nge relations as cha nnels fur th e lran smission of loc al
ten den cy to un even develop me nt of Department I was respo nsible for th e
approxima te ly regular gro wth of th e soc ial pr oduct in th e greate r part of
pi
th e pos t-war yea rs, by co ntrast with th e jerky accumulation cha racte ristic
Diagrams 3 and 4 illust rat e th e expa nsion of th e two depa rtme nts. The
pe riod ' 947 - 61 was on th e whole one of balance d and int en sive
accumulation. The two depa rtme nts expa nde d at th e same average pace
(fro m an index of 7 0 in ' 947 to one of 110 in 1961), th e co ntractions of
' 949, ' 954 and 195 8 co rrecting dispro portions in th e int ernal ev olution of
eac h dep artment . This was a period of slow average dedine in real soc ial
. ... ..
.-..'.
'O'
'.
/'
tran sform ati ons of th e pr od uctive forces. This partial neutr alization of th e
of th e pr ed ominant1y exte nsive regime th at obtained befor e thi s

revolutionization of th e co nditions of existence of th e wage-earn ing dass.
.. .... .........
"'.
,~
,~
1910 1972
SO"'"'" us v.p....... "'o/co.. .. . "'.
wage costs. The watershed yea rs of 195 8- 61 saw an accelera tion in th e fall
in soc ial wage co sts pr oc eed ing from a sudde n change in th e forms of dass
Diagra m 4. Ind ustr ial pr od uction by volume in th e department pr od ucing
struggle to th e de trime nt of th e wage-earn ers, which we shall descr ibe in
co nsumer goods (1957 - 1959 = 10 0)
more detail in Chapter 3. This inau gur at ed th e most int en se wave of

accumulation in th e who le history of Ame rica n capitalism , which ve ry
rapidly br oke th e dynamic equilibrium of expa nsion of th e two
dep artm ents. Depa rtme nt I expa nded more rapidly th an Depa rtme nt Ir
and became more differentiated , th e sub -de pa rtment pr oducing ac tual
mean s of pr od uction expe riencing particu larly fast gro wth susta ined by th e
genera l tran sform at ion of pr od uction pr oc esses. In Depa rtment Ir th e
pro portions obtaining be tween co mpo nent br anch es also broke down . The
result was a deeply un balan ced accumulation which was only maintain ed in
so far as th e relative surplus-va lue pr od uced could be accumulate d at an
accelera te d pace . This tem po co uld itself be maintain ed only if
manufact uring pr oc esses were alte red more and more quick1y to supply
57 I 7 1
58 I 7 1
-------<O~------------------
-'
(1
I
I
I
.... -,-. - "n'''''''''''.... componon" .,. rel..... p""'u<"
--_. -- Clol.".... 1_.. .... ... funo'.'"ii;x ..,-: ..,...
,
.
........ / - - ,H ..........1d 1<0r.<ft
<1
..
. .. 'j:;;f/
. , ..
'O'
'\.
!'Vr""'"
... '
. -...::,.--"
",
,"
(b) Trends of capital fo rma tion. One essential feature of relative surplusvalue is th e incorpo rati on ofl abo ur-power in th e pr oduction pr ocess as an
element of capital subjec t to th e valorization of th e means of pr od uction .
This is why th e furmation of fixed capital ind icates a reinfur cement in th e
mat eri al base of th e po wer th at th e capitalist dass exe rcises over soc iety.
The net accumulation of fixed capital can be see n from Diagra m S. which
shows th e long-r un trend of th e net stoc k of fixed capital. The period ization
th at emerged in our investi gat ion of relative surplus-va lue, via th e
indicat or of real social wage costs, dearly re-emerges on thi s gra ph.
may leave aside th e tw"
~'Iorld ~'Iars ,
~'Ie
characterized by losses of fixed
capital due to over-use of existing stoc k and insuflicient replacement , as

well as th e recon version periods after th e wars, characterized by eno rmo us
net investment . ~'Iith th ese excep tional period s left out of account, we can
not e th e fullowing phases:
(1) A slow and irregular gro wth in capital stoc k from th e beginning of th e
1970 111711
century up to ' 9' 5, a period which we saw was do minated by exte nsive
accumulation.
Al th e po int we have now reached , it is possible to furmulate certain
(2) A rapid gro wth from ' 92' to ' 929- 30, fullowed by a massive
questio ns about th e trends " f th e las! ten yea rs. According to " ur ana lyses
destr uction of capital in th e Depression and a stagnation in th e sec ond half
so far , lhi s per iod has bee n a ne of a crisis in the regime 01 int enslt'
accumulation. It s originality by comparison with earlier historical
of the ' 930s.

(3) A vigorous impetus from ' 95 " onwar ds, slowing down at th e end of
th e decade but accelera ting again during th e phase of sharp gro wth in th e
pr ecedents can be see n in th e novelt y of its sympto ms, which numerous

economists have descr ibed and which we shall seek to int erpret as Qur
investi gati on pro gresses. The pr esent crisis is quite distine! from th e Crea!
Depression, where th e real issue was th e all-round establishment of th e
regime of int ensive accumulation. It is distinct , too , from th e transient
rate of surplus-va lue in th e first half of th e 1960s.

Diagra m S. Gross nat ion al pr od uct and fixed capital stoc k fur pr ivate non far m businesses
disturbances th at furm part of a regime's int ernal regulation , particularly

since int ensive accumulation can functi on cor rectly only by buffering such
disturbances. It seems necessar y th er efure to pose a deeper question: are
th er e limit s to th e transfurm ati on of th e co nditions of existe nce of th e
wage-earn ing dass in th e furm of an extension ofcommod ity relations? Are
th e int ract abilit y and novelt y of co ntemporary social co nflicts th e sign of
th e emergence of such limit s? It is necessar y to reiterate th at relative
surplus-va lue susta ined by an eve r more rapid revolutionization of th e
co nditions of pr oduction is necessar y fur th e lon g-run perp etu ation of
capitalism once th e int ensive aspec t of accumulation has bec ome
dominant .
59 I 7 1
60 I 7 1
------<O~------------------
-'
(1
.. .,
~"" _r"",,
replacement of co nstant capital canno t be separa ted from that of th e

co nversion of surplus-va lue int o th e materi al elements of producti ve
ro .... up'..1"'O< ~
capital.
""".._,,.1
In order to inter pr et observations of thi s pro file th eoret ically , we need a

more pr ecise co nception of th e effect of th e replacement of fixed capital on
th e law of accumulation. In th e cyd e of expanded repr oduction depicted
above, fixed capital is defined as th e tot al value of th e materi al elements of
th e pr od uction pr ecess whose use as pr oductive forces exte nds over
severa l cyd es. In accordance with th e law of exc hange equivalence, or th e
'f'
tp j\.V
law of value, th e met amorphosis of the value of fixed capital int o th e value
of pr od uced co mmod ities takes place over th e tot al period for which it is in
1\1
I, I' ~
use , with th e result that its value is des troyed at th e same mom ent th at it
becomes obsolete and ceases to be a means of valorization. Fixed capital
co nsequently loses its value gra dually with eac h pr oduction cyd e . A
gro wing fracti on of its tot al value is found in th e mon et ar y form as a
financial pro vision designed later on to pu rchase co mmod ities that are
'"
bes t expresses th e tem po ral movement of accumulation is
thus th e pr ofile of gross fixed capital formation .
==
~'Ihat
means of pr oduction , replacing th ose which have bec ome obsolete . In th e
".
191..
,~
'"O
co ntinuity of capital's overall repr od uction , th e difference in turnover

,~
""
tim es for th e differe nt elements of co nstan t capital gives rise to a mon et ar y

flow which forms part of the pro fit realized in th e co urse of eac h cyd e . The
y el observation " f a sta tistica l iner ease in th e value of th e stoc k " f fixed
amo unt of thi s amo rtization fund is determined by th e value of th e fixed
capital, taken by itself, only masks th e underl ying pro blem of th e

continuity " f cause and effect in th e produ ction and circulation of
co mmoclities as th e r epr od uction of th e co nditions of pr od uction . In lh is
perspective , th e single princip Ie of capitalist accumulatio n, in other words
th e expansion " f surplus-va lue, pr esents i tself as a cycle of met amorph oses
of value, summed up in th e formula M - e , P, C' - M ' , where th e
capital and its ave rage turnover tim e as a multiple of th e bas ic cyd e . The
sum of th e amortization fund and tot al net pro fit forms th e total cashjloU'
or gross pro fit which th e capitalist dass has at its disposal.
Now we have sho wn how capitalist pr od uction is found ed on th e
transform ati on of co nditions of prod uction , whose origin is th e creation of
new means of pr od uction and th e lowering of th e value of th ose means th at
inerease of abs trae! labour . This cycle destcoys in " rder to produce and
replace those th at have bee n co nsumed . This mutati on of pr od uctive forces

is th e materi al bas is of labo ur pr od uctivity as a source of relative surplus-
pr od uces in order to des troy, since pr od uctive activity doos not bec ome
value. But th er e is no reason why th e pace of transform ati on of th e
such by th e useful objects it creates, but rather by th e commod ities th at it
pr oductive forces sho uld be ada pted to th e pace of replacement of fixed
pr od uction pr ecess is no mor e th an a ne mamen! in th e purely quantita tive
quick1y, th en so too doos capital accumulation, which means th at th e
capital which satisfies th e co nservation of th e value of co nstant capital. ~'Ie

are faced her e with a co ntradiction in th e most rigorous sense of thi s term o
pr od ucts ofl abo ur have in turn to be des troyed all th e more quick1y so that
This is a real co ntradiction in th e pr ecess of accumulation, for which th er e
an ever greate r amo unt of soc ial labour can be expended eve r more
doos not exist any 'sy nthesis'. On th e one hand , as capitalism is a
int ensely . In this blind and one-dimensional logic , th e pro blem of th e
co mmod ity-prod ucing society, th e repr oduction of th e co nditions of
puts int o circ ulation .
~'Ihen
th e met amorph oses of value take place more
61 1 7 1
62 I 7 1
-------<O~------------------
-'
(1
pr oducti on implies conservation of th e value of al! cQmmod ities in
tem po ral dy namic of capital formation . This int er venes in a decisive way in
exchange; on th e other hand , as capitalism is based on th e antagonism of
th e relationships between th e two departments of prod uction . That is why
th e wage relation , it canno t repr od uce its co nstitutive relation exce pt by
th e mod aliti es of capital devalor ization differ according to th e regime of

accumulation. These mod alities critically de termine th e way in which th e
revolutionizing the cQnditions " f produ ction . A contradiction of lhis kind

canno t endure; a rre of its terms mus! necessaril y de" tcoy th e a lher . It is
thus th e capitalist relation " f pr od uction itself which causes th e nonconservation of the value of fixed capital. There results a dwa/o rization 01
capital. It is impo rt ant no! ta co nfuse lhi s co ncept of devalor ization with
tha! of capital de preciation, since th e former pr ecisely makes it impossible
to satisfy fully th e lalter . Defined as an internal characteristic of capital in
genera l, devalorization of capital is an essential pr ecess of mod ification of
th e value co mposition of capital, th e impo rt ance of which we have seen in
social loss of value is borne and th e way thi s loss is made up in th e co urse of
accumulation. They are realized in pr actice th ro ugh th e met amor ph oses of
value. From this po int of view, th e devalor ization of capital co nforms
co mpletely to th e law of value. It is realized in pr actice in mon ey form , and
thi s is how it influences th e tem po ral evolution of gross fixed capital
formation .
The esse ntial differe nce can be summed up as follows.
(1) Inasmu ch as th e tendency towar ds th e un even develop ment of
th e law of accumulation. It is th er efore a co nstitutive pr ecess in
Department I is not strongly offset by th e genera l penetr ation of capitalist
accumulation. The devalor ization of capital means a loss of value. One
pr oduction int o Department
po rtion of th e labour crystallized in th e means of pr oduction is not
expressed in a recu rrent movement formed by success ive phases of
valida ted in exc hange as social labour . It is destro yed , co mpletely

annihilated. The gro wing impo rt ance of fixed capital for relative surplus-
massive increase in gross fixed capital formation and phases of deep
n,
th en th e devalor ization of capital is
value makes th e devalor ization of capital a massive phenomenon with
depression . A major cyd e of accumulation can be traced in th e United

Sta tes, with a period of sorne ~ o yea rs or so. This lar ge-scale recu rrent
decisive social impo rt ance . The co ndition of its possibility lies in th e
movement , articulate d with min or fluctuation s linked to th e business cyd e
co ntradictory character of accumulation as it pro gresses, in th at it

increases th e dissociation between th e gra dual transmission of th e value of
which we shall not ignore her e , can be observed in Diagram 6, de picting th e
th e fixed capital to th e prod uct and th e co nditions of its obsolescence . On

th e one hand , th e amount of value transmitted by depr eciation and th e
tim e over which it is transmitted tend to increase with th e materi al
ramification of manufacturing plant ; on th e other hand , th e co nsequent rise
in th e
organic
co mposition of capital tends to
accelera te
evolution of gross fixed capital formation from 1890 to 194 6.

Diagra m 6. Gross fixed capital formation in private non -farm activities
from 1890 to 194 6.
(In billions of dollars at
'9~9
pr ices)
th e
transform ati on of th e pr oductive forces so as to augment th e rate of

surplus-va lue, and hence co nsequent1y to increase th e pro bab ility th at th e
means of pr oduction invested will bec ome obsolete . The devalorization of
capital is th er efore th e necessar y expr ession of th e blind regulation of a
mod e of pr oduction found ed on an antago nistic relation , where th e social
character of labour only appea rs a po st eriori in th e pr ecess of co mmod ity
exchange. The more society develop s its pr od uctive capacity by deepening
th e division ofl abo ur , th e more it experiences serious losses of thi s !:ind o
Befor e dosing thi s chapter , in which th e concept of devalorization of
capital co mpletes th e genera l formulation of th e law of accumulation, we
have still to examine th e manner in which devalor ization affects th e
63 I 7 1
64 I
71
-------<O~------------------
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(1
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fI.
,.
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,.
r-
r-;
1111
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,,
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....
_ -formKl '
t'ol
,
.,
, \.,ri
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,
, ,,
"
V
,
\ / , '-- ,
,
~- -
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,,
-+JI- ,i
Prod"".. fO<><l.
lof,"""",I"ro.. .
,,
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,,"
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lof..muet.....
, -----,
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totoI= ~ 'od <llP""
,.
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--
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--,
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,. Pu " h u h,.' .-. " n hol.",n. " ph" m. n t . 1p" -" u . , u, pm.n t
S ou",., Offl o/Busino ss ;.onomi
Since 1946 th er e have not bee n any phases of deep de pression in th e
furmation of capital, but rather a phase " f slow gro wth fullowed by a phase
ofrapid incr ease . Yet the pr ofuu nd mod ilication of th e lon g-ru n cycle of
accumulation has not made business cycles disappear . If th e latte r have

bee n somewhat weaker in amplitude during th e long up war d phase of
int ensive accumulation, th ey have succee ded eac h " ther fast er th an unde r
(2) ~'Ihe n th e transfurm at ion of th e co nditions of existe nce of th e wageearn ing dass pro vokes a po werful co unter-tendency lo th e un even
th e regime of pr edom inantly exte nsive accumulatio n.

~'Ihat
co ncretely happens her e? Unde r th e regime of pr edominantly
development of Department I by way of a rapid expansion of market s fur
exte nsive accumulation, Department I develops in success ive spurts.
Department Ir and an increasing de nsity of exchange relations between th e
Phases of rapid advance in gross lixed capital furmation c"rrespo nd to th e
two de partments, th en th e devalorization of capital bec omes a permanent
creation of new indust ries und ertaking accumulation in Department 1. So
precess, structura lly incorpo rat ed in th e rhythm of capital formation . The
long as Department I pursues its own develop ment , mon et ar y f10ws of
tem po ral evolutio n of gross fixed capital furmation is th en profu und ly
investment have th e upper hand " ver other mon etary f10ws repr esenting
modified , as shown in Diagra m 7 .
th e pro visions fur replacing existing eq uipment. They also increase more
Diagra m 7. Gross fixed capital formation from ' 929-' 97 " by category of
quickly th an overall net pr olit , because th e opening of new investment

oppo rtunities by addition of new pr oductive capacity increases th e share
expenditure (in billions of dollars al 1958 pr ices)
of prolit invest ed . Yet th e massive increase in prod uctive capacity in th ese

very indu stries of Department I incessantly raises th e overall level of
2. GENERAL TE NDENCIES IN THE A CCUM ULATI ON OF PROO U
65 I 7 1
66 I 7 1
- - - - - - - (O r - - - - - - - - - - - - - - - - - - -
-'
(1
exchange needed to realize th e sum " f gross profit (the cQmbination of net
pr ofit and depreciation allowances) cor respo nding ta th e depreciation and
and diversify th e commod ities of mass consumption. Obsolescence
valorization of th e capital invested . Now th e uneven development of
bec omes genera lized and permanent . This pr ocess is th e materi al

subs tra tum for th e new modalities of capital devalorization. Intimately
Department I expresses th e discr epancy between th e spec ific dynamic of
linked to capital formation , devalorization no longer expresses itself chiefly
accumulatio n as a prin cipIe fur th e overall expansion " f value, and th e
as a brutal int er rupti on of th e course of fixed capital deprec iation. It forms
soc ial conditions " f th e divi. ion " f labour th a! permit th e extension of
part of th e met amorphoses of value , and is integrated int o th e financial
capitalist relations of pr od uction . This discr epancy is translated int o an

insufliciency of mar ket a ulle!s ta make th e capital invested show a profit .
pro visions for replacing fixed capital. To th e exte nt th at obsolescence

bec omes a perp etu al and genera l process, it can be sta tistically pr edicted .
~'Ihen
lhis insufliciency results in a mass " f unsold commod ities, th e

consequent non-realizat ion of value pro vokes a violent contraction in th e
This is translated at th e monet ar y level into th e formation of an insurance

fund out of overall pro fits. This fund is lumped together with th e
formation of fixed capital. It simulta neously involves a partial des truction
amortization fund , from which it canno t really be distinguished . It is
of th e fixed capital operative in pr od uction . The devalor ization of capital
incorporated a p riori int o cost pri ces. As a result , an intens ification in the
thus arises during a crisis of mar ket oullets and reinfor ces it . The norm al
pace 01 obso lescence is translated into a groU'th in the sh are 01

depreciation a/!o U'a nces in ot'era/! cash j10 U' , and correlatively int o a
relative decline in net pro fit .
Diagra m 8 depicts thi s development in th e United Sta tes after th e
Second ~'Iorld ~Iar . Comparison between thi s and th e pr ofile of gross fixed
capital formation given in Diagra m 7 pro vides th e indications we need of
th e new features of th e accumulation cycle. ~'Ie may note th at th e rapid
gro wth in th e share of depreciation a/!o U'a nces in overall cash flow
coincides with periods in which th e gross formation of fixed capital slows
down. This means th at th e intensificat ion of ob solescence is an essential
depr eciation cycle of fixed capital is br utally interrupted . Fact ories are
closed, cluste rs of pr oductive forces abando ned, while means of
pr od uction are destro yed on a massive sca le right across society. This form
of capital devalorization is th er efore an essential component of a deep
depr ession in th e gross formation of fixed capital. The social losses
involved affect th e capitalist class by th e int erruption of depr eciation as
well as by th e sharp contraction of net pro fits. They affect th e wage-earn ers
by mass unemployment and its atte ndant miser y. But th e devalor ization of
capital at th e same tim e repr esents th e esca pe ro ute from th e crisis because
it drastically lowers th e value composition of capital. This mutati on in
value relations has as its materi al subs tra tum a genera lized obsolescence
within th e pr oduction pr ocess which tends to crystallize during a
fact or in th e extrac tion of relative surplus-va lue , creating th e mar ket s

required by th e formation of capital when th e social conditions of th e
parallel exte nsion of th e two departments are not satisfied. The
depr ession . Accumulation piel,s up again with a qualita tive transform ation
devalor ization of capital in its new modalities thus bec omes th e force
of th e forces of pr od uction th at initi ates a new phase of expansiono

The characteristic movement of th e regime of intensive accumulation
tending to neutr alize th e uneven develop ment of Department 1. ~'Ie can

now unde rstand th e meanin g of our earlier assertion th at capitalist
which became genera l after th e Second ~'Iorld ~'Iar can be gras ped by
comparing and contrasting it with th e pr ocess just described. The contrast
pr oduction pr oduces in order to des troy and des troys in order to pr oduce.
The incessant increase in surplus labou r imposed on th e working class is
is th e expression of dec isive changes in th e regulation of capitalism which
indissolu bly connected with th e sys te matic social waste by means of which
have been brought about by th e universalization of th e wage relation . The

fundamental fact is th at th e qualita tive transform ati on of th e forces of
serious depr essions have been avoided in contemporary capitalism o The

ques tion is th en how th e losses of value involved in th e new modalit y of
pr od uction has bec ome a permanent pr ocess, instead of being chiefly
devalor ization are borne. ~'Ie shall show in Chapte r 6 th at thi s mod alit y is at
condensed int o one spec ific phase of th e cycle of accumulation. This
th e roo t of th e permanent creeping inflat ion th at is th e fundamental feature
change is due to th e inter act ion of th e two departments of prod uction ; eac h
now pro vides th e other with its mar kets as th ey combine to lower th e value
of th e regulation of capitalism since th e Second
67 I 7 1
~'Iorld ~Iar .
The capitalist
class as a whole, by incorporati ng an a pri ori insurance against
68 I 7 1
- - - - - - - {O t - - - - - - - - - - - - - - - - - - -
-'
(1
obsolescence int o th e furmation of its overall cash f1ow, itself enfurces lhi s
genera lized obsolescence , while simulta neously shifting th e social losses
th a! fullow from it a nte th e wage-earn ers. This shift is bo th diffuse and
'" H+ H-t-ti-t-r H+H+ti-t-t1H+ H+I

,
genera l. It is effected th rough th e loss " f value of th e purchasing po wer of

wages as a result " f mon et ar y inflati on . The devalor ization of capital thus
bec omes a devalor ization of th e rights allocate d to th e wage-earn ers. It is
lhi s precess th a! enables th e capitalist dass to continue to appropriate an
overall cash flow suflicient to maintain accumulatio n.
~'Ie
" O)
'00
\IJ~
shall thus be in a
j i'.
tff
serious contraction in th e gross far mation of fixed capital far thi rt y yea rs.
The features of thi s crisis are well and trul y such as to jeopard ize th e
P
i
pos ilion to assess th e pro fuun d significance of th e recen! crisis,

characterized frs! of al! by an accelera tion of inflat ion , th en by th e first
1\1
s..11 ,.."" " .. ,.'" 1' ... ... ""...'
'" 1<4>;l I r
"l' '[ . '

"
mechanisms of regulation spec ific to intensive accumulation.
Diagram 8. Financing ratios in non -financial corpo rations ('9 48- '9 7 ')
,
,,
... "'" on"""'" 1""" >' ' '",
"
"
-,
,
"
u
'.
,m
J9lJ
,~
,m
/
-,
,~,
,~
",' ''1fo, m. Uon . n. ""..

US D.p........'" 01<:0""' ''' '
, . Qm, fi...
S O" ",""
f". d.",1R. so,,-. Bo. m
r" '1 . m.o ,h'. 01 n..-d . " ."l '1"," " ' o " nfron' '1,,'l. m 01 ..lu... '1 .
" n, h u, Uon ol.n o.,.,u..l. m.., u,,' l" nom" "'" ,''' '1 . ",U.u. ' . J. r" . ,n, Los
..",d. ..."" 10" 0""' d. l. ,h'o,,-. "'0-<1. ' 0"' d. l'',h.",., PH " , ' 976.
- On '1', ,o' n' , ... '1. " .u. u. oft1. mulU. h" " B. S,1m.tt,L'. ".lyso " . " " "0"0"'0"'
dos ..., -. " ",, PH" , ' 97'.
u.
69 I 71
'ill
'1. cn WH m..' 'mm., ,,Uon1 ' ..n An, lo-S..on ' n " ',' n, . n u
70 I 71
- - - - - - - <0 > - - - - - - - - - - - - - - - - - - -
-'
(1
,,,' 1. m ; n ; m um . f mou , ,,, n " ..." . fo, 'b ..'U . m. n t. ARo; '1. Ci.n Wu '1"."h on . f
".,.1" . n o " Mi" m " , . n o m " , . f ;n,h .iou J.

,.n." l o.m , un" l. ' T.n t. P" '1. "" . ft h", .
' In .uh in" '....
lut .l. n. 11m" , n
Bu , ..u . f E<ono m " " ... u oh , S'a"'sI" <.
'1. 1> . n o " , m.nt> . f In <!u, ,,... l P,,<!u,h.; n o " ..1 W.... Int. m .honoll.
Com. u ', 111.!:,onom', J o" mol no. 3" ' , 1. 83, Mu, h , " 73. T1'ind l .hu,,;..1 . ., .
1 m u . t .n fr om . n ."1<,, "' ''' A Con..", o/ Pay , b. E.H. P1. 1p, B""n . n o M.H. B" " n . ,
Lon . on , ,. 68.
' Qu . t
b.
,"o,,"no m n. in
'A R.m,," ' '
St u d,.f
'1.
G, .. t D m'i on . n o ;t,
e.u...',F" , uu .- M" , h, " 55.
2 . GENERAL TE NDENCIES IN THE ACCUMULAT IO N OF PRODU
- 71 1 71
- - - - - - - - - - {O > - - - - - - - - - - - - - - - - - - -
-'
(1
th e labo ur process must thus dispel th e illusion s spread by bourgeois

ideologists in th e supposedly liber atin g character of th e new types of work
Transformations in
the Labour Process
organization . It is obvious enough that th ese illusions do not deceive th e

working dass, who daily co nfront th e co ncrete realities of exploita tion. But
th ey do have an effect on br oad sec tions of public opinion , which have only
a highly abs tract co nception of th e labour process and whose sensitivity to
human dignity is eas ily reassured by an emollient propagand a .
Analysis of th e labour pr ocess must also dispel a further illusion - th at
of th e liberating character of tech nology , or of th e 'sc ientific and technical
1. Tite Mechan ization o f Lab o u r
revolution ' as it is called nowadays. This illusion finds, of co urse , formal
Capita list pr oduct ion is th e unity of a labour pr ecess and a pr ecess of
expression in neod assical th eory , where th e forces of pr od uction are

inn ocent of any social co nditioning. It inspires a whole spec trum of
valorization, in which th e valorization is do minan!. Investigati on of lhi s
pr oductivist ideologies, not th e least of th ese being th at of French planning
unity involves a further co nceptualization of capitalist relations of
as po pularized by Pierre Masse and other exponents of incom es po licies.
product ion . On th e a rre hand , we have defined th e wage relation , th e

appropriation of labour-po wer as a co mmod ity , as the fundamental
Let us pr oduce as much as we can , and th en eve ry one can have more , is a
relation of pr od uction . On th e other hand , we said th a! capitalist relations

of pr od uction present a dual character of antago nism and cooperation . In
showing how th e labour pr ecess is transform ed un der th e impulse of th e
struggle fur surplus-va lue, we mus! acq uit a task th a! is essential fur th e
lransili on from th e abs tract to th e co ncrete in any th eory of accumulation:
simple and pers uas ive slogan. An eve n more insidious noti on is th e ide a
th at th e capitalist character of pr od uction is dissolved simply by th e
application of science to it . Hence th e od es to auto mation in which mod ern
prophets de pict for us a society in which burde nso me work will have
disappeared . Id eological amalgamations of th e pro blem of onerous sorts of
co ncrete labou r with th at of capitalist exploita tion are typical of eleva ted
namely to de monstr ate that th e transform ati on of th e labour process

creates relationships within pr od uction th at ada pt th e cooperation of
co ntempo rary discou rses on manual labour .
labour-po wer to th e domination of th e wage relation . Prod uction th er eby
labour is subjec t to th e social division ofl abo ur . Techno logy is th e materi al

subs tra tum of relations internal to th e labour pr ocess which make
co nstitutes a structure in motion , in oth er words an organic set of social

relations whose evolution is th e co ndition for perp etuating th e wage
The reality , un fortunately , is quite different . The technical division of
collective labou r-po wer a single force pr od ucing surplus-va lue. The
relation .
techni cal division oflabo ur pr ogresses in such a way as to fragment living
~'Ie
labour and thus rende r essential only an outp ut norm fo r labour-power
must now, th er efore , broach an essential element of th e th eory of

capitalist regulation , which will shed light on certain pro blems th at are
widely debated at th e pr esent tim e . In effect , when th e dass struggle
becomes intense , it canno t be eas ily held down to th e wage co ntract , i.e. to
th e amount of wages in mon ey terms. For it tends to put in question th e
int ernal relations of pr oduction by challenging the co nditions of labour ,
th e dassification of jobs and th e rules of work organization . The struggle
gives rise to a rapid evolution of th e labo ur pr ocess, thus creating new
social re lations. In thi s struggle th e capitalist dass sta kes its existe nce - in
other words th e maintenance of th e wage relation . Theo re tical analysis of
2. T RANSFORMATI ONS IN THE LA 80 UR PROCESS -
, I 37
defined in terms of time. It is in this way th at th e collectivization ofl abo ur

pr oceeds in co nformity with th e valorization of capital. It sho uld not be
surprising th at th e United Sta tes has been in th e vanguard of major
transform ation s of th e labour pr ocess. These transform ati on s involve
changes in th e genera l pr incipIes of work organization in all do mains of
pr oduction when th e latter bec omes capitalist . These principIes develop
with th e deepening of th e social division oflabo ur . Their very genera lity,
whatever th e co ncrete fields of th eir application, is th e bes t pr oof of th e
fact th at homogenization via abs tract labo ur is now written int o th e
2 I 37
- - - - ---j0 > - - - - - - - - - - - - - - - - - - -
-,
A THEOR'f OF CAPITALlST REGUlATION
process o production . Tb.. mljor lun.ronn..tions ","ve ...m.n ID Ih..
iabour can be t Th.. laps m Ihe worl:inl-day arise frem two bnds of lime
nrted SI..tes first o .n bec.uM ;1 is there lh.ol1he ...ole r"Lotion " .oS IDOIIt
pmod,
qwd:ly UDlV"rsaltzOO.. It is t~ lUnsfi:>nn,nons tlu.t ..." mus! UOW
(1) Ttm.. penods bound up ""'Ih Ihe COOTdmatton of <ltJfur..nl sefm<!tlts

of th.. Labour pt'OC<!SS . These are the result of !hose <hsc:onImUltl...
succtnetly surv"y.
1.b
prodllCUOO pr act1c<!s tbat pr....... nt the totahty of the YrOI"bng day from
beml mad.. ioto 0 0" SlDgle mus 0 1abstrac1 l.o.bour. Th"y ar e periods for
shofunl malen.al LO 1M OO\ItM of tr ansfo rmallo o , fur repalt an<:!
1- Prindpl..... o T.oylorisl1I
~'I'.
sh.ill confine our study to lhose llWjor !l"~tlOns of lbe L.bour

J>fOC"'S" which have taken pUee iD lhe fO-Cl1Ied -=>d mdustTi.iol
r... olIlUOJ>. which beg.." ID lhe Lilttef h.ili of lb .. 19th rentury .md hu
lolSb (pr eparal>on and maugural10ll of a paron>lar product>on run ,
0WlI nme . T1us IS lb .. period ID which lb ..
sluftmg of .",.J:;,rs bound up ""'Ih Ihelpallol1 oonfigural>on of lb .. madllne
conlmued through to
~ptl.ilist
0U1
mode of product1OD hu ~fll1,oItt<>illy brought 1010 bem
~ ..ms o productlV<!
forc<!s ..bl.. 10 link ..bsolut.. .md ",Lot:lv .. surplus-
nlu.. dOS<llytogeth..... Th... r buis is lh. p rincipie 01mn:halll%otlon, which
mallllen.atlce, periods bound up ""'lb dlolnles in Ibe nature of prodUC'tlv..

UIlIIlfficienl c:oordination bet-.....n succe.,;v.. operal1ons causmg a d..l.o.y ,
~em).
(2) Ttm.. penods bound up ""'Ih th.. partial reconsttllll>on of iabourpo>o..r at lb" worl:plaC<! (various paUHlland b~ du.. lo fatigu..).
incorporates in its moch, olopoeration the q UAlitativ.. charact..ristics of
Th.. t..rm Taylorism mi ght be dened as th...um totalofthose N!lations
those concrete labo nrs p....vious ly performed by th . d exterity o f worloers .
of production internal to th e labeur prONU that lend to a"""ler ale the
The rnachine syslem i. a co mplex of productive forres in which a seri... 01
co mplelion oft he mech anical cyde of movemenls on Ihe job ' and lo fill Ihe
tools i 1 in motion by a mechanical lOurce of . nergr, lhe motor , vi.. an
gaps in Ihe working da y. The. e t elation s ate expressed in general principles
"ppro priate lransmission . y.te m. The relati onship betwee n workers and
o work organization th at reduce th e wor kers ' degree of auto nomy and
mu ns of labour is thus revers e<! . Instu d of wielding too ls, th e workers
place Ihem under a perm anent surveillance and co ntrol in th e fulfilment o
becc me appendages of th e machi nes. By transferring the qu alitati ve
Iheir outpul nor m. In Ihe Unile<! Sla les, Taylorism came inlo force in Ihe
characleristico of labour lO Ihe machi na , mechanizalion reduces labour lO
enginee ring induslries al Ihe end of Ihe 191h cenlury . II wao a ca pita li' l
a cyeJe of repetitive mov emen lSIhal is char aclerize<! solely by ilo dur alion ,
response lo Ihe eJa.. s1ruUl.. in production in a phase when lb.. labour
Ib<t ou lpu l norm . This is Ihe fuun dalion of Ihe homogenization of labour in
processw... composOO of sev ..r.l Mgmetlts.....ch organized on mechanical
production. All m<><!lfication. in Ihe oranUation of wor l: represenl a
hu,,", inl ..rnally . y..1 .hose ml egr aticn
further ..xpression oflhis principIe.
between <ltJfur..nl cal ",!,,",," of .",.I:er. Tb.. insufli.ci..nl mechanical
""fo""
~ill
depended on dtrect r..lations
Th.. oulpul norm of soci.aliabourpower \lI th..

lb.. pivot of any
analyns oflb.. Labour pt'OC<!SS. Here It is n~ lo lab accounl of the
e xfClSed by .ay of ruI<!s of.",.\: fixing the oulpul oorm fu each job ...
changa th.ot oc:cur iD lb.. LOt<!tKt>ofl between the df..r..nl periods of tune
...U as !he nature and ord<!t o f lM IDOY..",,"ols lo be perfi:mn~ . A
th.ot mn. up lb.. ooorl:ing day. Let us t all th.ot lb.. return 00 socia.I Labout
iDlegratton of lb.. dfer<!Il1 sefmetllS meant tbat constraml had lO be
managerW s1aff .as ora.ni%~ ~ lM lOle purpose o f -=mg <>bedI..~
is ~ : (t. - tJ /t., .here t. is lbe tlm.. ~ for Ibe productioo oftbOM

oomm<><!lll....hose amsumpti.oll rKOlll'l, lllles iabour-po>oer , and t. -l. is
lO Ib_ rul
lhe s:urplus iabour-Ilme . lbe I~al ab.traC'liabour-llme t.
ils<!lf loealed
punmg Ibem mIo appbcal>Oll and modymg Ibem . Th.. """ of Ihis
W,lhin a .",.bng da y of dur.11OII T. Tb.. dference T- t., " "Pfess<!S Ih..
I"pafatton and speciali.:.ol>Oll of functi.otIlI W"'IO combal lb .. control OYef
porousn<lSS of lb.. .",.bng day from the ~andpoml of abmaC'liabour. N' lh

a g1v..n d"V"" of mechanwl10ll of labcur and a gtv"n typo of .",.\:
oraniullon, lb" YrOI"b ng day hu n ~ y lo be T so tbal abstrac1
.",.bng conml>ons lbal lb<! rel.o.l>ve aulonomy of jobs m lb .. old
1, PRINCIPLES
os TAYLORI SM
_ 3 I 37
\lI
d~enl,
A further typo
ot ~ff,
or.l.Ol%ec1 ...
Ilme and motioo
charp;eclw,lh devi.sillg Ibe rules, ""penm~lltmg w,tb Ihem ,
~em
could l....v.. lb" YrOI"I:<!tS. Detai1ad lime and mol>on analyns of jobs,
combined .....Ib rese.rrch inlo lh" psycho-phystolOgtc.al N!actions of
4 I 37
J
A THEOR\' OF CA ~ I TA lI ST RE GULATION
individual. lubjeocl&d te lhe tepetition o f different oonfigurations o f
mov em eat mrc indusl ry o / tb e prolelu i",nizec! bl",ck po pul"'l ion of the
movement, pro vided informa tion lbat ..nabled specia list. to rerno"a tbi.
o bstad e . This informati on " U lh.. ba... far a r<M! sllnplification o f jobo .
Each prcductic n worker " as giV"h a sllnpl er cycl.. to perform. Tb..
il\<luguration o f ~u"rns of tbill:ind l&d to lb.. conceptio n of n" w m..thods
of prcducticn and Mw typoeI of nw.chin.....tools. 'T<!Chnical p rogr",..' wu
oom plerely deternuned by lhe int<msifiOltion of output norms. It sought lo
Sou th, fro m the beginn in 0 1 tb e Second 1'Jorld ~'l""'r o n..",rds . In 1'Jeste rn
Europe it especially invclved ru~v.. " ",v,,", 0 1 immigr",tion from tbe
of jobs in auch a ..ay as to = v"nt th.. worhlrs'
Fordrsm is st.l" Ih.ol IUpetMdes T. ylorism.' It d..notes "",ti... of ma jar

lTiflSfonn.IllQM in lb " Liobour prccess d osely lmked to Ibose chang... m Ibe
con<hlions of elCistetlCll of lb" ..............m cLtss t:lwt P Vi! tl5i! to Ibe
/i:>nn.lllOll of .acilI cotlIUm ptwl:l norm illd t""d lo lI15tItutlorWwt Ibe
<OOOnOmic d a.- stTllWe m Ibe form of eo1IectIve bir.rnun . f ord1sm is
stnhn illustTitwl:l of 1M Monnst lb......ccordm lo ..hicb lb .. technical
,J'''t lhe con ten t

~<lOOt wh~.
il wU uot potsibl.. ro b....n it dtroctly. Such clwng""

1IlO<:bfi.d botb lb. WOTI: poerform.oDC<!S to bo accomphshoo. ..,th th.. m.uns
of \.IbouT .md lb. fP"CIfic..tiOD of lb .. Hbd'!!'5 to be manutoctured or

.....mbl.d (for iul..nce .. ch.ionge ID throosholds of toI",..mce).
Taylorism cuJmin.,ted Wllb lb. org..m:.tion of worl:t<MlllS. This form of
or.anwohOll bec..me unport..nt wh..., mcre.umgly larg e worl: co1lectlVltles
Med ite rr. n...n and from Am ca .
a. T. ylo rUlII . upeneded by r o ro. m
dmJion of Liobour is detenmn<Od by 1M deepenm of lb .. soci.ll d1V1ston of
munobibud in prodUetlv. mft..structures ..hich ,t ..as extremely costIy
Liobour . JI marb. n.... st.e m Ibe reguLotlon of upltdlism . th .. rem>e of

inlellJlVe iCCUllluJ.,tiOO in ..hicb Ibe U pltd1ist cLtss """,1:5 ov .....n
illd ..hich retn.ilined m soernce for very lon g tmIe m
lllilli fIlllfllll al 1M productioo al "",e-Lobour by th e d os<> irticuLotlon of
1I in motioll .. bote! ca plul of extrem..ly higb ..alue. This v;llu e ".os
lO
oper."
oom~ "'lh th e period
ot ... ge p;lyment. Team org=tmn oomb med

...et"Y rule designe<! te reoduc. tbe S.pI m th e ooori:ing d..1y. By restrictms
Ule indlV>dlUl ooorbns d.l.y, It ..U pom.ble to fix ou tp ut norms inv olvwS .
v"ry high ~ 0 1ooorL By u.r.nte<!'lIlS oo ntin uity, it " as possibt.. to b.mJt
Ul<O loa 0 1tmM invo lved in tbe startlIlg-up 0 1m.a.chines illd Uli! prep;ll".hon
oi prodlK'tion runs . By nubnSlIWChines function i!iUli!r oo ntinuous1y o r

...mi<ontuluous1y (e.S. stoppml only ..t Ule _1<--encis),lt ..... pom.ble to
r.LotioM of produetioo "'lb Ibe lXHIlII>O<hty reLotlollS m ..hich the g..-
...m...... purehue lhftr mNllS of consumpt>on. Ford= 15 thus Ule

pnncipl4l of a " artinllario n ktu.." pross D
I prDauc1lD" a"a mD t DI
ee ..... mptio", ..hicb oo nstltu tes Ul.. lIU55 product>on t:lwt is Ule specic
ceeeee e 0 1 tM uni v"ruliution 0 1..",ge-Lobour . In this ch..lpter, Uli!refor. ,
.... sh.all study onIy OM upect of FOTdmn, t:lwt ..hicb illlects Ul<O
OllilllUtiof of Liobour
oo
Ul.. tIIOdi.htles of " "'gi! pa.ymi!nt. ~'l". sh..alI
I""duc. tb" tmI" tb..,. ....,,, kept in servwe .... .. moN! mti!l15!! utiliution oi
rhem. The mcr<OU9d r.pi<Uty ofc.. p1I.alturnover thus obtam-ed l'e<iuced Ibe
inv-st1I.I" It m lb" hgh t of
ris1: oi ob.ol~.OO usoci.I led Iosses through d..-v.alonul1on.
lb. produ=
Alter Ibe Second ~"arld ~"M, I....m org..mz.ol1on boc.ami!gener.al in most

industries botb in 1M Unil<Od SU les ..ndin ~"estern Europ". This ext ell510n
OUt ......h...
<!XposItwl:l of Ibi! ro1e of lb.
tTiflSfonn.Itwl:l of lb" con<htlOnS of .. llJst<!llce of Ibi! ... g...........ml cLtss in
of lUTp1.... v.alue . In C1wpl"," 3 .... sh.all Oon to study lllON
fully botb lbis lriflSfonn.l twl:lll5elf.nd lb.. forms of g.. l'<!Liot1On '1 has
<T<Oi1-ed.
Th.
Ch.oTiC'lfllstlC Liobour process of f ord1sm is sem;a utomatic
r<tp.-nI<Od th e .SS1milil1on of T. yionst pnncrpl"" by m.m.og..mi!nts, tbe

_ .blmlmflll of time .nd mot ion study as.n . utonomous function in tM
assemb/!I-/;" t proauet;o". This p;lmcuLor type of Lobour pl'OCi!55 ....
ch.ore of spoeciilist. pleced d osely un der m.n. g..m,mt control, .nd tM
_ .blml-ed in lb . U" il-ed SU I... from Ibe 19"'05 on ...,ds, ~lly fi:>r
cr eencn of . VUI resoervoir of bomog..nooou nd mobil.. Lobour-pow.....
/niQ
consu mer lood. produced m lon production runs , ",nd ....
both ccnst r. in<Od and resigned lOc. pil. list I.bour discipline . The migr.tion
of I.rge m. _ of ..orl:err, div orced fro m .ll socio-eultur",1 ties to th eir
subMqu."tly UI."d-ed upttr....m 10 Ihe pr od uction of st",nd.ordized

interm-edi.l. componentr fur Ihe m",nuf",ct ure of these me",ns of
co mmuniti", of origin , pl.y<Od . m",jor ro le in th e co nsider",ble gro..th of
ccnsumpticn. Th. _ .blisbment of one ",nd the ....me ty pe of I",bour
thi. reservcir , In the Unit<Od St",tes thi . involved in ""rticu l",r th e
prOCllSl .... . po.. erful furce fur th e ve rtic",l integr"'t ion of pr oduction
1 , PRINC IPLES
O, r An
ORI SM -
5 I 37
6 I 37
-'
(1
pr ecesses and a mat eri al support fur th e lransmission of local mutat ion s in
th e pr od ucti ve forces between th e two departments of pr oduct ion . It is fur
transform ati on . This co nversion was accompanied by a normalizati on of
lhi s reason th a! th e semi-automatic assembly line is th e ma s! suita ble
th e spec ifications of co mpo nent elements, indu cing th e upst ream

penet rati on of assembly-line work.
labour pr ecess fur relati ve surplus-va lue. The organic liaison it estab lishes
The second principIe , which was co mplementary to th e int egrati on of
between th e two departments of prod uction enables value relati on s to be
segments of th e labour precess, was th e fixing of workers to jobs whose
revolutioni zed in th e direction of a reduction " f th e unit value " f items of
pos itions were rigoro usly determined by th e co nfiguration of th e machine
mass consumption . Fordism thus genera ted a tendential fal! in th e tim e l.

needed fur th e reconstitution of social labour-po wer. Bu! we have already
sys tem. The individu al wor ker thus lost all co ntro l over his wor k rhythm .
not ed in th e frs! chapler th a! relative and abso lute surplus-va lue are
between job s and subjec ted th e collective rhythm to th e uni form
intimat ely related . This is co ncretely expressed in th e labour pr ecess,

where Fordism too k up th e prin cipIes of Taylor ism and put th em more
movement of the machine sys te m. In thi s mod e ofo rganization workers are
effectively int o pr actice , to obtain an eve r greate r intensification ofl abour .
norm , since job auto no my has bee n tot ally abolished. It thus became
Fordism further developed th e mechani zat ion oflabo ur , increased th e

int ensit y of work, rad icalized th e separa tion between manual and mental
possible to simplify tasks yet further by fragmenting cyd es of mot ion int o
The co ntinuous linear flow pro hibited th e formation of buffer stecks
un able to put up any individu al resistance to th e impositi on of th e output
labour , rigoro usly subjec te d wor kers to th e law of accumulation and
mer e repe tition of a few elementa ry movements. This simplification,

planned in engineering de partments which were th emselves subjec t to th e
turned scientific pro gress against th em as a po wer serv ing th e uni form
division of labour , was pursued th rough a co ntinuo us ameliora tion of
expansion of value. The decisive influence of Fordism can be seen in th e
assemb ly-line performance , modi fying machine types, inventing new
accumulation of capital in genera l by th e break in th e pace of development

of th e rate of surplus-va lue after th e First ~'Iorld ~'Iar , which we have
pos itions and job s, alte ring manufacturing and assemb ly plans.
Once established , th e assemb ly-line precess can be sys tematically
modified in accordance with th ese two pr incipIes to increase th e share of
already remarked . Fordism dee pened Taylor ism in th e labour pr ecess by

th e application of two co mplementary prin cipIes:
surplus labour in th e working day . But thi s precess itself has its limit s, set
Firstl y , th e int egrat ion of differe nt segments of th e labour pr ecess by a
on th e one hand by th e secial co nditions necessar y for th e labour pr ecess
sys tem of co nveyor s and handlin g devices ensuring th e movement of th e
to play its ro le in valorizing capital and on th e other by barriers int ernal to

th e labour pr ecess itself and by th e dass struggle that eccurs within it.
mat eri als to be transform ed and th eir arrival at th e appropriate machine

tool s. This is th e sys tem th at justifies our reference to a semi-auto matic
The first limit s are not exte rn al and absolute, but rather th e effect of th e
assemb ly line oIt repr esented a mutati on of th e forces of pr od uction th at

co nsiderably lowered th e tim e taken for th e transfer and manipulati on of
pr ecess itself, which is not auto matically harmoni zed by th e co nstitutive

relationships of th e capitalist mod e of pr od uction . The far -reaching
objects th at were often heavy and diflicult to move , or else co rrosive and
dangero us to hand le . The sys tem was similarly respo nsible for a major
transform at ion s of th e techni cal division ofl abo ur th at th e semi-auto matic

assemb ly line permits give an eno rmous boos t to producti ve capacity and
sav ing oflabo ur-power and a not able increase in th e organic co mposition
co nsequently demand secial co nditions spec ific to th e mass circ ulation of
of capital. A co ndition of its success was a revolution in energy which
co mmod ities at a rapid ly increasing rate oThis req uirement is all th e more
ur gent in th at assemb ly-line prod uct ion is subjec t to a spec ific co nstraint :
genera lized th e indu st rial use of electricity and made possible th e

co nstruction of high capacity mot ors which enormously increased th e
th e further th e fragmentati on of individu al tasks and int egrati on of jobs by
po wer ava ilable in indu st ry . In thi s way , th e labour pr ecess co uld be
th e machine sys te m have already bee n taken , th e more costly in means of
co nverted from a de nse net work of re lationships between jobs, with
pr od uction is subs equent int ensificati on of th e output norm . The reason is

th e great techn ical rigidity of th e machin e sys te m. This way of raising
int ermediat e pr od ucts passing bac k and forth , and trial and error in th e
case of assemb ly, int o a stra ightforward linear flow of th e mat eri al un der
2. TAYLORI SM SUPERS ED ED BY FDRDISM -
7 I 37
labour producti vit y co nsequently makes investment propel investment on
8 I 37
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(1
an ever mor e colossal sca le, while markets mus! be expanded al whatever
abs enteeism has particularly disastrous effects, since it significantly
cost , with incr easing rlgks " f devalorization of th e fixed capital thus
increases th e time needed to build up pr od uction teams and co nsequently
irnmobilized .
The int ernal limit s " f th e labour precess itself can be identified by
analysis " f th e tim e perlods making up th e working day. ~'Ihen th e
fragmentation " f la. ks is pushed to an extre me limit , severa l elements
co mbine to prevent a further decline in tim e wasted and even to reverse lts
directian . The chief fact ors al wa rk her e are:
(1) The inerease in th e 'ba lance delay tim e', i.e. th e delays caused by
also th e tim e taken to get th e assemb ly line going, as well as requ iring th e
employ ment of excess labour-po wer devote d to various ancillary tasks but
imbalances on th e assemb ly line o This phenomenon derives from th e fact

th a! th e spalial co nfiguration of th e assembly-line plant imposes certain
co nstraints on th e disposition of th e series of partial tasks, th e result of
which is th at not all wor kers have a cycle of movemen ts of th e same
pr imarily serv ing to make up th e gaps on th e assemb ly line when needed .

(3) The abolition of any pe rceptible tie between th e collective output of
th e work force and th e exp end iture of energy by th e individu al worker .
This follows directl y from the collectivization of labour accomplished by
th e assemb ly line o It enables capitalist managements to avoid any direct
challenge to the output norm . But its dr awback is th at it makes it diflicult to
divide th e workers against th emselves, and induce th em to participate in
th e degra da tion of their own co nditions of labo ur by means of individu al
output bonuses. Assemb ly-line work tends to unify th e workers in an
dur ation . This impossibility of distributing tim e equally leads to a tot al

tim e lost equal to th e sum of th ose period s spent waiting by th e workers
overall struggle against their co nditions of labour . If th e capitalist

managemen ts try to reestablish divisions between individu als by
with sho rte r cycles. This tim e increases with th e further fragmentation of
differentiating th e reward s for jobs which have been rend ered subs ta ntially
tasks.
(2) The effects of int ensificat ion of labour on th e mental and physical
uniform by th e fragmentati on of tasks, th en th ese artificial differe nces
equilibrium of th e workers. The first negative effect her e is due to

uniformity of rhythm , co mbined with co nstantly increased tem po . The idea
falsify analysis of cost pr ices, and co nsequently also of invest ment criteria .
They also upset th e balance of th e assemb ly line by impedin g th e transfer of
workers between different machines. If jobs are not ind ividu alized , th en
th at pr od uctivity depends on a uniform pace of operation th roughout th e

working day is a pr oduct of th e capitalists' need to reinfor ce co ntrol over
co mplicated plans are needed to involve th e participation of th e workers in
th e labour-po wer at th eir disposal. In no way doos it de rive from an
un certain , yielding th e results expected in terms of social stabilization only
observation of the ideal psycho-ph ysical co nditions for human activ ity. On
when th ey sec ure trade-uni on collabo ration . ~'Ie shall see in Cha pter 3 what
th e co ntrary , if one thing is clea r, it is th at human performance is impro ved

by changes in pace and by th e possibility of self-contro l over th e mom en ts
an essential ro le collective barga ining played in th e orientation taken by
and mod aliti es of such changes. Subjec tion to a uni form but ever increasing
appare nt pr oductivity gains. The success of such schemes is highly
th e technical division oflabo ur in th e ' 950S and 1960s, as thi s pr oced ur e

involved th e workers' oflicial aba ndo nment of direct struggle over
pace of work, co mbined with th e curtailment of resting tim e , imm ensely

increases fatigue and creates new forms of nervo us exhaustion from which
co nditions of labo ur in favour of various plans to give th em an 'interest' in
it is impossible to recover from one day to th e next . Sympto ms of thi s

mod ern form of destruction of human capacities have multiplied during th e
certain of th ese plans in th e late 1960s, together with unoflicial actions

taken outside th e framewor k of th e trade uni on s expr essed th eir gro wing
co urse of th e 1960s, espec ially in th e most mechani zed indu st ries: a high
co nsciousness of the illusory character of th ese schemes as against th e
level of abs enteeism, and particularl y an irregular level th at defies any

atte mpt at pr ediction ; an incr ease in tem po rar y disabilities pr ecipitated by
very real aba ndo nment of th eir means of struggle.

The co nsiderable slowing down in th e fall in real social wage costs th at
th e accumulation of ner vou s exhaustion ; a rise in accidents on th e
can be observed from th e mid 1960s onwards was th e expression in th e
asse mb ly line ; an incr ease in th e pro portion of defective pr oducts, and
value field of this challenge to Fordism as th e genera l mod e of management

of wage-labo ur . In study ing th e genera l panor ama of capitalist
co nsequently in th e tim e devote d to quality co ntro l. The irregularity of
2. TAYLORI SM SUPERS ED ED BY FDRDISM -
9 I 37
th e performance of th e ente rprise . The violent reactions of workers to
10 I 37
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(1
accumulation in th e United Sta tes, we sta rted by identifying th e

co ntempo rary epoch of restr aint on th e rise in th e rate of surplus-va lue as
a crisis of th e regime of int ensive accumulation.
~'Ie
being realized unless capitalist relations of pr od uction are abolished. This

abolitio n will not be accomplished by p ondering over possibilities th at
can now take a rre step
have not yet been realized by scientific develop ment . Capita lism has
further in our account Qf its structura l dete rminants and begin to
sha ped auto mation, just as it sha pes eve ry other sys te m of pr od uctive
characterize its genera l features as a crisis 01 the np roduction 01the w age
forces, so as to make it a mat eri al infrast ruct ur e for th e pr oduction of

surplus-va lue, on which th e repr oduction of capitalist relations of
relation, which affects method s and goals of pr od uction , as well as mod es

of life. The social conditions which permitted capitalist relations of
pr oduction to be universalized th ro ugh th e transformat ion of the way of
life of th e wage-earn ing dass have now un der gon e a profu und altera tion.
The dass struggles in pr od uction torlay bea r th e germ of a major new
transform ati on of th e labour pr ceess - Neo-For dism.
pr oduction depends. If auto mation is a revolution , it is so in th e sense th at

eve ry major transform ati on of pr oduction method s within capitalism
pr ovokes a change in th e value camposition of tot al social capital th at
accelera tes th e devalor ization of fixed capital invest ed and creates
co nditions favour able to accumulation. The pro blem is to know whether
th e change in work organization made possible by th e int rod uct ion of
Neo_Fordism
auto matic pr oduction co ntro l can canalize th e dass struggle int o forms
co mpatible with th e law of accumulation.
'Neo-For dism', a term pro posed by Christian Palloix ,' is an evolution of
(a) A uto ma tic p roduction co ntrol. In pr incipIe auto matic pr od uction
capitalist relations of pr oduction , still in its embr yonic stage, th at is

designed to meet th e crisis in such a way as to safeguard th e repr od uction
co ntro l is qualita tively superior to th e coordinated machin e co mplex of

'syste ms enginee ring'. ~'Ie have see n th at th e latter still involved th e direct
of th e wage relation - in other words, to perpetuate capitalism o It is
application ofl iving labour to th e flow of pr od uctive opera tions. It was thi s
impossible to tell her e whether this evolution will succeed, for it implies
direct co nnection that , eve n while it subjugated labour , created co nstraints
not only a major transform at ion of th e labou r pr ceess, but also a
in spatial organization and in tem po ral rhythm . ~'Ie have also seen th at th e
techni cal division of labou r un der thi s pr incipIe ended by colliding with
3 . T h e Problems Posed by Automation in the Labour Process:
sceialization of th e mod e of life , with forms that are still hard to perceive .
Only at th e end of thi s work shall we attempt to make any overall
th ese co nstraints. In Fordism , th e pr oduction pr ocess has been co mpletely
judgement . ~'Ihat we are co ncern ed with in th e pr esent chapter are simply
liber at ed from any limit s imposed by th e physical stre ngth of individu al
th ose pro blems which directly bea r on obstad es to gro wth in th e output of
human beings. Yet it remains depe nde nt on th e reaction tim es, faculti es of
sceial labour-po wer and arise on th e semi-auto matic assemb ly line , as well
percep tion , co ncentration and de tec tion of individu als, and on th e rapidity
with which th ey can coordinate th eir movements. ~'Ihen all th ese faculti es
as th e manner in which capitalism has sought to overc ome th em .

Neo-Fordism, like For dism itself, is based on an organizing pr incipIe of
are pushed to th eir limit by th e logic of assemb ly-line work und er th e spur
th e forces of pr od uction dictated by th e needs of capitalist management of

th e wor k collective . The new co mplex of pr oductive forces is auto matic
of relative surplus-va lue prod uction , we saw th at multiple forms of tim e-
pr od uction co ntro l or auto mation; th e principIe of work organization now
pr oduction pr ocesses which imposes on one and th e same manufact uring
in emb ry o is known as th e reca mposition of tasks. The co mbination of

th ese two lines of develop ment has unleashed th e most shameless
unit an output plan made up of distinct and success ive sho rt pr od uction
runs. The rigidity of th e assemb ly-line process is costly in terms of balance
propagand a about th e liberation of man in work. It is certainly possible
delay tim e , sta rting tim e , as well as of mod ification of th e movin g parts,
th at auto mation doos co ntain possibilities which will eventually, in th e
spec ial tooling and skilled labou r able to adjust multiple functi oning
very long ru n , lead mer e operative work in prod uction to disappea r. But
one thing is sure her e and now. These possibilities will have no chance of
machine tool s.
The new pr incipIe of work organization is th at of a tot ally int egrat ed
3. THE PR08 LEM S POSED 8Y AUTOMAT ION IN THE LA80 UR P
"
I 37
wastage appea r. These tendencies are reinfor ced by th e dive rs ification of
' 2 I 37
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(1
sys te m in which producti on operations pro perly so called , as well as

measurement and handlin g of infurm ati on , react upon a rre ano ther as
th e co ntempo rary pace of tran sfurm ati on of th e labo ur proc ess.

Auto ma tic pr oduction co ntrol int roduces a new flexi bility . For th e same
eleme nts in a single pr ecess, co nceived in advance and organized in its
pr incipIe can be incorpo rat ed in differe nt co mplexes of prod uctive furces;
tot alit y , rather th an in success ive and separa te ste ps of an empirical

pr ecess " f het ero gen eou s phases. An organization of lhi s kind is made
it is ada ptable both to mass pr od uction and to pr oduction in sho rt or

medium runs. In th e first case what is involved is direct numeri cal co ntro l
possible by th e sys tema tic applica tion of th e prin cipIe " f feedback ta th e
in which a series of machine tool s ope rating on a definite segment of th e
functionin g machine tools. The basis " f th e enlire system is thu s th e ability
to construct machines that control the ir oU' n operations.
This requirement presuppo ses a co nsiderable develop ment " f forces of
pr od uction , in three respects:
(1) A scientific and no longer merely empirical knowled ge of eac h phase
in th e prod uction pr oc ess. This is tru e ab ove all fur co ntinuous flow
pr oduction pr oc ess is linked to a central co mputer and pr ogrammed to

ada pt itself to any kind of va riation. This co mbination is kna wn as a tran sfer
machine . The co upling of tran sfer machin es and automa tic co nveyo rs ,
pro grammed so as to pr ovide reserves of int ermediat e co mpo nents as a
funct ion of th e pr od uction rhythm , furms a tran sfer line oThe inst allati on of
pr oc esses th at do not dep end me rely on mech anical bu t also on chemical
tran sfer lines , which is ve ry co stly in terms of fixed capital, centralizes

pr oduction enormously, and only becomes worthwhile from th e capitalist
ac tions. In order fur th e pr od uction pr oc ess to be capable of co ntro lling
po int of view if very high levels of output can be regularly maintain ed . This
itself, a circ ular flow of infurm ati on is required on th e determinant
is why auto ma tic prod uction co ntrol has only made its big leap fur ward
parameters of th e pr oc ess, so th at th eir va riations can give rise ta suitable

corrective impulses th at are inst antly tran smitted . This req uires a rigorous
ve ry recently , with th e int rod ucti on of incorpo rat ed numeri cal co ntro l.
Here eac h machin e too l is equipped with its own mini-computer , of th e
and complete mathem ati cal repr esentation of th e mat eri al tran sfurm ati on s
kind which th e mini at uri zat ion of int egrat ed elec tronic circuits has made
that are to be co ntro lled .

(2) It is one thing to set up auto ma tic co ntro l of ass embly-line
possible to pr od uce . The functi oning of th e machin e is th en co mpletely

freed from th e mot or and senso ry limit s of th e human operator . Precision
pr oduction sequences who se co nfiguration has already long been
is impro ved , pr od uction tim e sha rply r ed uced , and ab ove all, th e tim e
develop ing in th e direction of a fragmentat ion and int egrati on of job s. It is

so me thing else again - a far more co nsiderable and risky ente rprise - to
taken to pr epare th e machin e sys tem fur different co nditions of use can be
red uced from severa l hours to a few minutes , while co mpletely elimina ting
create an auto ma tic linkage betwee n distinct sequences in a labour pr oc ess
th e need fur skilled personnel.
that have fur me rly been accomplished by different work co llectives. This
sec ond objective req uires a co mplete reconstr uction of th e pr oduction
The ro le of th e economist is to env isage th e effects th at th e developme nt

of th ese new furces of prod uction have on va lue relations. The first and
unit according to entire ly new plans fur th e circ ulation of pr oducts, a
most impo rt ant of th ese effects is a relative saving of labour -po wer in
co mplete red efinition of prod uction norm s, job pos itions and changes in
pr oduction . This saving results from a series of cha nges affecting th e work
bo th th e nature of th e responsibilities and th e ide ntity of th ose respo nsible
co llective . First of all, th er e is a de-skilling pr oc ess that arises from th e
fur th e co urse of pr od uction .
suppression of co mplex tasks. As th e operatives have only to supe rv ise th e
(3) These changes in work organization have only been made possible
machines and test th eir co rrect funct ioning, it is possible fur eac h to
by th e dual advances of elec tronics in th e treatment of infurm ati on and

capacity to programme sys te ms on th e one hand , and in th e pr oduction of
supe rv ise severa l at a tim e . One sec tion of production jobs is thus
elimina te d. Since th e work of th ese operatives has no direct effect on
inst ruments of measurem ent and co ntro l fur diverse prod uction pr oc esses
output , th ey can be paid simply by th e hour , thus dispensing with all
on th e other . It is thi s pr ogress that has led to th e int rod ucti on of

numerically controlled machine -tools. It is th e perfecting of th e fur ms
pro blems related to th e determination of output . Finally , since it is no

lon ger necessar y to individu alize jobs , and since th e end ing of manual
taken by thi s numeri cal co ntro l th at determines more than any thing else
operation of th e machin es makes tasks objectively homogeneous , it is easy
3. THE PR08 LEM S POSED 8Y A UTOMAT ION IN THE LA 80 UR P
13 I 37
14 I 37
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(1
to switc h workers around, adding sorne and taking away a lhers, and in lhi s
impo rt ant sav ings in transfer tim e , quality co ntro l and th e pr eparation of
way redu ce to a co nsiderable extent th e pro blems posed by absentee ism.

The number of furemen , quality co ntro llers and other superv isory sta ff is
pr oduction pr ogrammes. A far more advanced centralization of prod uction

bec omes co mpatible with a geogra phical decentra lization of th e operative
also sharply red uced . The enginee ring department , on th e other hand , is
uni ts (manufacture and assemb ly). A far -reaching modi fication of
expanded. The co mplete lransfer of producti on pro gramming dec isions to
relationships between indu st ries develops, replacing electro -mec hanical
lhi s department creates new job s fur skilled technicians, in a division of
items of high value by electronic items ofl ow value. The capitalist dass can
mental labour th a! is eve r more rigoro us. Bu! th e very centralization th a! is

realized by lhi s auto matic co ntro l means th a! th e creation " f new skilled
benefit from thi s in two ways. On th e one hand , a far greate r flexi bility in
th e inst allation of pr od uction units allows it to break up large working-d ass
jobs is far from making up fur th e destruction of old s!:ills resulting from th e
co ncentrations and create an env ironment th at minimizes co nvergence of
change in work organization , inasmuch as it makes sense to spea k of
struggles at th e po int of pr oduction . On th e other hand , th e develop ment of

electronic indu st ries with simple and sta nda rdized pr od uction met hod s
co mpensation of thi s kind , since th e skills involved are hetero geneous and
~'Ihat
is certainly tru e is th at th e hom ogeni zation
tends to lower th e value of co nstant capital and co nsequently to co unteract
effecte d by exc hange abso rbs th e transform at ion s in th e labou r pr ecess

when th e genera l co mmod ity circulation satisfies th e mon et ar y co nstraint
th e rise in th e organic co mposition of capital. The capitalist dass th en has

simply to make sure of th e essential fact or : tot al domination of
- th at is to say socially valida tes th e tot alit y of abstract labou r . The
pro gramming centres, resear ch method s, and pr ecessing of inform at ion ,
transform ati on s in th e labou r pr ecess th at are based on auto mation th en
and tot al sub mission of th e highly skilled personnel respo nsible for th em . If
such a separa tion between th e work of co nception and th e work of
thus incommensurable .
have an overall effect in th e field of value: a red uction in th e variable

capital required to pr od uce th e same amo unt of value. They thus give rise
to a relative surplus-va lue. But we know th at thi s surplus-va lue is only
effectively realized if th e equivalence relationships of exchange evolve in
such a way as to co unteract th e tendency to th e un even development of
Department I th at follows from th e rising organic co mposition of capital, as
th e translat ion int o th e value field of th e relative sav ing on labou r-po wer .
~'Ihat
th en is th e effect of auto mation her e? It is sca rcely possible to

answer thi s witho ut analysing th e new type of int er acti on s th at th e
exte nsion of thi s mod e of organization is co ming to esta blish between th e
two departments of pr od uction . There is as yet no overall study of thi s
question, inasmuch as we are still at th e mom ent in th e midst of th e crisis of
Fordism , and th e new inter acti ons are as yet only littl e visible. Yet it is
possible to make sorne genera l po ints about th e perspe ctives for change
that th e division of labo ur based on auto matic pr oduction co ntro l must
necessaril y indu ce in th e value division of th e overall pr od uct int o
quantities of value of differe nt sorts of co mmod ity . Automatic pr oduction
co ntro l divides up th e pr oduction precesses in a new way , linked on th e
one hand to a centralization th at permits direct co ntro l of pr od uction by
lon gdistance transmission of inform ati on , and on th e other hand to a
rearrangement of th e segments of a co mplex labour pr ecess to allow for
15 I 37
execu tion , and such a co ncentration of effective manageri al po wer over th e

forces of pr od uction can be accomplishe d, we can foresee a simulta neous
lon g-ru n pr essure on both co nstant and variable capital. The regime of
int ensive accumulation co uld th en surv ive th e crisis of Fordism .
(b) The recomp osition 01 tash. The atte mpts to alte r th e organization of
labour which have mul tiplied since th e mid 1960s must be see n in th e
perspective of th e develop ment of auto matic pr oduction co ntro l, and th e
transform ati on of capitalist relations of pr oduction which has just bee n
explained. Their objective is to overcome th e crisis in th e reprod uction of
th e wage relation inh eri ted from Fordism by transforming th e labou r
pr ecess in accordance with th e flexi bilit y given by auto mation. At th e
pr esent tim e , no new dominant form of th e labour pr ecess has yet
emerged . All we can do th er efore is to elicit th e significance of th e
pr incipIes now being experimente d from th e bas ic sta ndpoint of th e
perpetuation of wage-labo ur .
The analysis of th e labour pr ecess we have already co nducted allows us
to assert th at th er e is a change in th e genera l pr incipIes of work
organization whenever th er e is a change in th e mod aliti es of capitalist
management of th e labou r pr ecess. Auto mation br ings with it th e
16 I 37
-----~o)-------------------
-'
(1
possibility of suc h a major tran sfurm ati on , because it replaces th e rigid

int egrat ion of th e mech ani cal princip Ie with an int egrati on th a! is bo th
same operators. This is because job enrichment is not an enrichment in th e
more flexible and more far -reachin g, base d on overall contro l by a genera l
inform ati on sys te m able to analyse and co rree! th e parameters of
product ion . The hier ar chical prin cipIe of capitalist co ntrol is thus
somewhat modified . Control via directives transmitted from a high
also strip th e tasks of preparation and reg ulation of any qua lita tive co ntent
co mmand is replaced by diree! co ntrol " ver th e prod uction precess . This
lies in th e suppress ion of categories of skilled workers , fitt er s and sette rs,
co ntrol is bo th more abs trae! and mor e rigorous. The U' orkers are no
who are no longer need ed , and th e devolution of all superv iso ry ope rations
longer subjected lo a constraint 01personal obedience, but rather lo the

collective constra int 01the production process.
and simple mani pulati on of th e machines to th e operators th em selves. At
literal sense of th e term oOn th e co ntrary , numer ically co ntro lled mach ines
req uiring specialization; the principIe of auto ma tic co ntrol co mpletely
remove s th e manufact uring proc ess from th e workers' vigilance or
influen ce . In co nditions of thi s kind , th e int er est of capitalist man agem ent
The va rious different experiments now be ing made in th e labour proc ess
th e same time , th e division of th e production proc ess is modified by

auto ma tion in a far -reaching way . Semi-auto no mous groups eme rge ,
sho uld be assessed by th e criterion of whether or not th ey be to ken new
responsible far manufact uri ng or ass emb ly pro grammes. Rigoro usly
relations in prod uction . In thi s respect , Job r ot ation and Job enrichment
int egrat ed int o th e overall infarmat ion sys tem of th e ente rp rise , and
are simply th e ultimate exte nsions of th e principIes of Fordism and

Taylorism . The y are palliatives far th e tim e imbalan ces be tween differe nt
entire ly subjected to th e pro gramming and co ntro lling centre far th e
jobs which appear on the ass emb ly lines when work is toa fragmented . A
de ta iled prod uction programme de fined far th em and by prescr ibed links
certain rearrangeme nt of th e workers' ope rating cyd es is needed to
be tween th e va rious groups. Each group, m or eov er , is co llectively
co mbat th ese losses of time and to secure a more effective fit be tween th e
responsible far th e execution of th e production plan , and has charge of th e

funct ion al serv ices directly bound up with it . It divide s up its tasks be tween
number of job positions and th e number of distinct tasks. This
bra nc h in which th ey are situa te d, th ese groups are co nstrained by a
its mem ber s. Freed from the necessit y of making sure th at th e labour
rearrangement , which may indude a certain regrouping of operations , is

itself based on a parcelization of work which ten ds to make th e workers
co nstraint is respected in each individu al case , capitalist man agem ent can
indiffer ent to th eir jobs . A certain po lyvalence on th e part of th e operatives
thin out th e hier archical pyr amid of command . It th er eby hopes to be
results , not because th ey bec ome mor e skilled, but on th e co ntrary

because th e division of labour has pu shed th e proc ess of de -skilling to a
be tter ab le to isolat e and attenua te co nflicts th at arise at th e po int of
maximum , by stripping work of all its specific characteristics . It would be a
production , and to paralyse th e funct ionin g of th e trade union s , by creating

a farm of organization far th e working dass th at is alternative to th at of th e
serio us mist ake , th er efare , to int er pret th e mu ltiplicati on of tasks within a
trade-uni on struc tures and int egrat ed into th e ente rprise.
single job position as a backward step. On th e co ntrary , it is th e

co llectivization of work in th e far m of abs tract labour th at creates the
II. The Struggle to Establish a Normal Working Day and
uni farmity pe rmitting thi s multiplicat ion , which is in no way th e revival of

th e kind of qua lita tive co ntent characteristic of a craft.
~'Iidened
work is
the Formation o the Trade-Union Movement
ju st as empty as be fare, and as co mpletely red uced to pure duration as was

ea rlier fragmented work.
As we have seen, under th e regime of exte nsive ac cumulation, where

absolute surplus-va lue pred om inates , th e len gth of th e working day is th e
Jo b enrichment, leadin g to th e far mation of semi-auton om ous groups,
principal mean s of extracting surplus labour . This was th er efare th e main
is on th e co ntrary th e mod e of work organization correspo nding to th e
issu e of th e dass struggle in th e 19th century . A soc ial norm cod ified in
genera l principIe far mulated ab ove, ev en if it is still in its embryonic stage.

It co mbines operations of co mpo nent contro l, preparation and regulation
legislat ion , and thus gua ra nteed by th e sta te, was only de finitively obtained
after three-qu arter s of a century of dass struggle. It was only obtained ,
of th e machines , with tasks of execu tion un der th e respo nsibility of th e
m or eov er , in th e co ntext of th e develop me nt of Taylorism, th en of
17 I 37
18 I 37
- - - - - - - - <0 > - - - - - - - - - - - - - - - - - -
-'
(1
For dism , which created more effective ways of increasing th e output of
soc ial labour-po wer. The pro blem of th e determination of working hours,
which poses th e ques tio n of th e ro le of th e trade-uni on movement , is thus
align th emselves with th e others. The defence of pr ivate property , finally ,

was int er pret ed in th e law co urts in an extr emely broad sense, th e co urts
co mplementary to th e sludy of th e labour precess.
actually bec oming th e most effective sta te institut ion s fur co mbating th e
workers' movement . J ud ges repeatedly upheld th e uncon stitution al
The spec ific conditions of th e development of capitalism in th e United

Sta tes had a co nsiderable influence on th e formation of th e wage-earn ing
character of legislati on placing barriers on th e exploita tion of th e workers,

as a violation of th e freedom of th e wage co ntract ; without actual legal
dass, which tcok an original co urse . Up till th e Civil ~'Iar , th e existe nce of
an open frontier gave wage workers th e hope of being able ta escape th eir
opposition to th e establishment of trad e union s, th e co urts sought to

paralyse th eir action by int er preting th eir struggles as int erfer ence with
co nditio n . The formation of stable prol et ari an organizatio ns, al once

permanent and pro vided with suflicient resources to co ndue! ongoing
free exchange (the right to work being defined in law as individu al free
struggles on a wide front in th e face of extre mely po werful adversa ries,
violation of th e anti-trust laws. It was only in ' 935 , in a co mpletely new
pro ved to be an extre mely len gth y hist orical pr ecess. In th e sixty yea rs up
till 1890 , th e trade un ion s managed to create a structure d nati on al
po litical d imate, th at th e trade uni on s were oflicially recognized at th e

nat ion allevel by th e National Labor Relat ion s Act (better known as th e
organization only in two sho rt period s, after th e Civil ~'Iar and th en again in
~'Ia gner
exchange between th e wage-earn er and th e employer), and lat er as a
1880 - 85. It was only in th e final decade of th e 19th century th at th e
Act).
The struggle to red uce th e working day was mar ked by th ese
American Feder ati on of Labo ur managed to establish itself as a permanent
instituti on al co nditions. The movement fur a legallimitati on bega n in New
organization .' Up till th at tim e , trade uni on s were essentially lecal

organizations furmed in phases of pro spe rity , which th e employers eas ily
England in th e 1840S. This was th e most indu st rialized reg ion, and th e most
de nsely end owed with means of co mmunication . In Massac huse tts a
managed to destro y as soo n as economic co nditions too k a turn fur th e
workers' organization with th e explicit aim of obtaining th e 10-hour day in
worse . Organized on a craft bas is, th ese unions only managed to organize
nar ro w fringes of th e working-d ass po pulation, genera lly among th e skilled
law was fuund ed in
184~,
and ra pidly spread th ro ughout New England . Its
workers. Seeking as th ey did to obtain and safeguard co nditions oflabo ur
demands also ind uded aban on th e employ ment ofchildren unde r 1 ~ , and
th e pro hibition of night work fur women and children . But thi s movement
suitable fur th eir craft, th ey had no int er est in co nducting any co ntinuous
did not win much in th e way of results. Certa in city authorities did gra nt a
action fur genera l legislation.

They also had to face po litical and legal co nditions th at were highly
10-hou r day to public employees, but only rarely was thi s legislati on
unfavourable . The feder al characte r of th e USA gave eac h sta te almos t tot al
autonomy in labou r legislation , and as in eve ry other field , thi s pr ero gative
was fier cely defend ed . A particularist mentalit y , whose origins went bac k
to th e struggle against English colonialism , was particularly virulent in th e
newer sta tes, which were de te rmined not to fall int o po litical de pendence
exte nded to th e pr ivate economy.
~'Ihen
it was, as in Pennsylvania in 1848
and New Jersey in ' 85' , legislati on restricting th e duration oflabo ur was
hedged with dauses allowing th e law to be eva ded if th e worker accepted
thi s in his co ntract of employ ment. This dause, designed to safeguard th e
'freedom of the labo ur co ntract' , gave employers a co nvenient and legal
escape ro ute. They had in fact a whole ars enal of weapo ns fur dissuad ing
on th e rich sta tes of th e Northeast. It was thus extre mely diflicult to
from employ ment workers who refused to accept this 'free co ntract' . The
enfurce any genera l legislati on . Besides, in a co untry where socio-
emp loyers' action was also greatly facilit a ted by th e weakness of wor king-
econo mic re lations sec re te d an extre mely strong individu alist ideology ,
and an identifi cat ion between th e idea of pr ivate property and th at of th e
dass organizations, itself a pr oduct of th e relative lack of dass

co nsciousness in a mobile society where individu alism was incit ed by
nati on al int er est , any mass movement appeare d anti-American. There was
always a strong tendency , th er efure , fur th ose sta tes which had passed a
genuine economic oppo rtunities. Since labour organizations repr esented

ab ove all th e int er ests of th ose categories of workers who were both skilled
more pro gressive labo ur legislati on subsequently to regress in order to
and located in th e most dy namic bra nches of th e econo my, rises in wages
11 . THE STR UGGLE TO ESTA 8L1 SH A NORMA L W ORKING DAY
19 1 37
20 1 37
-----~o)------------------
-'
(1
th a! were gra nte d in period s of pro spe rity were suflicient to weaken th e will
This movement , however , developed to a great exte nt outside milit ant
to struggle fur a un ifurm legislation on working co nditions. In period s of
trade unionism o It is ev idence of th e impact on th e United Sta tes of th e
crisis, on th e " ther hand , th e empl"yers had eve ry int er est in dismissing
whole sec tio ns of th eir workers and extracting th e maximum labour out of
upsurge of socialist ideas and movements in thi s period as a who le, eve n if
transform ed by th e particular po litical structures and ideas of North
th e remainde r . These two mod es " f th e appropriatio n of labour-po wer

co mbined la pu l pr essure on wages and inerease absolute surplus-va lue.
America. This pro gressive movement succee ded in getting th e sta te

govern ments to pass a series of ameliora tive laws. Nearly every sta te
The weakness of th e unions and th e nar ro wness of th eir base made it easy
fur th e boss es subsequently to cancel th e few gains th a! were won . If lacal
established a minimum age for wage-labo ur (12 or '4 yea rs ); a certain

number pro hibited night work for children, as wel! as certain da ngero us or
legislati on had bee n passed , it was either furmally repe aled or else
stre nuo us tasks; forty sta tes fixed maximum working hou rs for women . But
aba ndo ned in pr actical application. In eve ry trial , th e co urts upheld th e

oosses' case . Final!y , direct violence with its habitual ars enal of black-lists,
th e restriction of working hour s for men co ntinued to be bloc ked by
spy ing, pr ivate repr essive forces, campaigns of defamation in th e pr ess, th e

hiring and intr oduction of a serv ile labour force recr uited dandes tinely,
loc k-ou ts, were al! used on a vas t sca le.
insurmountable obstad es. Among major indu st ries, it was only th e

railways, after co unt1ess accide nts and th e inter vention of th e Feder al
gove rn ment , which did not want to see th e transpo rt sys te m paralysed by a
genera l strike, th at ado pted th e 8-ho ur day in ' 9' 7 . It was war prod uction ,
These features of th e American dass struggle, mar ked by th e inst ability
moreover , by stre ngthening th e pos ition of th e workers, th at final!y
of wor kers' organizations, th e intermittence of th eir objectives, th e
enabled th e genera lization of th e 8-ho ur day and th e 44-hou r week in al!
reinfor cement of repression by th e bosses, th e great sensitivity of th e

balance of forces to th e econo mic and po litical co njuncture , th e
indu stries exce pt stee l, with overtime paid at a higher rate o

The gains won by th e working dass during th e First ~'Iorld
hetero geneity of th e working dass, incessant1y aggravated by th e arrival of
once again short-lived. Capita list reaction too k advantage of th e
new stra ta of immi gran ts of disparate origins, al! left th eir sta mp on th e
internation al po litical co njuncture created by th e deep split in th e soc ialist
struggle for th e social de te rmination of working co nditions, right th ro ugh
movement after th e Octo ber Revolution in Russia . In th e United Sta tes

more eas ily th an elsewhere , th e revolutionary fraction of th e workers'
to th e New Deal.
~'Iith
th e degradation of livin g sta nda rds and th e co ncentration of

workers in th e indu strial centres which spra ng up und er th e impulse of a
~'Iar
were
movement , which had been weak in any case, was isolated and crushed in
very rapid accumulation of capital, labour co nflicts increased in scope,
th e propitiou s co nditions of th e ' 920 - 21 recession . These events enabled

th e capitalist dass to launch a genera l anti-union campaign and take th e
dura tion and violence. After th e sanguinary dashes th at pu nctuated th e
offensive on th e po litical front . A number of craft uni on s were forced to
late 19th century and th e first atte mpts at mass uni oni zati on , th e struggle
for th e 8-hour day and th e 6-day week culminated in th e bloody
disband , while th e co urts paralysed th e actions of th ose th at remained . The

big co rpo rations organized th eir own co mpany unions and emba rked on
demonstr ation in Chicago's Haymarket Square on May 4th , 1886. The
th e new meth od s of personnel management characteristic of Fordism . It
Haym ar ket defeat spelt th e end of th e hope for a mass movement unifying
th e working dass for fifty yea rs. The trade un ioni sm th at gre w up on th e
was thi s far -reachin g transform ation of th e labour pr ocess according to th e
ru ins of earlier struggles , and which too k advantage of th e serious

dissensions that th e defeat in Chicago had pro voked within th e working
was not expressed at thi s tim e in an exte nsion of average working hour s.
dass , was co nsciously a co rpo rative uni oni sm intended to defend th e

int er ests of workers of spec ific crafts and trades.
pr incipIes of Fordism th at explains why th e weakening of th e working dass

The Creat Depression pro found ly changed th e co nsciousness of th e
working dass , as wel! as th e attitude to indu strial co nflicts of a large
This is not suflicient , however , to explain th e po litical campaigns to
number of social gro ups po litical!y attac hed to th e liber al bourgeoisie ,

espec ial!y when th ese co nflicts occurred in bra nches of indu st ry
reform labou r co nditions which gained in stre ngth between ' 90 7 and ' 9' 7 .
do minated by th e giant co rpo rations. On th e one hand a mass movement
11 . THE STR UGGLE TO ESTA 8L1 SH A NORMA L W ORKING DAY
2 1 I 37
22 I 37
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-'
(1
developed and led to th e furmation of th e Congress fur Indu st rial
sum deno ting a social re lation of distribution by which tot al revenue is
Organization (e IO) in 1936. Its pos ilions were far more rad ical th an th ose
divided .
of th e traditional unions, and fuund express ion in a massive unionization of

workers in th e key bra nches of sleel and mot or vehicles, after th e
spec tac ular strikes of autumn 1936 to winter 1937 .' On th e other hand , th e
politica l balance of forces had grea tly changed when a refor mist bloc with a
great majority in th e indu st rial sta tes and Congress carried th e New Deal
administra tion to po wer. Orre of th e fundamental principIes of lhi s wide-
Theo re tical development from abs tract to co ncrete is not only a

scientific moo e of exposition. It alsa involves a dec isive ideological issue .
For th e observer uninter est ed in th e overall repr oouction of econo mic
relations can read ily co ncern himself simp ly with th e labour mar ket , taking
it in isolati on as a mar ket where th e parties to exc hange sta nd on an equal
ranging overhaul of th e institution s of capitalist society was th e
fao ting. For such an observe r , what exists sponta neo usly is an individu al
hourly wage as th e pr ice of an hour 's co ncrete labour in such and such a
cod ification of th e dass struggle. This involved oflicial recognition of trade-
trade , or else a piecework wage which is th e pr ice of th e 'labo ur fact or'
uni on organizations with majar po wers of negotiation vis-a-vis th e bosses,
expended in th e manufacture of thi s item . It is th er efare labo ur itself which
and th e means to exerc ise th ese po wers without th eir legal existe nce being
seems to be paid far . The daily, weekly or monthly wage appea rs to be
enda ngered. It also requ ired negoti ati on s and arb itra tion pr oced ures to
take place within a legislati ve framework established at th e nat ion allevel.
simply th e pr oouct of th e unit pr ice of labo ur and th e amount of labou r
This was th e spirit of th e ~'Iagner Act of ' 935 . This tim e th e organized
rebellion by emp loyers against th e new labou r legislati on was defeated ,
to da with abs tract labour . For , as we have see n, th e latter is a pr incipIe of
than ks to th e vas t po litical support won by th e struggles of th e working

dass to impose recognition of its trade-uni on orga nizations, a support th at
moti vat ed a change in th e Supre me Court's int er pret at ion of th e
co nstitutionality of soc ial legislation. This po litical success was expressed
in th e Fair Labor Sta nda rds Act of ' 938. This law, passed by Congress, was
expend ed . The labour involved in thi s co nception has absolute ly nothing

abs traction th at permits th e co nstruction from econo mic objects of a
space, th e set of equivalence dasses in exc hange, whose mathematical
structure is such th at a measurement can be defined far it . For th e neodassical sch""l, on th e co ntrary , labou r is a 'proouctive serv ice', in other
words a use-value . There are as man y pr oo uctive serv ices as th er e are
different spec ies ofl abo ur . These spec ies are hetero geneou s, but exchange
is deemed to be an imm ediat e quantita tive relation between a useful gaod
applied un der th e autho rity of th e Feder al govern ment. It established a

minimum wage and laid down a framework far working co nditions. The
and a type of labour , which directly de te rmine th e pr ice of th e labou r in
working week was set at 44 hours, with a dause stipulating its red uction to
terms of th e gaod. The pr ice de te rminations far different types of labour
40 hours within 3 yea rs. Additional hours had to be paid at tim e and a half.
The employment of children unde r , 6 was far bidden in almos t all sec to rs of
are written int o th e genera l eq uilibrium, as a co nfiguration of quantita tive
indu st ry . This law was genuinely enfarced. The 4a -hou r week was genera lly
types ofl abo ur ind uded . In thi s co nception , it is dear th at th e existe nce of
a nominal reference wage , which has a strictly sacial character and far ms
established after th e Second

of unionization was high.
~'Iorld ~'Iar
in th ose indu st ries where th e level
ratios in which net excess de mands are all cancelled , th ose of different
th e pivot far differe nt ind ividual wages, ca nno t be ente rta ined. Nor can th e
diversity of far ms in which wages are paid , or th eir hist orical evolution, be
th eorized . These are relegated by nea -d assical th eory to institution al
III. Forms ofWage and Labour P rccess
co ntingency , and th er efare exd uded from econo mic th ought . The neo~'Ie
broached th e pro blem of wage-determination by defining a nominal

This first approach, however , was far from exhausting th e
dassical daim to gras p th e co ncrete can only co nvince th ose fascinat ed

with mon et ar y differe nces in individu al wages, who think th ese differences
ques tion, since it co nceptualized wages in th eir most fundamental or most
are capable of an imm ediat e int er pret at ion witho ut any pr ior need to
abs tract respect oAt thi s degree of abs traction, wages can evidently not be
directly eq uated with th e individual worker's pay slip. They are a mon etary
investi gat e what wage-labo ur actually is.
reference wage
j .
111 . FORMS OF W\.G EA ND LA 80 UR PROCESS -
23 137
It remains tru e nonetheless th at differences in individu al wages farm
24 1 37
- - - - - - - - <0 > - - - - - - - - - - - - - - - - -
J
A THmR'l' OF CAPITALIST REGULATIO,"
p.a.rt of tb.. com pl" "
ph"'nom"~
oi th.. r..pro:iuction of ...ag<!-ubour. Th. y
nt'l. l O b!! ..xpLnn-ed. though there iJ no l:in:loo pnnClpl.. mr ..xpWning
tn.nsformatioll5 of the 1.o.bour process in lh.. ~oth century, but has also
CT"'Ited lb.. mos! mod..m _ in other ""OTds, tb.. mos! ooll<!ct::lve _ fonn of
th<!ID.. ~i"lIh this prob'"m. _ .ppro.iCh lb. unm<mse qu<!'Stlo n o th. ml<lTn<l1
wrect "al" d..t..nnmatlon.
S1utIfie.otIon oi lbe w.Il~1l ella. Tb. d..limtIon o lb e """""PI of

."goos."d la posltion Wlthtn thetb<lory of ...Alu.. elwract-mu w"g... Lobollr
u lhe product of .. , .."..,..lI oUId unorm KJrilI relat>OIl that is lb. ~ 01
c,pitWIn . Tb.. stntic.o!:K>ll of lhe ....s.... mmg dass furms prt of lb.
CODCTete ccndJoons a f . eprod uction a l tia .. age relallon. It is DOt to
1n..J.1yse<i ID th.. ..Id af ... 0.\11<0, bu! Ir is ~d'mt ID th.. eifects a f Ul<IM
l . Time W.;es .nd the WorlUllgDay

Tbe most v..nerabl.. and d.aical form oI"ag...
In
brg...-sc.ole industry iII
bourly p.ilymenl . ~'fe m.oy note tllal 1M bourly .age actua.lly p.llid ee
w ff1!r..nt mWvidual woru.... l1ltctU.atel aroutid a ~ ra le ..Ilicb liorms!be
o bject ofl ..n..ral ni!gotu.tIollS ..hen tbe woru.... lIlOV..m..nt IS oraru:ed c e
COtld.1l1ons Oh tM lDO.ll"~ Ionn a f ...alU., in otMr words h..... on tIwt "<OS

lIow th~ ..... dtff..""nt types of <UY1SIOIl. suponmpos<!d O h on ancther
a lUjar scaJ.. and lis nbts are recogni:ed in 1.0. Sutb ni!gotu.tIollS, ..lticb
...thm lb.. worbng d ass."" lb_ ID t1JJU u .. eha ng....ble smce th.. y ~1
go fu h1!yond any mWVld ual eeereaee betw...... <mlPIoy..rs and employed,
from tboo d us struggle.OO " r<I I'lbj1 to lb.. umfYlllg force o the ".g..
, ..lItion t",,]f. Bul in the hoJnOll..n~ fio!ld of mOlle!uy qu.anllties, lb.
rev....1that .al "" ..xpress an overall relationship betw....n tbe cLasses. ~'1e
can also Ob""lV" that tbe d"'''I"min.lllion of tb.. baSlc bourly ..age iII
indissolubly tied to tbe over all duration of th" labour inscribe<! in ill
effects of th ese divimons u" . ddilive. Hence . ny ,rnmedi"te , . Ihe, Ib. n

critic. 1reglStration of differen<:el of ..ages il a my.lificalion , ..hich makes
il impos.ible lo analy.e eilher ..hal all ..ages have in common, or th cs a
differenlialion. lhal ari.e from diverse pr ocee. of . lra lificalion.
The facl or. of differenliali on ..ilh ..hich " e . hall be concerned in th e
pre. enl chapler are lh e major changes in lh e labour proce. These
change. genera le qu alilali ve modifications in lhe ""nerele form o in ..hich
..ag... are paid , and oo rre lative ly in lhe prmciples obeye<! by lhe
q uant itativ.. differen~ bet......n the individu al ..ages o f interelLangu ble
c. lculated . ~'flLat iII the relatiOnJhip bet......n th.. basle ho urly wage and the
''''Ot101!I'S .
no minal re f..r..nce lOage ? The larter denot
Tb.. suportlIlposition of df"l"filt typeI of labour pl'OC'a'SS in dferenl
definition. Thu. il i. not th e duraticn of labour actually perform", ..hich

may well vary from one dal e to anolher , ..hich enlero inl o lh e definilion of
lh e ha. ic hourly wage, bul ralher lh e duraticn ofl abour eon. ider" normal
by soc iely.
The delerminalion of lh e basic hourly ..age i. lherefore lh e pr aducl c f
lh e genera l dalruggle over lh e fixing of a lypiealwage ""nlrael and lhe
esla bli. hmenl o f lhe dur ali on of labour by whieh lhe ba. ie hou rly wage iII
distribution charact..ristic of ca pilalism. Al
th.. ov..ral1 re1.o.tio ll of

hav.. """,n, it is de6.ned by
industn... d""" not mili It pos:Rble to idflltliy a strict histonool succasion
Ibe total lOal " sum p.lId to Ibe ""OtUrs prodUC'ing oommoditles wvid.,f by
in tbe modobtles of unm..m.le ..age p.ilynlfllt. Y1!t tb.. dOllllILlIlt char~"I"
tb e total abstract lahour perform..:! by tbis sociaJ.lahour-power.
of tb.. or.nnz.otlotw1 pnncipl.. of Taylorism. and subsoequ..ntly of r ord1sm.

e.iln be pet"l'1!Iv" in lb e imporlance aaumed by C1!I1am forms of .ag.
A first dfer"n"" appe.on; betw+en the baslc bourly lOage and Ihe
nomin.ol re fer en"" .age ..ben lhe dur atiOll of ..ffectlve labour IS higher th.on
relan .... to olb ero for tbose industriell twt und....enl changes in lbeir
tb e "'sal hmit . This COI'Tespotldl to tbe p.ilymenl of overtlme. JI iII
Labour
Al lbe pr_nt !111M , moteov ..r , lb .. emergene-o of Ileo-
imporlloIll lo note lhal !be ral ell p.ilid for o.... rtIm~ .ork. Me iJQC'ia.lly
Fo tdlSIll lS ..ngendenng debatell and e xpe tlln1!nts tending to loasen or e ve n
de t..rmml . Th..y Me prod~ of !be cLo.a Itruggl.. , .hi<:h lbus enle.... into
compl..t..ly diDol.... lbe re1.o.uoMlup betw+en "al'" and output .
lbe liorma.tIon of th-e nominal Nfe rence ..ag.. . If Ibis la lt er "as SIIlIply a
prt>co1!SS .
Th.. id.mt::tficatlon of Corn:IS of ..ages and th1! d"lIlOnstratlon of an
dLl"ect "a g~, as IS th.. bastc hotirly ra le , then tb.. number ofadditlotw1 hotus
irtev1!l'Slbl.. '!!VOlution from ",me Corn:IS 10 otb,," tbus has a gr;at histoncal
wou1d be lb" sol.. ",urce ofWv"!"ifilC9. But the nominal ""fu""n"" lOagelS
I:Igmficance m tb.. srudy of Ibe developm1!llt of capltalist rela llOIlS of
tb e mon 1!tary form oftbe reproductlOllof social labour-pow..r . For reasons
production . Th.. Unit" SIat.. hu
wbicb lOu hall """mine in Chapler 3. tbill indud... a purchasmg power 1h.>1
111 .
~ O RJo\ S O ~
not only on gmated the m.ojor
W6. GE ANO LABOUR PROC ESS _ 2 5 I 37
26 I 37
-'
(1
is no! direc tly paid to the individual workers bu! which appea rs in the furm
of an indirect wage whose payment de pends on different mod aliti es from
those of th e diree! wage . Conse quently, if we are spea king of th e overall
repr od uction of th e wage-earn ing dass, which is necessar y in a rder to
effective dura tion of labour above th at of nor mallaoour derives from th e

increase in th e vo lume of pro fit th at th e capitalists seek in th e upswing
define th e nominal re fere nce wage , th en th e wage tot al to be taken int o
phases of accumulation. The wor king dass bends its elfort to seizing a few
account is th e sum of diree! wages and soc ial benefits paid in th e sec to rs
advantages in th e wake of th e expansion of capital. The outco me of th e
pr od ucing commodities. This sum is th e monetar y furm of variable capital.

It is necessar y to co nsider it in th eory as divided int o a quantum of direct
wages and a quantum of indirect wages, eac h ensuring a differe nt aspec t of
co nflict is co mpletely depend ent on th e co ntro l of working co nditions. In
th e repr od uction of th e wage-earn ing dass. The law of thi s division , even if
co mplex , still involves a series of socia l ru les which fix th e amount of
indir ect wages as a funct ion of th e sum of direct wages.
This doub le distinction between effective and nominal dura tion on th e
one hand , and between direct and indir ect wages on th e other , int rod uces
an impo rt ant flexi bility int o th e determination of individu al wages. Time
wages appea r as th e pr od uct of th e bas ic hou rly rate multiplied by th e
The evolution of th e distribution of individu al wages in th e co urse of

accumulation passes by way of th e mechanism of overtime . The rise in
effect , eac h individu al capitalist has th e choice , if he wants to increase his

pro fits, between pro longing th e working day fur th e labour he already
employs, making it work extr a days outside of th ose norm ally co mposing
th e working week, or recr uiting new workers and making th em work in
additional teams outside of norm al hour s. But just as eac h individu al
capitalist is subjec t to th e overall movement of accumulation, so is labou rpo wer to th e law of po pulation th at is a fun ction of it . During an upswing,
relative surplus po pulation is absorbed, since new capitals are furmed and
duration of effective labour , cor rected by social rules gove rn ing th e
invest ed in pr od uction , while th e expansion of existing capitals is

accelera ted. Competition fur workers can act to th e de triment of th e
payment of overtime , and th e furmation and receipt of indir ect wages. This
is what makes up th e mon et ar y resou rces of eac h worker . Since th ese
emp loyers, if th e rate of gro wth of capital furmation is suflicient1y rapid . In

order to attract additional workers, or else to get th e existing work furce to
resources fluct uat e with th e duration oflabo ur , it appea rs to th e observer

int er est ed simply in th e mar ginal variations th at what is paid is th e
work lon ger hour s, th e capitalists may be furced to co ncede spec ial
advantages. These co ncessions will be th e more inevit able , th e more th e
quantity ofl abo ur pro vided , rather th an th e labour -po wer . In reality , th ese
mar ginal fluctuati on s can in no way account fur th e genera l re lation of
trade unions have been able to impose a strict definition of th e not ion of
th e norm al working day on which th e bas ic hour ly wage is calculated . This
distr ibu tion which divides th e overall incom e create d by social labour -
normal dura tion doos not refer simply to th e len gth of th e working day , but
also to its pos ition in th e working week (fur example th e S-ho ur day and th e
po wer en masse into a sum of wages and a sum of pr ofits. On th e co ntrary ,

it is th e division th at th e wage relation inscribes in tot al abs tract labour
s-day week), as well as its pos ition in th e q -hou r day. It is in relation to
that de te rmines th e nominal reference wage according to th e law of
thi s definition that additional hours and hou rs worked outside th e usual
transfurm ati on established in th e first chapter . But th e fact th at tot al

capital presents itself as a relation of co mpetition between auto no mous
limit s of th e day or week are paid at a higher rate oThe nominal daily or
individu al capitals gives rise to a modulat ion of individu al wages. The tot al
normal dura tion. The outco me is th en th at th e appare nt hourl y wage rises
wage sum is distributed unevenl y to th e individu al workers by th e
above th e bas ic hourly wage , particularly fur individu al workers in th e
mechanism of tim e wages. This variability in th e furmation of indivi du al

wages is an impo rt ant element of th e laws of co mpetition . It enab les
up per fringes of overtime .

The opposite is th e case when effective working tim e falls below th e
individu al capitals, whose valorization is subjec t to th e jerkiness of a mod e
normal dura tion during a do wnswing in th e business cyd e . This hap pens to
of pr oduction that finds its unity only in th e blind reg ulation of equivalence
an un even degree in different bra nches and firm s, and th e payment of

workers accord ing to a stipulate d bas ic hourl y wage th en reduces th e
relations of exc hange, to ensure th at thi s jerkiness is partially absorbed by

th e labou r-po wer which th ey employ.
" TI ME W\.G ES A ND THE W ORKING DAY -
27 I 37
weekly wage rises more sharply th an th e tim e worked rises above th e
dedine in pro fits. In th e United Sta tes, where th e risks of co mpetition are
28 I 37
- - - - - - - - - <0 > - - - - - - - - - - - - - - - - -
-'
(1
shifted sys tematica lly and massively onto th e workers, as par! of th e

norm al co urse of events un der capitalism , recession brings no! only th e
tot al un employrnent of sorne workers, bu! also th e partial unem ployrnent
of olhers. The form of tim e wages is admirably suite d to th ese jolts.
Flexi bility in th e workers' mod e of co nsumption is, " f co urse , essentia l to
lhis mechanism . Bu! lhis flexibility has its limits, mar ked by th e existence
of a minimum wage compatible with a basic maintenance ofl abour-power .
~'Iorking-dass
struggles have lon g sought to gain recognition of th e need

fur a guara ntee d minimum wage, however sharply the actual hours worked
may fall oIn lhi s way th ey directly reveal th a! what is at issue in th e wage
relation , und er th e guise of th e hou rly wage , is th e division of th e working
day between th e value oflabour-po wer and surplus-va lue.
overall organization are both already determined . The basic piecew ork
w ageean th en be defined in th e fullowing way :
Ba . ic piecewo r k waz e Nomin a l daily waz e fur n or m al wor kin z
ti m e/ Av era z e num ber of item . pro duced pe r day
Hence:
Ba . ic piecewo r k waz e Ba . ic h ourly waz e job ou tpu t n or m .
By tyin g th e bas ic wage explicit1y to th e job , Taylorism ereated far more

oppo rtunities fur ind ividu al wages to be differe ntiated, and the eapitalists
tcok advantage of th ese to link remuneration to a stimulation of labou r
int ensit y . Paym ent fur overtime at a higher hourly rate is in striet
aceordance with th e pr ologation of working tim e . The dete rmination of th e
bas ic hourl y wage itself is secial in natu re , and fullows from th e natu re of
th e wage relation . This is a dete rmination th at escapes th e individu al
eapitalist .
2 . Piecework and the Stimniation o On t p n t
Yet tim e wages do not enab le a pr ecise ealculation ofreal eosts, since
Piecework is a derivative furm of tim e wages th at furms part of th e
th ey canno t give rise to any measurement of differe nces in pr od uctivity in
applieatio n of th e pr incip Ies of Taylor ism . The two furms are genera lly
differe nt jobs. It is only such an attentive and repeated measurement th at
fuund together in related labour pr ecesses within th e same indu stry .
can pr ovide th e moti vati ons and means fur a transfurm at ion of th e
Piecework pr ovides an expression of th e bas ie wage th at explieit1y takes
technical eo nditions of pr oduction in th e direction of an ever greater
int o aceount th e variations in th e int ensit y ofl abo ur . This is why piecework
co mpression of living labo ur , and hence a rise in th e rate of surplus-va lue.

Now th e eo llectivization of work fragments individu al tasks and multiplies
can only be pr actised in labour pr ecesses th at are suflicient1y mechanized

fur th e eyd e of eac h worker's actions to be simple and repetitive enou gh to
be read ily red ucible to pure dura tio n, th ough insuflicient1y int egrat ed fur
th eir dive rs ity; it makes it necessary to study very pr ecisely both partial
movements and th eir int egrat ion . Piecework thus makes it possible both to
output still to be measurable individu ally fur eac h job o
lower th e bas ic wage to th e exte nt th at th e pr oductivity of partial tasks
The first th eoreti eal pro blem raised her e is the relationship existing
between piecework and th e bas ie hourly wage . Piecework payment is fixed
increases, and to individu alize wages in such a way as to sharpen

co mpetition amo ng workers to a maximum . The co mmon int er est of all
to a job with rigor ou sly spec ified eharacteristies. Its fuund ation is an
eapitalists her e appea rs to coincide with th at of individu al wor kers taken in
elementa ry measurement of output in terms of th e tim e needed to

co mplete a eyd e of actio ns pertaining to a spec ified job oKnowledge of the
isolat ion . Piecework has th e signal ideological advantage fur th e eapitalist
output norm fur th e job makes it possible to de termine th e number of items

it is possible to pr oduce in normal working eo nditions, in other words by
dep loying labou r-po wer aceording to an average int ensit y fur th e eyd e of
actions in ques tio n, over a working day of give n length .
fullowing relationship :
~'Ie
thus get the
Av eraz e num ber of item. pro duced (fur a .peclfied job po.itio n ) Norma l
wor km z day/ Job ou tpu t n or m
work perfurmed , since individual wages actually are modulat ed as a

funct ion of differences in labour int ensit y . Once again, mar ginalist doc trine
co mes to th e aid of eapitalism . The nature of th e wage relation and th e
social nor m th at eo rrespo nds to it are co mpletely hidden . All th at is visible
is a distributio n of individu al wages th at is dee med to re pres ent th e nat ural
fit between th e eategories of'w ages' and 'labour' .
~'Ihat
This measurement takes int o aceount those period s of inacti vit y th at

eanno t be utilized by a labour pr ecess whose technical characteristies and
2. PIECEW ORK A ND THE ST IM ULAT ION OF OUT PUT -
dass of indu cing th e illusion th at wages as an econo mic eategory are tied to
29 I 37
hap pens in reality is th at th ose workers endowed with a greate r
aptitude th an th at taken int o aceount in th e output norm , or else those who
30 I 37
- - - - - - - - - <0 > - - - - - - - - - - - - - - - - -
-'
(1
th emselves force up th e pace of th eir wor k, produce more items in th e

working day th an th e ave rage number on which th e norm is based. They
it would shift a littl e to one side or th e other . But th e investi gati on s of
receive an addition to th eir wage fur th e additional items pr od uced . Those
The wage curve fur workers on th e same job shows two very sharp peaks
whose s\:ill and int ensit y are less th an th e norm do no! mee! th eir quo tas;
th ey no! only receive a wage lower than th e bas ic rate , bu! also risk being
lecat ed one on either side of th e bas ic wage . The existe nce of th ese two
replaced by " ther wor kers. On th e average, however , th ese differences in
workers pr od ucing above th e quo ta co rrespo nding to th e bas ic wage
either direction campensate fur a rre an other, with th e result tha! th e

overall gro up ofw orkers emplayed on a particular job are paid al th e level
regulates th e pr oduction of eac h of its mem ber s in such a way th at th e
American soc iologists have sho wn th at thi s int er pret at ion is tot ally false .'
mod es indicat es two different types of gro up behav iour. The gro up of
of th e bas ic piece rate o This means th a! social labou r-po wer receives its
output gives eac h of th em an eq ual additional wage, and one suflicient1y

subs ta ntial to justify th e higher int ensit y of work from th e workers' po int of
proper pr ice , th e mon et ar y equivalent of th e wor king-d ass co nsumption
view; but effective pr od uction is limit ed so as not to be toa high above th e
norm . Ifthis is not so, th en th e antago nism of th e wage re lation creates th e
quo ta , thus avoiding th e risk of a mor e de manding output nor m being

imposed . Experience sho ws th at no incentive gives suflicient moti vati on
furce to modi fy th e co ntent of th e job , or more genera lly th e labour

pr ecess as a whole , in such a way as to bring th e wage back to its bas ic
leve!. If th e norm is toa easy, th en a significant pro portion of th e workers
fur increasing labou r int ensit y unl ess it pro mises a wage sorne ' 5 to
~o%
get an additional reward , and capitalist management uses th e engineering
above th e bas ic rate oThe alte rnative respo nse is sys te matic and co ncerted
restr iction of prod uction on jobs recroned to be rated toa low to make it
department to enfur ce a refixing of th e output nor m , either direct1y or by
worthwhile to fulfill th e quo ta. It is bette r th en to try and furce a refixing of
way of a mor e severe quality co ntro l or stricte r regulation , or else by
th e output norm . The two peaks of th e curve are not genera lly th e same in
techni cal modi ficati on of th e job co ntent oIf th e norm is toa severe, th en
co mpetition between th e workers bec omes po int1ess; th e work collective
height ; th eir relative height rather indicat es th at th e output norm is either
solida rizes and th e team disrupts pr oduction on th e job by a co ncerted
on th e loase side or on th e tight side. The shape of thi s curve indicat es both
th e po te ntial fur co mpetition between workers and th e existe nce of
decr ease in tem po . The mor e th e labo ur precess is int egrat ed and th e
workers' solida rity exte nds to associated operations, th e more pr oduction
collective respo nses among th em . This gives rise to co mplex co nflictual

relations between gro ups of workers, management and its exec utive
is disorga nized. The work climate th en de te rio ra tes. In th e long run ,

management will have to rede fine an output norm close to th at which
agency in th e engineering department , over th e fixing of output norm s.
yields th e bas ic wage .

There are however three further aspec ts to th e precess of thi s genera l
reduction to th e bas ic wage:
~'Ihile
th e workers will seek to achieve a united pos ition , th e management

will try to divide th em by changing workers ro und between jobs and
possibly taking advantage of th e support of tem po rar y workers or th ose in
(1) The distr ibu tion of individu al wages aro und th e bas ic rate fur a give n
min orit y categories. The management's aim , above all else , will be to
pr event th e workers from acq uiring a collective co nsciousness of th eir
job doos not genera te th e full distribution curve that might be expec ted of
th e workers if th ey pu rsued th e individu alist ic behav iour of neo-classical
objective unity in th e labou r pr ecess.

( ~) Management's roam fur manoou vr e increases with th e diversity of
logic . This would in fact pr edict th at eac h worker , as a pro vide r of serv ices,
ste ered between th e un pleasant elfort and th e pleasant remuneration in
job pos itions th at results from th e dee pening of th e techni cal division by
co mplete freedom and independence . Since it is reasonable to co nsider
th e spec ialization and fragmentation of tasks. The result is th at a single

labour precess with different and independent job pos itions can have a
th at ability is allocated amo ng individu als on a curve of norm al
lar ge number of output norm s pro viding a whole series of basic piecework
distribution , it is only logical to expect thi s to be reflected in th e

distr ibu tion of wages. If th e output norm had been properly wor ked out,
rates. It is no longer possible to say that eac h of th ese bas ic piecework rates
is equivalent to th e bas ic hou rly wage . But thi s eq uivalence is realized on
th en th e bas ic wage would be th e mid-point of thi s distr ibu tion , from which
th e ave rage. If this were not th e case, th en th er e would be serious co nflicts
2. PIECEWORKA ND THE ST IM ULAT ION OF OUT PUT -
31 I 37
32 I 37
- - - - - - - - - <0 > - - - - - - - - - - - - - - - - -
-'
(1
arising from a permanent structura l gap between th e wages " f workers on

piecework and th ose paid by th e hour , whether th ese gro ups coe xisted
The maja r transfurm ation s of th e labour pr ""ess de noted by th e terms

Fordism and Neo-Fordism engende r changes in th e furms of wages. These
within one and th e sa me prod uction unit , or were found in different units of
changes expr ess an ever gro wing rigidity in th e wage distr ibu tion and
a single ente rprise. Bu! th e existe nce of a spectrum of basic piecework rates
repr esent th e co ntractual relation s by which the growing unification of th e
makes it possible to create a wage hier ar ch y by mar king out sorne job s as
wage-earn ing dass is expressed in th e fixing of individu al wages. At any
bette r paid th an a lhers. Managements will attempt ta use lhi s hierarchy in
po int in tim e , th e distribu tion of wages amo ng th e workers is th e resultant
a rder to sel up sca les of pro motion by seniority. The more acute labour
of the mod es of work orga nization th at coe xist in pr od uction . The tem po ral
co nflicts are, th e more managements seek to exte nd th ese differentiations.
evolution of thi s distr ibu tion is chiefly influenced by th e type of labour
Since, however , lhi s band of variations can only be mar ginal around th e
pr ""ess th at bec omes s""ially dominant in th e co nditions of pr od uction .
bas ic hourly rate , gra des bec ome so co mpressed th at differentiation loses
its eflicacy in dividing th e workers. But it still has th e serious
incon venience fur th e capitalists th at it obscures analysis of real costs by
int roducing norm s th at do not co rrespo nd to socially necessar y labour tim e . The red uction and simplification of wage sca les, if co nstantly
co untered by th e antago nism of th e wage relation th at obliges th e
capitalists to divide th e workers, is still imper ative fur th e rationalization of
pr oduction .
(3) The transfurm ation of th e labou r pr ""ess modifies th e co ntent of
job s and re quires a perp etual refixing of their output nor ms. In th e co urse
of this evolution of th e bas ic piecework rate , th e wage of th e overall group
of workers paid on thi s basis remains gove rned by th e nominal reference
wage . This means th at th er e is no link between th e increase in individu al
earn ings and th e increase in pr od uctive efliciency of a worker in a
particular job pos ition. If th e number of items pr oduced in th e working day
doubles, th en th e basic piecework rate is divided by two ; th e daily
reference wage is unchanged . But thi s red uction is not enfurced
inst antaneously . In a rder to weaken th e workers' resistance to job
modification s which may call int o question tradition al pattern s of
seniority, management can fix a loo se norm when a technical change is
int roduced , pr esenting it as a tria!. It can th en later move to a stricte r
determination , when th e new job has bec ome a well organized rou tine
pos ition. Since such modification s are incessant , th e existe nce of jobs in
thi s trial phase gives rise to an additional reason fur variation in individu al
wages.
3 . Th.. InfIn..n".. o th.. Coll.."tivization o Work on Fonns o

Wag..s
3. THE INFLUENCE OF THE COLLECTIVl ZAT ION OF W ORK ON
33 I 37
(a) Collective outp ut bonus es. These bo nuses establish th e spec ific
co rrespo ndence between bas ic hour ly wage and th e nominal reference
wage which is characteristic of Fordism . Collective plans fur stimulating
output were developed in th e co urse of th e Second
~'Iorld ~'Iar
and
particularly in th e ' 95 os, th e period in which Fordism became th e

do minant furm of work organization in th e United Sta tes .' ~'Ie know th at in
thi s type of labou r pr ""ess individu al job s lose th eir auto no my and
independence . Hencefurward th e inability of th e workers to exe rt any
influence on th e pace of work br eaks th e link between wages and output at
th e individu al leve!. Output can be determined only fur a work collective
defined by a series of organically linked tasks. The collective output bonus
replaces piecework as a modulation of th e bas ic hou rly wage . Collective
output bonuses are devices to indu ce collectives of workers to renounce
any challenge to wor king co nditions in exc hange fur a genera l mon et ar y
co mpensation . In a rder fur th ese plans to succee d, th e trade-uni on
organizations must d ose ly collabo rate in th eir operation in th e co ntext of
collective wage negoti ation s.
Unlike th e bas ic wage , th e collective output bonus doos not have th e
character of a sum of mon ey advanced by co ntract o It is only paid when
sales figur es are higher th an th ose co rrespo nding to th e level of pr od uction
th at brings a norm al rate of pr ofit in th e indu stry to which th e firm in
ques tion belongs. The collective output bo nus is thus subjec t to all th e
vicissitudes of capitalist pr oduction , from bad planning to fluct uation s in
mar ket co nditions. The capitalist doos not take any risk here . If he has
furced up th e intensit y of th e labour pr ""ess, and th e additional pr od uct
canno t be sold at a pr ice th at will realize a mon et ar y surplus over and
above th e normal sale, th en th e additiona l work perfurmed is pu re loss and
34 I 37
- - - - - - - - - - - {O > - - - - - - - - - - - - - - - - -
-'
(1
is no! paid . It is no! th e capitalist who bears th e costs of il , bu! th e workers.
th e co mplexity of th e labou r pr ocess engende red by th e socialization of th e
Since th e output bo nus is an additio n to a wage th a! co rrespo nds to norm al
pr oductive forces. But like those we analysed earlier, thi s form doos not
change th e nat ur e of th e wage as th e expr ession of th e value of labou r-
product ion co nditions, an output norm mus! be fixed just as it is with

piecework. Bu! her e th e norm is defined fur th e collective worker , either
th e overal1 gro up of hourly paid wor kers, or even th e tot alit y of nonmanageri al emplayees. The norm thus forms par! of th e tot al pr oduction
cost , and is measured in mon et ar y terms. It is th e w age oost p er dollar 01
sales fur a labour pr ecess with give n characte ristics when th e workers are
paid th e bas ic hourly wage . The lransilion from lhi s normal wage cos! to
th e overall wage cos! is made by multiplyin g it by th e volume of sales
cor respo nding to a norm al activity of th e workforc e (in duration and
int ensit y), and setting a reference pr ice for th ese sales. The wage cost per
da llar of sales is th en co mpared month by month with th e relation between
th e effective overall wage cost and th e exchange-va lue of sales effectively
realized . A planned co rrection can be made so as to take account of
variations in th e sales pr ice . If th e ratio between tot al real wage costs and
th e exc hange-va lue of sales is lower th an th e norm al wage cost per da llar of
sales, th en th er e is an output bonus. The tot al bo nus is determined by th e
po wer in co mmod ity relation s.
(b) The gu arantee d monthly w age and the w age fun doThe forms of wage
involved her e do not repr esent a return to th e individu al mechanism of
tim e wages. They are on th e co ntrary forms th at push th e logic of Fordism
to its limit , and begin to bec ome socially significant with th e recent
develop ment of Neo-Fordism . These forms can make th eir appea ra nce only
when th e collectivization of labour has reached so high a degree th at
pr oductive efliciency bec omes a social po wer entire ly de te rmined by th e
integrated sys tem of th e pr oductive forces. The emergence of Neo-Fordism
mar ks th e onset of a histor ical tendency in th e development of th e forces of
pr oduction th at Marx already indicated as a possibility on th e horizon of
capitalism : th e evolution of pr oductivity towar ds an eve r greate r
independence from th e expenditure of livin g labou r , where pr oductive
po wer essentially resides in th e gro wing capacity of mod ern forces of
pr oduction to realize an organic integration of pr oductive pr ocesses. This
formula:
waz e
organic integration is a differe nt and mor e advanced form of socialization
This bo nus is th en divided amo ng th e wor kers according to forms th at
of labou r th an equivalence relations of exc hange. It can play a part in

replacing th e blind reg ulation of th e law of value by th e possibility of a
can vary as decided (equal division, division pr oportion al to working hour s
collective co ntro l of pr od uction . To th e extent th at it develops within
or wages received). In certain cases one section of th e overall bonus is not
co mmod ity pr oduction , it can weaken th e relationship between individu al
imm ediately distributed, but forms a reserve fund to co mpensate for

periods in which wor king hou rs fall below th e norm allevel.
wages, or eve n th e wages of a gro up of wor kers, and output , to th e po int of

non -existence . It thus acts as a po werful force of homogenization in th e
Finally , just as modification s in th e co ntent of a particular job lead to

th e refixing of th e output norm on which th e bas ic piecework rate is
determination of wages for workers on fragmented jobs. Ind ividual wages
calculated , so toa do transform ati ons of an integrated labour pr ocess

req uire th e refixing of th e norm al wage co st per dallar of sales on which th e
reference wage . The most recent forms of wages, th er efore , express more
and mor e dearly th e overall relation of distribution imposed on th e wage-
overall output bonus is based. J ust as th e pr ice of labo ur -po wer is not
earners by th e capitalist appropriation of th e forces of pr oduction .

The guara nteed monthly wage ev inces rigid differe nces between
con ective bon u.
[(Nor m al
waz e co.!
Act u a l ov eran
co.t )/ Exc han z e valu e of .ale.] Exchanz e valu e of .ale.
affected by individu al changes in pr od uctivity for a particular job , since th e

bas ic piecework rate falls in th e same pr oportion as that in which
pr od uctivity rises, so th e pri ce of labour-po wer is not affected by local
changes in th e pr oductivity of a labour pr ocess, since th e nor mal wage cost
is modified in such a way th at th e output bonus remains unchanged . The
collective output bonus is thus a co mple x form of wage th at de rives from
3. THE INFLUENCE OF THE COLLECTIVl ZAT ION OF W ORK ON
35 I 37
lose th eir flexi bility and tend to approximate eve r mor e to th e nominal
indu stries and reg ions th at derive from th e social stra tification within th e
working dass. On th e ave rage, howeve r, it expresses th e nominal reference
wage paid on a monthly bas is. It pr otects th e reconstitution of labou rpo wer from th e co nsequences of a red uction in working hours below th e
normallevel. It directly appears, th er efore , as th e mon et ar y counterpart of
36 I 37
- - - - - - - - - - - <0 > - - - - - - - - - - - - - - - - -
-'
(1
th e social consumption norm . The guaranteed wage may also present itself
in furm as a tim e wage, since it is eq ual to th e basic hourly wage multiplied
by th e number of hours of work, when working hours are eq ual to th e
norm al duratio n on which th e basic wage is defined.
The wage fund is a guara nteed wage allocated no! to each worker
separate ly bu! rather to a wor k collective . In dividu al modulati on s can lose
th eir capitalist character when th ey are defined in ways de te rmined by th e
work collective itself, fur example by a semi-autonomous work gro up .
A h;, ' ,,; .u, m" ,. fou no ;n ' 1 . " ll"u.. "" ,t b. An o'; Gm , 111. Di.....",.
ofLobour, H
T1; , ;no . l
;n' ' '. ' ''
, .., ' . " , puU<u lul. '1. m , y b. s . "",1m, 'Wh.t D. B..... Do"
' 1 . ;n' .n,'..h on on .oou " " h ;, h .. ". h... m n ;n Ch ,,, , ..n
n ;n" .... ;n ., " , ' h T'.;n , , ; n .
s .. e h , ;, h.n p . n " . , 'l. , ,,i, ,,,..n . Du fo,." m u n i ofo, ."m.', Lo P.ns" , n o.
,8" F,u" . ,.,6.

s .. p . n " . , o. d '.
s .. J.R. eom mon , . n . o' h m, Hu"'", of Lobor in .h. Um..d S'o"" N." Yo" , " "'- 35 (
o!, J.G. R " ,k, AH'"", ,,, of Am. ri<on Lobour, N." Yo", , . 66.
'Th. In Ou, ,,;.1 Wu',f"o,,"n. , " 37.
Th. ou ' . u ' n " m '.;n , m.., u". ;n fr.. ' " n , of. ""km , h ou,.
F" h n
" m,,"'l. , ' u
m , uhon oft h ,,'l.m, ,,;... " .""""k m.n', m W.F. W h . ' .~

on.y ond"o",'o"'on, N." Yo" , " 55 . n . ,.,0.
Th. m..' " l" , " h.m., " h ;, h " '. . . .. . m ol fo, ....,,1 mOu ,'m,;n 'h,,1.
' 950' , " .. kn o"n .. 'h. S..n lon . h n.
3. THE INFLUENCE OF THE COLLECTIVl ZAT ION OF WO RK ON
37 / 37
- - - - - - - - - - - <0 > - - - - - - - - - - - - - - - - -
-'
(1
shows that co mmod ity circulation und er capitalism is organized according

to a genera l pattern . For such a genera l pattern to exist, genera ting an
3
The Transformation
of the Wase-Earners'
Conditions of Life
expansion of co mmod ity circ ulation as a dosed circ uit co ntaining th e

necessar y links between th e two departments of pr od uction , th e collective
worker sha ped by capitalist re lations of prod uction must also be structured
by th ose soc ial relations de te rmining th e pr actices of co nsumption . The
separa tion of workers from th e means of pr oduction that is th e origin of th e
wage relation brings about a destr uction of th e various mod es of traditi on al
co nsumption and leads to th e creation of a mod e of co nsumption spec ific
to capitalism o A social norm 01 U' orking -c1ass co ns ump tion is formed ,
which bec omes an essential determinant of th e exte nsion of th e wage
1. T ite Ca p it a li s t P r od u c ti o n o f t h e Mo d e o
relation , as a fundamental mod alit y of relative surplus-va lue. Thro ugh th e
Co n s u m p ti o n
social co nsumption nor m , th e mod e of co nsumption is int egrat ed int o th e
The object of lhi s chapler is to investi gat e th e reproduct ion of social

labour-power . It will th er efure no! dea l with individual consumer
behav iour, bu! rather with th e furmation and transform at ion of th e
co nditio ns of existence of the wor king dass - in other words, with th e very
fuund ation of capitalist accumulatio n, th e mat eri al co ntent of th e
genera lization of th e wage re latio n. ~'Ie will th er eby dee pen our th eory of
co nditions of pr oduction . The mutat ion s in th e prod uctive forces

engende red in Department I take e!fect in Department Ir by way of a
red uction in th e value of labour-po wer and a co rrelative increase in th e
rate of surplus-va lue. Analysis of thi s int egrati on is an esse ntial aspec t of
th e th eory of accumulation.
wages by identifying th ose forces whose int er acti on leads to th e fixing of
Diagra m ~ . The 'Double Reel' oft he Repr oduction of Capita list Relations of
Production : repr od uction of th e tot al capital in eac h of th e two
th e nominal re fere nce wage , a pro blem to which we gave an exd usively
de partments of pr oduction , and re prod uction of th e social labour-po wer.
formal solutio n in th e frs! sec tion of Cha pler 1. ~'Ie shall also be dealing
with th e social stra tification of th e wage-e arn ing dass and th e way in which
capitalism aggravates it . Finally , we shall analyse th e creation by th e dass
struggle of new social relations organized int o institution s which yield th e
pr oced ures of collective barga ining, and assess th e e!fect of th ese
pr oced ures on th e long-r un evolution of th e ave rage wage .
In th e space of social activities, th e repr oduction of th e wage relation
involves a maintenance cyd e of social labour-po wer th at is de picted in
Diagram ~ . Two pheno mena at once sta nd out . On th e one hand , th e
maintenance cyd e of social labour-po wer is a cyd e of metamorphoses of
value which indudes th e co nsumption pr ocess, such th at th e latter is
dominated by co mmod ity relations. On th e other hand , th e cyd e has a
transver se relationship to th e expanded repr oduction of capital, via th e
co nnection between th e two departments of pr od uction which we studied
in Cha pte r 1. This relationship of th e maintenance cyd e of social labourpo wer to th e cyd es of accumulation in th e two de partments of pr oduction
3. THE T RANSFORMATI ON OF THE W\.G E-EARNERS' CONDIT I
, I 53
.
,-.---
_
_---
...
..... __,_o
. .. _ .--.. -----_._"
.. ..
m ...
-< --~
<-~<
- ~ - <._ ~
,-
"-
l . The Fonn ation a n d Evoln t io n o a No n n o Social

Co nsn m p t io n
2 I 53
- - - - - - - - - <0 - - - - - - - - - - - - - - - - - -
'
-'
(1
There are multiple connections between pr oducti on and consumption in

~'Ie
liter ature never saw th e origin of thi s pro blem in th e inher ent antago nism
have seen th a! th e
of capitalist relations of pr oouction . Keynes opened th e way to a far -
capitalist labour pr ecess is gove rned by th e mechani zati on of labour .
reaching criticism of th e neo-d assical adjustments by showing th at th er e
Deprived of any cra ft content , wor k loses any qualita tively differentiated
character th a! could have an influence on th e working-d ass mode of life.
was no such thing as a labour mar ket and th at th e level of employment was
th e maintenance cycle " f social labour-po wer .
Because labour-po wer bec omes a co mmod ity , it is incorpo rat ed int " a
pr od uctive sys te m whose alpha and omega is surplus-va lue; th e
determined by th e pro spe ctive incomes distr ibuted by firms, when account
was taken of th e conditions of pr oouction in which th ese were operating.'
This dynamic approach was genera lly not followed by pos t-Keynes ian
fragmentati on of la. ks and th eir reduction to pure temporal duration are
writers like !Caldor , Pasinetti ' and Sweezy, who reduced th e pro blem of
th e int ernal prin cipIes of its evolutio n. The transfurm at ion of relations of
product ion crea tes a mass product ion of commoclities which tends by th e
effective demand, in Harroo's perspe ctive , to th e ques tion of th e effect of

rigidity in th e distribution of incomes on paths ofbalance d gro wth. In th e
logic of th e equivalence relations of exchange to destro y non-capit alist
Marxist traditi on , th e pro blem of effective demand is an aspec t of th e

pr oouction of surplus-va lue. It is linked to th e way in which th e dass
forms of prooucti on to th e exte nt th at a single space of commoo ity

circulatio n is formed. If th e wor kers are rendered homogeneous in th e first
struggle either succee ds or dces not succeed in revolutionizing th e
instance by th e capitalist labour precess, thi s homogeneit y is dec isively
conditions of pr oo uction and exchange, and consequently in calling forth
reinfor ced when th ey are cut off from individual ties of family , or bonds of
an expansion in th e mass of commoo ities pr oo uced .
neighbourhood proximity or supplementa ry activity th at still link th em to

a non-capitalist enviro nment. Classified as fragments of a single secial
example, how in th e mid ' 9 ~ OS th e semiauto matic pr oouction pr ecess

created an int ernal barrier to its own development by further weakening
labour-power , but simulta neo usly isolat ed by th e wage contract as
th e wor kers' movement after th e blows it had alrea dy suffere d in th e wake
individu al laoour-powers in mutual competition , workers are inevit ably
If in th e first phase thi s weakening led to a rapid

divergence in th e distr ibution of incomes, thus inaugur ating new consumer
mar ket s, th e very nar ro w social base of th ese mar ket s was incapable of
tied to capitalism by th e individual consumption of th e commoo ities

pro vided by mass pr oouction . This uniform mooe of consumption of
simplified pr oo ucts is a mass cons ump tion. This is an essential condition of
capitalist accumulation, for it counteracts th e tendency to th e uneven
develop ment of Department 1. The connections between th e two
departm ents
of
pr oouction
it
forges
genera lize
certain
maJor
transform ati ons in th e labou r pr ecess. On th e one hand th ese raise th e

organic composition of capital, while on th e other hand th ey counteract
thi s rise in th e evolutio n of constant capital over tim e by reducing th e unit
value of th e means of pr oo uction , and increase th e rate of surplus-va lue by
lowering th e social value oflabo ur-power (l. in th e not ati on used above ).
This is why th e developmental rhythm of mass consumption is at once
indu ced by th e pr eceding accumulation th at transform s th e conditions of
pr oouction , and forms a base for futur e accumulation. The need for a
comprehensive lin1:age between th e two departments of proo uction , and
th e abs ence of any auto matic mechanism to balance th eir develop ment ,
has been acknowledged in non-Marxist th eoreti calliter at ur e since Keynes
under th e guise of th e pro blem of effective demando But non-Marxist
" THE FORMATI ON A ND EVOLUTI ON OF A NORM OF SOCIA L
3 I 53
of th e First
~'Ie
have see n, for
~'Iorld ~Iar .
neutralizing for very lon g th e uneven development ofDepartment I , which

was considerably accelera ted by th e new pr oo uctive forces. Fordism , in
other wor ds th e entir e set of soc ial conditions of th e regime of int ensive
accumulation, had to pr eceed by way of considerable changes in th e
moo alities of dass struggle, in or der to estab lish itself.
(a) The cha racteristic mode 01 cons ump tion 01 Fordism. In order to
under stand how th e transform at ions of th e relations of proo uction within
th e labou r pr ecess create impulses th at play a pr imordial ro le in th e
formation of a moo e of consumption , it is necessar y not to view
consumptio n empirically as a sum of expenditure funct ions, nor in terms of
th e th eor y of th e individual consumer as th e source of an axiomatic set of
well-organized and stab le choices, given certain resources and mar ket
conditions. The praxiological conception of th e th eory of th e individual
consumer forms part of a definitio n of th e object of economic science as a
logic of individual choices subjec t to th e constraint of sca rc ity and th e rule
4 I 53
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-'
(1
of a un iver sal pr incip Ie of rationality (principIe of optimization) , which is
also th e co nservation of ab ilities and attitudes. This aspec t of co nsum ption
rad ically fureign to th e co nception on which we base ourselves her e - th a!
should not be see n in a pr incipally functi on al sense. It co ncern s th e
is, a science of th e social laws govern ing th e product ion and distribution of
th e means of existe nce by men and women in organized collectivities.
pos ition of th e individu als co ncern ed in social relations, and th e

repr esentation of thi s pos ition within the gro up of individu als who share it ,
Empiri cal observation of expenditure funct ion s has a co mpletely differe nt
as well as vis-a-vis other social gro ups with whom th ey maintain relations.
sta tus. It is th e sta tistica l expression of th e subjec tio n of co nsumption to

co mmod ity relations. It is indispensable in a rder to gras p how an already
The bas is of thi s repr esentation is ev idently th e exe rcise of real ab ilities,
established mod e " f co nsumption evolves over tim e , because of its

location al th e po int of co ntact between exchange and co nsumption
relations, i.e. th e role req uired by society. But thi s repr esentation IS
effected in th e form of a recognition which involves th e perception of
pro per . ~'Ihat we need her e , however , is something more bas ic - a th eory of
definite cultural attitudes. This recognition maintains social relations of an

ideological nature , although th ese possess just as 'material' an existence as
th ose pract ices th at make co nsumption a socially co nditioned activity,
not int rin sic to th e individu al , but inh er ent in th e place eccupied in social
subjec t to co ntrary forces of hom ogeni zat ion and differentiation th at

medify it in a manner favourable to th e genera lization of wage-labo ur . ~'Ie
economic relations. Such relations, which issue from social stra tificatio n
canno t develop thi s approach in a book devote d pr imarily to a genera l
co nsumption . They can be referred to as status relations. The co ncept of
th eory of capitalist accumulation; in any case , it is dealt with in severa l
sta tus is not mer el y needed to inter pret social differentiations in
recent , studies and co ntro versies.' Basing our argument on certain of th ese
studies, we shall co nfine ourselves to linking th e co ncepts which co ncern
co nsumption ; it is equally necessar y to un der st and th eir renewal over
th e effect of th e transform ation of capitalist relations of pr eduction on th e
possible to spea k scientifically of a social pr ecess of co nsumption, or eve n
mede ofconsumption , to th e law of accumulation.
a mede ofconsumption . The effect of status on th e co nsumption precess is

expressed in acq uired habits which stabilize the main tenance cyd e of
Our po int of departure will be a definition ofconsumption as an activity

or more accura te ly a process, th at is, an organized set of activities, which while pr edominantly pr ivate - are subjec t to a genera l logic of th e
and require spec ific repr eduction , actively differe ntiate th e precess of
tim e , and th e co nditions of th eir stability or distor tion which make it
labour-po wer int o a routine. These habits are transmitted from one
m social practi ces and th e
genera tion to the next . The learning of cultural sta tus cedes and th e
principIes of behav iour th at follow from th em is one of th e essential
pr eservation of ab ilities and attitudes implied by th e social relations of

which th eir subjec ts are supports. This definition calls for severa l re marks .
funct ion s of th e famil y ; it accompanies the learning of th e roles to which

families aspire in th eir int er -gener ation al choices. New individu als thus
First of all, since co nsumption is a materi al pr ocess, it is located in space; it

has a spec ific geogra phy and object-network. It is also a set of operations in
ente r th e labour mar ket see king pos itions with a sta tus whose ideological
features th ey have already internalized . Only th e forces unl eashed by
tim e , an employment of tim e in th e liter al sense. The nature of the
capitalist accumulation can disso lve th ese habits, by genera lizing mobilit y
co nsumption process and its place in th e main tenance cyd e of social

labou r-po wer are thus strongly co nditioned by th e impo rt ance of labour-
and insecurity of employment .

Give n th ese very summary indicati on s, how should we view th e
tim e , its intensit y as an expend iture of human energy , and th e other
formation and repr eduction of th e spec ific mede of co nsumption of
tem po ral co nstraints directly co nnected with it . Consumption, moreover ,
Fordism , which is an esse ntial aspec t of th e regime of intensive
is a predominantly pri vate process; its co ncrete pract ices take place
pr incipally within th e hou sehold , a site where individu alit y is pr otected .
accumulation? For th e first tim e in hist ory , Fordism created a norm of

working-d ass co nsumption in which individu al ownership of co mmedities
They are not directly un der th e sway of the relations of pr eduction . This is
why th ey can give rise to vary ing ideologies and are susceptible to
governed th e co ncrete pr actices of co nsumption . This involved a reversal

both of tradit ion al ways of life and of th e initi al experience of th e wor king
differe ntiation . This differe ntiation is not co ntingent , for co nsumption is
dass in an epoch of extre me po verty and tot al insecurity , which pro vided
reconstitution of energies expend ed
5 I 53
6 I 53
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-'
(1
th ese
co mmod ities: th e standardized hous ing th at is th e privileged site of
circumstances, th e co nsumption pr ecess was either tot ally des tructured or
individu al co nsumption ; and the automo bile as th e means of transpo rt

co mpatible with th e separa tion of home and workplace . ~'Ihilst remaining
no bas is fur any sta bilization of consumption habi!s. In
else organized in th e context of th e extended family, with a striel division

of do mes tic labour and a great expenditure of do mes tic labour-time . ~'Iith
For dism , on th e contrary , th e genera lization of commod ity relations
extended to th eir dominatio n of practices ofconsumption. This was a mooe
co mmod ities fur pr ivate use , th ese are durable goods whose acq uisitio n
goes far beyond th e purchasing power of current wages. The furmation of
of co nsumption restr uctured by capitalism , because th e tim e de voted to

consumption witnessed an increasing density in individu al use of
socialization of finance , and co rrelatively a very strict co ntrol over

workers' resour ces and expenditures. It was important fur th e pr ecess of
commod ities
and
not able
impoveri shm ent
of
non- commodity
int erper son al relations. Once th e social co nditions th a! enab led thi s mod e
th e working-d ass norm of co nsumption th er efure pr esupposed a vas t
individu al co nsumption to be organized and stable, while re maining

co mpatible with th e appare ntly individu al and free relationships of
ofconsumption to be repr od uced were esta blished, its co nsumption norm

evolved dy namical!y because its co mmod ity content was directly
co mmod ity exchange . This was achieve d by th e genera lization in th e
inscribed in th e genera lization of th e mechani zed labour precess with semiautomatic co ntrol. These co nditions were multiple in character and
int egrati on int o th e nati on , i.e. th e smal! famil y unit and househ old . Her e
th e working dass received a sta tute that funct ion ed as th e regulator of its
impli ed so great a change in social pr actices th at it is in no way asto nishing
norm of co nsumption , th rough th e furmation of its expend iture habits. But
th at th e expansion of Fordism after th e Second ~'Iorld ~'Iar was pr eceded by

a lon g period of crises and int ense dass struggles, whose outco me was th e
it still remained essential to limit the co nsequences of capitalist insecurity
establishment of secial co ntro ls to guara n tee th e furmation of th e workingdass norm of co nsumption and to regularize its evolution.
The most imm ediat e of these co nditions relate to th e influence of
transfurm ati on s of th e labour precess on th e maintenance cyd e of labourpo wer. ~'Ie have seen how Taylor ism , and lat er Fordism , ada pte d to th e
restri ction of th e working day by sharply increasing th e int ensit y ofl abo ur
and sys te matica l!y compressing wasted tim e . The result was the
working dass of th e social structure th at was th e co ndition fur its cultural
on emp loyment and on th e furmation of individu al wages, so as not to

break th e co ntinuity of th e co nsumption pr ecess, and in order to enab le
th e workers to meet th e financial co mmitments co ntracted with th e
acq uisition of th eir co nsumer goods. This implied legislati ve arra ngements,
a hom ogeni zati on and socialization of wages, and th e establishment of
social insur ance funds against th e tem po r ary loss of direct wages. Al! th ese
will be explor ed late r o
~'Ihen
the wage relation had been transfurm ed in such a way as to perm it
disappearance of any tim e fur recuperation at th e workplace itself. The
th e socialization of th e co nditions fur purchasing sta nda rdized housing and
increased exhaustio n of laoour-po wer in th e labour pr ecess had to be
automob ile transpo rt , th e pr oduction of th ese co mplex co mmod ities itself
entirely repaired outside th e workplace , respecting th e new tim e co nstraint
became th e central pr ecess in th e development of th e mod e of
of a strict separa tion between wor king and non- working hours. Since thi s
co nsumption . The pr oduction of sta nda rd ized housing of a chiefly
was overlaid by th e further co nstraint of separa tion and increased dista nce
sub urban kind had multiple effects. Constructed according to certain bas ic
between workplace and residence , transpo rt tim e was co nsiderably
sta nda rds, th e new housing pu t an end to unhygenic and unsafe int eri ors,
prol on ged , with th e result that th e tim e co nstraint imposed by labour did
not fal! des pite th e limit ati on of wor king hours. In dividu al commod ity
and permitted th e inst al!at ion of hou sehold appliances th at saved domestic
co nsumption is th e furm of co nsumption th at permits th e most effective
bought rather th an simply rented . Its mass pr od uction by techniqu es of
recupe ration from physical and ner vou s fati gue in a co mpact space of tim e
pr efabr ication red uced its costs to a po int where , stre tc hed over th e
overal! term of payment , it was less of a burden on th e working-d ass wage
within th e day , and at a single place , th e home .

The structure of the co nsumption norm thus coincides with its
co nditioning by capitalist relations of pr od uction . It is governed by two
" THE FORMATI ON AND EVOLUTI ON OF A NORM OF SOCIA L
- 7 I 53
labour . Sta nda rd ized housing is also a symb ol of sta tus, once it can be
of th e ' 95 0Sth an were the rents extorte d by the landlords of th e int er- war
yea rs fur th e unhygenic hou sing of th at tim e . So far as th e auto mob ile was
8 I 53
- - - - - - - - - - - - <O r - - - - - - - - - - - - - - - -
-'
(1
co ncern ed , its mass pr oducti on coincided with th e establishment of th e
In so far as Fordism increased th e rate of surplus-va lue by de veloping
semi-auto matic assembly line, in other words th e crea tio n " f th a! mooel of
wa rk organization th a! was later to be exte nd ed to th e lon g pr oduct ion
an overall set of secial relations th at dosely co mbined th e labour pr ecess
runs of means Qf mass co nsumption . The genera l introd uction of th e

assembly line revealed th e intimat e relation ship between th e labour
with th e social co nsumption norm , th e de partment producing means of

co nsumption appeare d to be endowed with a dynamic arising from
pr ecess and th e mod e of co nsumption th a! it sha pes. For th e two bas ic
co nsumption itself. Since accumulation managed to pr eserve a relatively

regular rhythm th an ks to a certain harmoni zat ion of development between
co mmod ities of th e mass co nsumption pr ecess created co mplementarities
th e two de partments, at th e pri ce of a planned obsolescence and a
which eifected a gigantic expansion of co rnmod ities, supporte d by a

systematic diversification of use-values. This diversification was inscribed
permanent devalor ization of capital, th e pro blem of eifective demand was

not too serious. The 'co nsumer society' appea re d to have definitively
in th e very la gio of th e social norm of co nsumption , whose evolutio n was
resolved th e co ntradictions of capitalism and abolished its crises. Such was
governed by th e replacement of direct activity at home by time-saving
th e patte rn of th e two decade s after th e Second
equipment. It was also susta ined by th e ques t fur a sta tus adequate to th is
norm . But in order fur th is logic of co nsumption to be co mpatible with a
indicated in summary furm in Chapter 1: a relatively regular rise in real

wages, made possible by a co ntinuing fall in real social wage costs th at
labour pr ecess oriented towar ds relative surplus-va lue, th e tot al of use-
reflected a rise in th e rate of surplus-va lue.
~'Iorld ~'Iar ,
which we
values had to be ada pted to capitalist mass product ion .4 This meant th e
creation of a fim ctional aesthetic ('design'), which acq uired fundamental
secial importance .' This aesthetic had firstl y to respect th e co nstraints of
engineering, and co nsequently co nceive use-values as an assemb ly of
sta nda rdized co mpo nents capable of lon g product ion runs. It also had to
introd uce planned obsolescence , and establish a funct ion al link between
use-values to create th e need fur th eir co mplementarity . In th is way ,
co nsumption activ ity co uld be rende red un ifurm and fully subjec te d to th e
co nstraints of its items of equipment. Finally , th is funct ion al aesthetic
dup licated th e real relationship between individuals and objects with an
imaginary relationship . Not co ntent to create a space of objects of daily
life , as supports of a capitalist co mmod ity un iver se , it pro vided an image of
thi s space by adv ertising techniqu es. This image was presen ted as an
objectification of co nsumption sta tus which individu als co uld per ceive
outside th emselves. The pr ecess of social recognition was exte rnalized and
fetishized . In dividu als were not initially interpellat ed as subjec ts by one
another, in accorda nce with th eir social pos ition: th ey were inter pellated
by an exte rnal po wer, diffusing a ro bo t po rtra it of th e 'co nsumer' .
Consumption habits were thus already calculated and co ntro lled socially.
Yet it canno t be stressed too greatly th at th e role of th e image in
co nsumption , which man y seciologists have made int o a fundamental
explanato ry pr incip Ie of capitalist development, is strictly sub ordinate to
th e materi al and secial co nditions th at we have discussed .
9 I 53
(b) The crisis 01 Fordism and the perspectives 01 Neo -Fordism. The
ideologists of th e co nsumer society were har shly awakened to th e realities
of capitalism by th e deep crisis th at bega n to int ensify in th e latter half of
th e 1960s. As we showed in Chapter~ , th e crisis of Fordism is first of all th e
crisis of a mod e of labo ur organization . It is expressed above all in th e
intensification of dass struggles at th e po int of producti on . By challenging
co nditions of work bound up with th e fragmentati on of tasks and
intensification of elfort, th ese struggles sho wed th e limits to th e increase in
th e rate of surplus-va lue th at were inh er ent in th e relations of pr od uction
organized in thi s type oflabo ur precess. This was th e roo t of th e crisis. It
can be see n in th e halt to th e fall in real social wage costs th at eccurred
simulta neo usly with th e outbreak of spora dic co nflicts and ende mic
co nfrontations challenging work disciplines of th e kind Fordism had
established. But it is d ear enough th at th e crisis extends to th e sum tot al of
relations of prod uction and exc hange, and is upsetting th e regime of
intensive accumulation. It is possible to spea k of an organic crisis of
capitalism witho ut implyin g its inevit able disappearance . Let us examine
th e pro blem more dosely. The imp asse of relative surplus-va lue th at
originates in th e labour precess bra kes th e expansion of exc hange relations
between th e two departments of producti on . The development of th e
department producing means of pr od uction encounte rs a co nstraint , since
it no lon ger gives rise to technical mutat ion s leading to a further
, O I 53
- - - - - - - - - - - - <O r - - - - - - - - - - - - - - - -
-'
(1
mechanization " f abour , capable of genera ting a suflicient sav ing in diree!
labour tim e to co mpensate fur th e inerease in th e organic ca mpo. ilion of
capital. It is no! surprising, th er efure , tha! th e replacement of th e semiauto matic assembly line by th e sys te m of lran.fer lines, esta blishing
automatic co ntrol over mass pr od uction , has so far found only limit ed
applicatio n. Certa inly lhi s form of auto matic pr od uction co ntro l saves
diree! living labou r , bu! it doos so only by exte nding and pushing to its
ultimat e limit s th e form of work organization and th e working-d ass
co nsumption norm characteristic of Fordism . It canno t th er efore a lfer any
solution to th e mounting dass struggle in pr oduction . This has been sho wn
once th e crisis of Fordism is expressed in a challenge to thi s particular form

of work organization . This is why we have seen such a liter al explosion of
what are known as social costs of grow th from th e mid 1960s onwards.
The rapid increase in thi s co mpo nent of th e value of soc ial labour-po wer
can be see n in Diagra m
(p . 96 above).
~'Ihile
it is th e direct wage cost per
overall unit of value added th at has increased least since th e Second

~'Iar ,
~'Iorld
th e unit cost of indirect wages has increased far more than any thing
else, with a real explosion in its gro wth since 1965 . This observation is
co nfirmed by Diagra m 10 , which shows th e long-term trend in nati on al
incom e distr ibu tion . This dearly shows th at th e overall aggrega te of wages
by th e int roducti on of transfer lines in th e auto mob ile indu st ry . The new
plus social benefits was sta ble only age rial, techni cal and co mmerc ial
fact ories esta blished on thi s basis have been mar ked by th e strongest
working-d ass challenge to labou r discipline .'
personnel) has been held stea dy since th e Second ~'Iorld ~'Iar , whereas th e
share in th e overall aggrega te of wages plus social benefits was only sta ble
The difliculties encounte re d by accumulation in Department I lead to an
in th e period of very swift expansion from 1960 to 1965 , and bega n to
upsurge of unemp loyment and gro wing job insecurity . At th e same tim e ,
increase very rapidly after th at da te.
th e exhaustion of th e possibilities for increased prod uctivity in mechani zed

assemb ly-line wor k forces capitalist management to a frontal attac k on th e
Diagram 10 . Distribution of nati on al incom e by category of incom e ( 19 ~9
pu rchasing po wer of th e direct wage . Two essential co nditions for th e
, ,)
develop ment of th e working-d ass co nsumption nor m are thus affected. The
result has been a falling pr oportion of th ose able to bu y th eir own hom es in
th e younger age groups, and th e stagnation of auto mobile pr oduction . The
buoyancy of th e social co nsumption norm is thus structura lly threat ened
by those co mmod ities th at are th e very found ation of mass co nsumption
un der th e co nditions of Fordism. It is menaced eve n more seriously by th e
deterior ation in its social pr e-cond itions. ~'Ie have see n, in effect, how th e
co nsumption norm geared to pr ivate co mmod ities can only develop if
th er e exist social mod aliti es of finance , pr oced ures by which society
ass umes respo nsibility for th e risks and expenditures of a collective
infrast ruct ur e . The pr oduction of thi s env ironment of pr ivate co nsumption
ente rs int o th e repr oduction value of social labour-po wer. Its cost forms
part of th e nominal reference wage as defined in th e bro ad sense, where it
indudes both a direct and an indir ect co mpo nent . Now th e exclusive
nature of th e tie th at Fordism esta blishes between a mechani zed labour
pr ocess and a strictly pr ivate co nsumption of co mmod ities genera tes a
rap id increase in th e cost of so-called collective consumption as th e
co nsumption norm develop s. This phenomenon co unteracts a rise in
relative surplus-va lue to th e po int of reversing its develop mental trend ,
1 , THE FORMATI ON A ND EVOLUTI ON OF A NORM OF SOCIA L
11 1 53
12 1 53
- - - - - - - - - - - - <O r - - - - - - - - - - - - - - - -
-'
(1
/
"t- tl-\SJ-".H--;;;b"i"'n
-j
/
I ,I/! 1\1 V
II
.
"
..
,"
.:
,,-.
-,
0"/
0'-"....
..
', ' .
. ....
justifiable to see it as an organic crisis " f capitalism o ~'Ie have already

explored thi s hypothesis by showing how thi s CriSIS is rooted in th e
organization of th e labour process.
demonstr ation
I-~~r~~t
.... ....-
" .-
social
co nsumption
norm
dass co nsumption only by reinfur cing th e antago nism of th e wage relation

and genera lizing thi s to th e co nditions guara nteeing th e co ntinuity of th e
maintenance cyd e ofl abo ur-power : pro vision fur th e unemployed and th e
of labour
accorda nce
with
th e
prin cipIe
of
co nsumption must be guara nteed at th e overall social leve!. The

l
& . ._
~,
".I...-ofl
_'
:<.. p""'"
...,.. .., ,. ",;,.t>rI_ ..... _no:! ~ .. ....... ,
,. ,,,.
""
~..
th e
mechani zati on means th at th e genera l co nditions of th e mod e of
~. ~
.._
th at
sick, co vering of famil y expenses and th e means of existe nce of retired

people . The uni ver salizati on of th e wage relation un der th e impulse of th e
\{
' ..,_n
"
<01><,,"',_ '
showing
can now co nsolidate thi s
characteristic of Fordism co uld regulate th e evolution of privat e wor king-
collectivization
by
~'Ie
:---1
'
socializa tio n 01 co nsump tio n bec omes a decisive ter rain and battle -ground
of th e dass struggle. For thi s soc ialization is ever more necessar y as
pr ecapitalist furms of eve ry day life are destro yed together with th e social
structures in which th ese co uld de velop .
~'Ihen
th e wage relation !S
exte nded to th e who le of society, so too must be th e social means of

co nsumption , either to be purchased as co mmod ities or to be pro vided by
pub lic autho rities. It is impossible to encompass th e distributio n between
th e two in any genera l law, since it varies co nsiderably from one capitalist
co untry to another. In th e United Sta tes, capitalist pr od uction is very
,, A: ..
'.
"
widespread indeed . It co vers, fur example , th e major part of health
"" 1
"
serv ices, and a good part of educa tion. This sho uld not be surprising, since
th er e are no use-values which are co mmod ities by nature , nor others
-.
'"
which are not oThe co mmod ity is a social relation of exchange , and its use-
.' -.
'.
value only th e support of thi s exc hange. It can well happen , th er efure , th at
certain use-values th at are not co mmod ities un der certain typ es oflabo ur
process and certain evolutionary logics of th e mod e of co nsumption
become so at other periods in capitalist development.

~'Ihat
Fordism , collective co nsumption ded ines and its costs rapidly increase ,
until th ey eventually cancel th e genera l tendency towar ds a rise in th e rat e
1'14"
~'Ie
have now reached a fundamental po int in our un der st andin g of
For dism as a regime of int ensive accumulation, and " f its pr esent crisis. ~'Ie
sta rte d with th e hypothesis th a! th e lalter was esse ntially a crisis in th e
repr od uction of th e wage relation . If th a! is in fae! th e case , th en it is
is a genera l law, on th e other hand , is as fullows. In th e co ntext of
13 1 53
of surplus-va lue. The labour pr ocess of Fordism , in fact , pushes to th e limit

th e mechanical principIe of work collectivization . This prin cipIe only
pro ves eifective m th e repetitive lon g prod uction runs of sta nda rdized
co mmod ities. It IS tot ally inadequ at e fur th e product ion of collective
'4 I 53
- - - - - - - -----<Or.-- - - - - - - - - - - - - - -
-'
(1
serv ices. Eith er th ese serv ices
are
produced by
capitalists with
co nsumptio n . In order to pursue its de velopment , capitalism must
un develop ed method s, and th eir casI gro ws astronomically as th e social

de mand fur th em rises. This is th e case with healt h serv ices. Their cost
th er efure push to its limit th e transfurm ati on of th e co nditions of existe nce

of th e wage-earn ers. This is what Fordism cannot do . The co nditions of
mus! th en necessaril y be translated int o a rapid rise in indirect wages.
pr oduction must be modified in such a way that th e value of th e social
Alternatively, th ese serv ices are produced by pu blic bodies. They th en

abso rb labour th a! is unp roducti ve from th e point of view of surplus-va lue.
repr od uction of labour-po wer is lowered in th e co ntext of a process th at

facilitates th e development of collective co nsumptio n . Such a pr ocess may
Far frQm being complementary to labour th a! doos pr od uce surplus-va lue,
be in co urse of pr eparation already , with th e emergence of th e labour
lhi s unproducti ve labour is from th e capitalist sta ndpoint antago nistic to it

when it abso rbs a share of social labour th a! gro ws more quick1y th an th e
pr ocess
revolutionization of th e labour process th at tends to replace th e
tot al sum " f surplus-va lue. The social casI of repr od ucing labou r-po wer
th en rises, with various financial co nsequences. There are severa l ways in
mechanical pr incip Ie of fragmented labour disciplined by hier ar chical

direction with th e inf orm ational prin cipIe of work organized in semi-
which such financing can impose a burde n on capitalist accumulation.
autonomous gro ups , disciplined by th e direct co nstraint of pr od uction
Eith er it inflates direct wages, and th e increase is taken back in th e furm of
itself. It is ev ident th at thi s prin cipIe is fuund ed on a co mplex of producti ve
incom e tax . Or else it is levied on pro fit in various different furms. In either
furces centred on th e automatic co ntrol of th e means of pr od uction by an
case , th er e is a restr iction on relative surplus-va lue and co nsequently an

obstacle to th e law of accumulatio n. As lon g as major transfurm ati on s in
integrated sys tem of measurement and treatment of infurm ation , analysis

of da ta and elabora tion of pro grammes th at furmalize th e pr od uctive
th e pr od uction of sta nda rdized co mmod ities and a cor respo nding upsurge
process, and transmission of instructi on s inh er ent in th ese programmes.
in th e mod e of co nsumption were pr edominant , th e collective costs of th e

repr od uction of wage-labo ur co uld be held stea dy and a rising rate of
Pilot studies co nducted in hospitals, in th e educa tio nal sys te m , in po llutio n
we
have
called
Neo-Fordism.
This
involves
maJ or
surplus-va lue co uld still be imposed . But th ese very furces th emselves
co ntro l, in th e organization of public transport , have co nfirmed th at thi s is

a pr incipIe of work organization capable of effecting a co nsiderable sav ing
genera te a more and more rapid increase in collective costs, at th e same
of labour-po wer in th e pr od uction of means of collective co nsumption,
tim e as th ey exhaust th e po te ntia lities co ntained in th e mechani zation of
while also transfurming th eir mod e of use in a far -reachin g way .
labour . It is not surprising, th er efure , th at th e crisis of Fordist work
The develop ment of Neo-Fordism in co mmod ity pr od uction in genera l,
organization should at th e same tim e have bee n th e occasion fur a genera l

drive of th e capitalist class to curtail social expend itures, and have usher ed
on th e other hand , co nfers a new and not able flexi bilit y on th e labour
pr ocess, which may be divided up int o semi-autonomous units. This
in a period of retr enchment in public finances. All th ese phenomena are

int egral manifest ation s of th e crisis in th e repr od uction of th e wage
flexi bilit y may be th e co ndition fur a profuund reshaping of th e ur ban

enviro nment which would de ploy new method s of prod uction ofcollective
relation .
~'Ie can now define more clea rly th e overall socio-economic co nditions
serv ices. The increasing socialization of co nsumptio n would be an essential
fur a capitalist resolution of th e crisis of Fordism in th e United Sta tes. The

only avenue of escape from th e crisis is one in accorda nce with th e law of
pr oductive furces. A new regime of int ensive accumulatio n , Neo-Fordism ,
accumulation th at is th e kern el of the capitalist mod e of pr od uction . For
accumulation to th e transfurmat ion of th e tot alit y of co nditions of

existe nce of th e wage-earn ing class - whereas Fordism was geare d simply
thi s to be success ful, th e sys tem must engende r new co nditio ns of
support fur accumulation in Department I and th e development of further

would arise from th e crisis, articulating th e pro gress of capitalist
to th e transfurm at ion of th e pr ivate co nsumption norm , th e social costs of
pr od uction and exc hange capable of accomplishing a lasting and massive

rise in th e rate of surplus-va lue. This can only be done if th e labour process
mass co nsumptio n co ntinuing to be met on th e mar gins of th e capitalist
is revolutionized in such a way as to rend er it capable of radically
mod e of pr oduction . The fact th at thi s transfurm ation of th e fuund ations of
transfurming th e co nditions of producti on of th e means of collective
th e regime of intensive accumulatio n is th e sale durable solution to th e
1 , THE FORMATI ON A ND EVOLUTI ON OF A NORM OF SOCIA L
15 1 53
16 1 53
- - - - - - - - - - {o . - - - - - - - - - - - - - - - -
-'
(1
crisis doos no! in itself mean th a! it is possible un der capitalism o ~'Ihat it

impli es is rather suc h a mo<iification of th e co nditions and mod aliti es of th e
dass struggle, of th e int ernal stra tification of eac h " f th e two po lar dasses
defined by th e wage relation , th a! it would be extre mely pr esumptuous to
make any jud gement on lhi s question al th e present stage of e ur analysis.
superimposed on eae h other , th ou gh th ese are a11 de rived from th e

fundamental tendencies th at we have studied either in the perspe etive of
th e furmation and transfurm ati on of capitalist relations of pr od uetion in
th e labo ur pr ""ess, or else of the evolutio n of the social co nsumption
norm . This is beeause th e most genera l law affeeting th e evolutio n of th e
working elass is that of relative surplus-va lue, which pr edom inantly tends
The development " f Qur th eory of accumulatio n, however , will enab le us

gra dually to discern what pr ecisely is al sta ke her e .
towar ds th e unifieation of th e pr oletariat . The aehievement of an ever
It is esse ntial to not e th a! th e problem to which we are led by th e
higher rate of surplus-va lue, however , passes by way of pr aetices th at
developme nt of th e law of ac cumulatio n has nothing in co mmon with what
create faet ors of differentiation within th e wage-earn ing elass. It is essential
is known as 're de ploy rnent'. The lalter is still enc!ose d in th e th eoret ical
to assess th e due order of impo rt anee , stability and distor tion of these
faet ors. Two distinet pro blems must be examined her e: th e internal
field of th e profit abilit y of individu al capitals, and based on th e co neept of

indu st rial sec tor. According to thi s per speeti ve , it would be suflieient fur
capitals to shift int o new and expanding seetors - whose presenee is taken
fur gra nte d in a problematic fur whieh capital alone exists and th er efure th e
essential questio n is mer ely a rearrangement of th e spaee fur its
valor izatio n.
Qur investi gati on of th e law of aecumulatio n leads us to a different po int
of view, beeause we co nceive capital not as an imm anent entity but as th e
development of th e wage relation . Ever y maja r crisis of accumulation is a
crisis of th e pr esent co nditions of repr oduetion of thi s relation . Its
outco me req uires th at obstaeles to th e transfurm ation of th ese co nditions
be broken. In th e United Sta tes, where th e wage-earn ing elass makes up
mor e th an 90% of th e eeono miea11y active po pulation and where Fordism
has bee n pushed to its ultimate co nelusion , th e social co nditions fur a new
and lasting upsurge of aecumulatio n can only be created by an internal
rea11ocation of th e wage-earn ing elass whieh would involve a massive
transfurm ati on of unprodueti ve labour int o labour produeti ve of surplusvalue. A transfurm ati on of thi s kind canno t be analyse d sta rting from the
co neept of secto r, but only from th at of department of produeti on . It is not
int e11igible in th e abs traet logic of pro fitability , but only in th e emerge nce
of a new inter aet ion between th e organizatio n of work and th e co nditions of
existe nee of the wage-earn ing elass.
stra tifieatio n of the pr oletariat and th e pro blem of manageri al sta ff.
(a) The stratijication 01the proletariat . The bas is of thi s stra tifieation is th e
organization of labou r . In its sys tematie applicatio n of th e pr incipIe of
meehani zati on , Fordism largely destro yed a11 ski11ed crafts and disso lved
th e sta tus th at was fuund ed on th em . In thi s way it create d th e co nditions
fur th e trade-uni on organization of th e working elass on an indu st rial bas is.
This organization bea rs witness to th e pro gressive unifieation of th e
working elass. To th e exte nt that meehani zati on has taken hold of non indu strial aetivities, th e workers in th ese aetiv ities toa have experienee d a
fragmentat ion of tasks making th em into int er changeable elements of a
co11eetive labour-po wer , i.e. pr oletarianizing th em . The existenee of th eir
old employ ment sta tus typiea11y co ntributed to maintaining certain
differentiations in wages fur a longer or sho rte r period , but th e ever more
pr essing need to red uce wage costs genera te d an irresisti ble pr essure to
align th ese categories of workers with th e sta nda rd working-elass
co nsumption norm . ~'Ihen American sociologists used to celebrate th e
enlargement of th e 'middle elass', what th ey were rea11y observing was th e
super-impositio n of two different phen omena: on th e one hand th e
extension of th e pr oletariat , in other words of th e fragmented ,
int er ehangeable and unski11ed worker ; on th e other hand th e rapid gro wth
in th e co nsumption norm to whieh a11 th ese workers were ada pted. These
2 . T h e Fa c t o rs that Diffenmtiate the Wage_Earrling Class
were two co mplementary aspee ts of Fordism .
The wage-earn ing elass is not stra tified according to a single or simple
This fundamental tendeney is qualified by certain see onda ry

differentiations whose mod aliti es we have already co me aeross in study ing
pr incipIe of division . Pr""esses of division of different nature are
th e furms of wages. These differentiations tend to aeq uire a certain stability
2. THE FA CTORS TH AT DIFFERENT IATE THE WAGE-EARNING
17 I 53
18 I 53
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(1
inasmuch as th ey are co mpro mises in th e dass struggle which are th en
exce ptional co nditions of exploita tion derives from th e permanence of
cod ified by collective barga ining. In enshr ining th e prin cipIe of seniority
ideological relations inh eri ted from slavery, in other words racism oLike a
and certain limited " ppo rtunities of promoti on , th ese differentiations play
a da uble role. On the ,me hand they form par! of the meth ods of discipline
cancer in th e social formation , racism has spread from th e South to th e

United Sta tes as a whole , and from th e black po pulation to all th ose who are
used by managements, which see k to stille th e co nsciousness of prol et ari an
not white in th e strict sense. Capita lism has made far more effective use of
solida rity in th eir labour-force by playing up individu al 'merit'. On th e
racism th an th e slave form of pr oouction ever could , by transforming

slaves int o wage-workers who were refused all possibility of int egrat ion
" ther hand th ey serve th e purposes of bureaucratized trade uni on s which

are in no way prepar ed ta face a de mocratic challenge to th eir ro utine
method s and objectives " f struggle in collective barga ining. It may happen ,
hQwever , th a! neo-Fordism will threaten th ese differentiations if capitalist
int o th e working-d ass moo e of co nsumption . Once racism was deeply

implanted in social co nsciousness, and repr oouced by th e regular
managements can make use of semi-auto no mous work gro ups as a weapo n
funct ioning of po litico-ideological instit ution s, a segmenta tion of th e

labour market could be int roouced eve n int o lar ge-scale indu st ry . The
against trade-uni on organizations. The latter will th en be forced to update
same simple labou r-po wer , empla yed at th e same type of fragmented
th eir met hoo s of action un der th reat of otherwise bec oming th e
activities, was paid differently acca rding to race , since a ne sec tion af th e
working dass was ceded lesser rights af reconstitu tion th an th e other by
involuntar y instruments of a maja r and lastin g setback in th e economic

dass struggle.
But th er e exist fact or s stra tifying th e prolet ari at th at are far more
po werful and active th an th ese in weakening th e workers' movement , by
society. For this to be so, it was ev ide ntly necessar y for racism to have
taken deep hold on th e working dass itself, to a po int where trade-uni on
a rganizations a nly tcok account af th e int er ests af white workers.
pr ovoking a deep and lasting division within th e dass. They repr esent th e
Progressive currents had also to be nipped in th e bud, by co nceding formal
effects of po litical and ideological re lations on th e maintenance cyd e of

certain categories of labour -po wer . These relations involve a sta tus
po litical rights to minoriti es and by trumpeting th e pr omotion of a black

bourgeoisie in th e liber al pr ofessions (medicine , ente rta inment, law).'
degradation in th e sense th at th e norm of social co nsumption is not

recognized in th e wages of th e wor kers affected. They take severa l differe nt
A further po werful force creating a permanent differe ntiation of wages is

th e structure of th e co nsumption pr ocess within th e famil y cell formed by
forms, ofw hich th e most important are th e two following:
th e co uple and its young children . It is th e recon stitu tion of labour -po wer
(1) Certa in categories of labour -po wer are oppressed ethnic min orities
subjec t to a sys te matic discrimination in all co nditions of work and life ;
(2) The organization of th e co nsumption pr ocess within th e famil y
in thi s social unit , which engenders an elementa ry form of ccoperation in

housework, th at fixes th e working-d ass norm of co nsumption . Housework
in th e nu d ear famil y cell supplies th e expenditure ofl abo ur needed for th e
househ old assigns certain categories of laoour-po wer (women and young
pr ecess of co nsumption . It is thus possible to spea k of a do mes tic form of
workers) a reduced wage .
pr oouction . This form of pr oo uction assigns a spec ial place in soc iety to th e
soc iety is a single tot alit y in which supers tructura l forms can exert a
female po pulation. ~'Iomen pro vide labour that is entire ly encompassed in

th e pr ocess of reconstituting wage-labo ur , and thus cannot be co nsidered
co nsiderable influence on th e law of capital accumulation. So far as th e
as directly proo ucing co mmoo ities. The simple ccoperation of housework
phenomena we are pr esently examining are co ncern ed , th ese relations

exe rt a genera l pr essure on th e nominal re fere nce wage and raise th e rate
indirectl y pro vides th e capitalist moo e of pr oo uction with unp aid labour .
These po litico-ideological relations show how th e re proouction of dass
The co mbination of thi s social organization and th e individu al

perception of th e wage permits th e capitalist moo e of pr oouction to set
of surplus-va lue. They also play a large role in capitalist co mpetition . ~'Ie
shall see in particular how th e stra tification of th e pro letariat assists th e
women to work for a supplemen tary w age. So lon g as th e nudear famil y
centralization of capital organized int o sub contracting net works.
remains dominant, even th e wage of unskilled women wor kers, whether
The most po werful weapo n used by American capitalism to create
2. THE FA CTORS TH AT OIFFERENT IATE THE WAGE-EARNING
19 1 53
mar ried or single, is de te rmined by th e ro le of women in housework.
20 1 53
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(1
Moo ern capitalist urban development makes th e co nsumption norm eve r

more rigid and ever more depende nt on capitalist product ion , by
suppressing th e social fabric within which housewor k can be effectively
exte nded. Capitalist ur banizat ion tends to th ro w th e female po pulation int o

wage-labo ur .
~'Iomen's
wages are th en de te rmined by th e price of those
th ese forces po int in th e direction of a gathering thr eat to capitalism as a

whole . This is why th e wage relation , th e very pr incipIe of dass
do mination, can pro bably only be maintained by way of an eve r more
tot alit ari an sys te m of ideological co ntro ls and mechanisms of repr ession .
The eve nts of th e last few yea rs in th e United Sta tes, as well as th e
housework. The capitalist mod e of pr oduction benefits from a lransfer of
distu rbing develop ments in ~'Iest Germany, indicat e th at such pr ocesses

are indeed at work. ~'Ihether th ey will succeed in mer ging int o a single
labour with low pr od uctivity (the do mestic labour from which it pr ofits
sys te m of social co ntrol is a question to which we are tod ay still far from
indirect1y) towar ds labour with high pr od uctivity (wage-laoour , from
being able to give an answer. But th e impo rt ant po int her e is to see dearly
which it pr ofits direct1y), while still paying fur female labou r-po wer as a
th at a very co nsiderable renewal of social co ntro ls forms part of a capitalist
functi on of th e do mes tic labou r it saves. This is also why women move in
have to
solution to th e crisis, because a transform ati on of th e co nditions of

pr oduction and exc hange permitting a new and lasting upsurge in relative
choose between wage-labo ur and do mes tic labo ur according to whether
surplus-va lue see ms to work in th e direction of a unificat ion of th e
economic co nditions are more or less favour able to one or th e other .
pr oletariat .
co rnmoclities req uired ta ass ure th e co nsumption pr ecess with red uced
and out ofw age-labo ur according to th e econo mic d imate.
~'Iomen
The supe rimposition of racism and sexism ass ure d th e permanent

hier arch y of wages to be observed in th e United Sta tes th ro ughout th e
period of Fordism : white male worker/black male worker/white female
worker/black female wor ker . This was a hier ar chy within th e same simple
labour -po wer . It was an effect of th e overall structure of US dass society.
~'Iill
thi s stra tification be maintained in th e perspective of a possible

develop ment of Neo-Fordism? It is still rather early to make any definitive
judgements on thi s po int. The socialization of co nsumption implied by
Neo-Fordism will make absolute ly necessar y and un avoidable new types of
soc ial co ntro l for regularizing a co nsumption norm very different from th at
which prevailed after th e Second ~'Iorld ~'Iar and is now in crisis. NeoFordism , however , can only bec ome th e future pr incipIe of int ensive
accumulation if it bea rs with it qualita tively new pr od uctive forces. Such
pr od uctive forces imply a far greate r degree of unification of th e
pro letariat . The mat eri al co nditions of th e maintenance cyd e of labour po wer will pro bably have to be embod ied in an ur ban develop ment th at is
no longer co mpatible with th e maintenance of th e ghettos. An increase in
relative surplus-va lue by a revolutionization of th e pr od uction pr ocesses
of means of collective co nsumption see ms possible witho ut massive
unem ployment only by a significant shift in th e frontier between working
tim e and leisure tim e , in th e direction of a re duction ofw orking hou rs. The
develop ment of collective co nsumption would remove eve ry objective
bas is from th e discrimination against woman's work. It is dear th at all
- 21 1 53
(b) Managerial staff. " The pos ition of managerial sta ff in th e wage-earn ing
dass has always been not oriou sly amb iguo us. This amb iguity obviously
de rives from th e relation of th eir pos itio n in th e capitalist organization of
labour to th e bas ic deavage which defines th e capitalist dass and th e
pro letariat . Managers appear as an int ermediat e social category . The term
social category can only be justified by a pos ition in social relations
betokening a pr eponderant hom ogeneit y amidst a dive rs ity of situations.
Now thi s hom ogeneit y certainly has no funct ion al bas is. The social division
of labour doos allocate managerial sta ff skilled - i.e. dive rse, co mplex and
mobile -
activities. These involve th e pr actices of mana gement ,
superv ision and co ntrol th at are necessar y to valorize th e capital de ployed

by a firm o But thi s funct ion al organization is th e support of an
administra tive hier ar chy . The latter canno t be reduced to th e form er , since
th e valorization of th e individu al capital, appare ntly independent in eac h
separa te ente rprise, forms part of th e overall repr od uction of capitalist
relations of pr od uction , in other words of dass society. If th e manageri al
sta ff thus act within a technost ruct ure , this latter still doos not acq uire a life
of its own . Its existe nce and operation are dete rmined by th e accumulation
of capital in genera l. It is in th e nature of thi s techn ost ruct ure , th er efore , to
be a perp etu al field of tension s ass igning manageri al sta ff a pos ition in
social relations that makes th em int o a social category sometimes referred
to as th e salaried petty bourgeoisie.' Managerial sta ffbelong to th e wage-
22 1 53
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-'
(1
earn ing dass inasmuch as th ey are parties to th e wage co ntract oBu! th ey
impute spec ifie costs to it . Fascinati on with 'human capital' and
do no! belong to th e prol et ari at , and do no! tend to dissa lve int o it as a
category , because th e social division ofl abo ur always renews co ntro l over
justification of th e wage hier arch y have un fortunat ely infect ed severa l
th e prol et ari at , eve n if its forms change. The individu al fat e " f certain
manager s, who may bec ome prol et ari ani zed in per iod s of large-scale
serious co nfusion between co mplex labour and labou r-po wer . Complex
change , when old hier ar chical funct ion s disappear , sho uld no! be co nfused
with th e social category itself. The lalter is th e agent " f capitalism in th e
econo mists outside th e neo-d assical sch",,!.' These errors derive from a
labour de no tes those spec ifie activities th at are organically determined by
th e collective worker and hom ogeni zed by th e social pr ocess of exchange .
organization of labour un der th e legal form " f th e wage co ntract o The
The phenomenon of co mplex labour forms part of th e analysis of

co mmod ity pr ices within th e laws of capitalist co mpetition . It has nothing
int ernal stra tificatio n of th e pro letariat , based on a diversity of co ncrete
to do with th e salaries paid to members of the category of manageri al sta lf.
co nditions " f exploita tio n subjec ted ta a movement of unification , sho uld
not be co nfused with th e distinction between th e pr oletariat and th e social
~'Ihat
category of manageri al sta lf, which is an un changeable feat ur e of th e
value. In a relatively stable sta te of th e social division of labour th at
capitalist organization ofl abo ur .
determines a certain permanence of forms for th e administra tive
T "n , h' ,, ~ n.'.. 'h. r "n,h ' "m , .dros ;, hm " ndmd .. "'''M<" h l , ' d I', ;n 'h.
" ..n" . f . n ,,' . qu;..l.n'. It , h.u ld ,. ' ' '.n, 'hm fo" , .. mdudm< ' "hn;, hn, . n d
. n<m.m.
is tru e , however , is th at th e latter are tied to th eir employers by th e

wage co ntract o They th er efore cash th eir qualifications as an exc hange-
hier ar chy , a pr ice tends to be established for eac h category of qualification,

resulting from th e co mpetition among manageri al sta lf. These pr ices do not
appea r as such; th ey are expressed in th e hier ar chy of salaries paid to
Since th e social category of managerial sta lf is th e agent of capital, yet is

subjec t to th e wage-co ntract , sta tus becomes very impo rt ant for its
manageri al sta lf from th e beginning of th eir career . In period s of rapid
autono my.
of
co rrelative changes in th e structure of th e ente rprise, th e exchange-va lue
co nsumption , but also a sen es of relations th at are co nstitutive of th e
of certain qualifications can be seriously threat ened . The hier ar chy may
social category itself

not mer ely sec onda ry fact ors of int ernal
dilfere ntiation of a social gro up whose co hesion is dete rmined by a more
alte r, certain specialized qualifications bec ome worthless, other new ones
fundamental deavage. They homogeni ze th e social category des pite the

het ero geneit y of its funct ion s, and th ey stabilize it by absorb ing th e
retain th eir pos ition at th e head of th e hierarch y .

But qualifications are not th e only way in which th e wage hier arch y is
multiple tensions that erupt within it , due to its amb iguous relation to th e
modulat ed . Career structures also play a maja r role. It is th e career sys te m
fundamental antago nism inh er ent in capitalist relations of pr od uction . The
th at subjec ts manageri al sta lf so dosely to th e capitalist dass and
sta tus of managerial sta lf is determined by th eir qualijications and by
reinforces th e dilfere ntiation of thi s gro up in society, as well as th e mutual
career structures. These distinctive feat ur es, which dilfere ntiate th em from
all other gro ups, make co mpetition th e pr incipIe of th eir int ernal relation s
- a co mpetition incit ed by th e hierarchy of till es and salaries th at forms
co mpetition within it . For thi s to be so, th er e must exist oppo rtunities for
enterprise , which indudes a large number of hier ar chical levels and a
part of th e person nel po liey of any capitalist ente rprise. If sta tus
multiplicity of functi on s. To ensure that career co mpetition, an ine vit able
hom ogeni zes th e social gro up of manageri al sta lf, th en th e elements th at
souree of tension , doos not jeop ard ize th e social d imate of th e firm and
determine sta tus are co ntro lled by th e ca pitalist dass, and form part of its
global po wer over society.
make manager s int o a social group hostile to th e bosses , th e pr incip Ies of
It is abs urd, th er efore , to co nsider th e salaries of managerial sta lf as
dete rmined by th e repr od uction value of a co mplex labou r-po wer , or to
individu al respo nsibilities, a great objectivity of performance criteria, and

int ense mobility of individu als within th e structure. It is th ese principIes
see k to identify the elements of thi s co mplexity by a funct ion al analysis and
th at make th e giant American co rpo ration so remarkably ada pted to th e
Such sta tus
involves not
only dilfere ntial norms
- 2 3 1 53
transform at ion of th e organization of la bou r , on th e other hand , with
appea r, so th at only th e most genera l manageri al skills and legal expertise
mon et ar y success. These arise from th e co mplexity of th e structure of th e
personnel po licy have to be rigor ou sly applied: a strict definition of
24 1 53
- - - - - - - ----<0 1 - - - - - - - - - - - - - - -
-'
(1
valorization of capital, and al th e same time so effective an instrument of
manageri al sta ff are not insensiti ve , ques tioning th e goals of th e giant
soc ial sta bility. The US pattern is not ably distine! from th e congealed
co rpo ration of th e Fordist type in th e midst of th e mounting pro blems
structures typi cal of France , where ralion al pr incipIes of organization are
arising from increases in social inequ aliti es, de te riora tion of th e
lar gely unkn own and careers are petrified by form al qualificatio ns, and
enviro nment and falling sta nda rds of collective co nsumption . Politi cal
reflection on th ese th emes will not go so far as to yield an un der st andin g of
above al! by nepotism and personal co nnections.

The sum tot al of th e relati on s th a! assign manager ial sta ff th eir place in
th e nature of capitalist relations of producti on . But pro blems of
soc iety is strongly int ern alized in th e spec ific ideology " f lh is soc ial gro up,
which reinfurces capitalism by ada pting th em to th eir ro les in th e social
co nsumption , of th e env iro nment, of social inequ aliti es and

discr iminations are awakening manageri al personnel to th e respo nsibility
division oflabo ur . Its two co mplementary peles are respeoljo r authority
of th e giant co rpo rations, and diffusing th e co nviction th at th eir
and individ ualism.

Respeol fur authority is determined by th e severe co nstraints spec ific to
th e structure of th e enterprise , th e per furm ances requ ired fur promoti on ,
th e meagreness of th e fragmen ted knowledge of th e great majority of
co ncentration of colossal producti ve resources imposes certain soc ial

duties on th em as mu ch as on th e sta te.
The sec ond phenomenon is th e emergence of discontent within middle-
manager ial sta ff and th e commod ity characte r th at it ass umes un der
enterpr ise caused by th e int roduct ion of auto matic co ntro l sys tems, which
capitalism o Managerial sta ff thus typically and un critically obey th e
destro y th e rank attac hed to certain hierarchical funct ion s. These furm
part of th e reor ganization within th e category indu ced by th e rise of Neo-
co mbination of promoti on and sanction th at mar ks th eir careers. Respect

fur autho rity is also reinfur ced by very significant cultural attitudes - th e
ranking administra tive sta ff due to th e changes in th e structure of th e
Fordism .
relations of protecol between superiors and inferiors in th e hier arch y , th e
The thi rd phenom enon is th e dissatisfac tion of technical sta ff at th e
effacement of personality behind funct ion , th e most abso lute co nfurmism
regimentation of research . The increasing fragmentati on of th e lab our
in outward expressions of character , and th e suppression of any
process, correspo nding to th e prin cipIe of mechani zation , obliged th e
independent opinions.
The individu alism of manageri al sta ff co nfurms co mpletely with
employers to divide up applied research int o separa te departments. The

resultant rigidity , and th e stra itjac ket of de ta iled per furm ance crite ria,
have harmed cooperation between differe nt fields of research in a do main
bo urgeois ideology . It has only one dimension , th at of mon et ar y gain,

which is th e alpha and omega of th e career sys tem. It is expressed by th e
where results are always diflicult to furesee . Research is a particularly
almos t tot al abs ence of trade-un ion organization amo ng th em . It sta mps all
favourable are na fur th e establishment of semi-auto no mous gro ups, as a
interpersonal relations within thi s social gro up, in which eac h is jud ged
result of a transfurm ation of th e labour pr ecess by auto matic prod uction
and assesse d in term s of his success in th e incessant pursuit of mon et ar y

gain and th e lifest yle th at fullows from th is. This mod e of life makes
co ntro !.
differences co mpletely exte rna!. The one-dimensional red uction of
ente red int o crisis do not see m seriously to th reaten th eir co hesion , nor to
modi fy significant1y th eir situation vis-a-vis th e capitalist dass on th e one
personality leads to th e reappearance of differentiation in th e possession of

co mmod ities, thi s in turn being a further incit ement to th e int ensified ques t
fur mon et ar y gain. Competition between individu als thus invades eve ry
aspec t ofl ife .
Yet thi s insidiou s ideology , co mposed of un con sciou s norms th at
The tensions th at have disturbed manageri al sta ff as Fordism has
hand and th e pro letariat on th e other . It would appea r, on th e co ntrary ,

th at th ey are in th e pr ecess of absorb ing and assimilating th e soc ial
transfurm ati on s th at characterize th e transiti on between two mod aliti es of
th e regime of intensive accumulation, Fordism and Neo-Fordism.
gove rn eve ryday life , has recent1y experience d certain reverses. Thr ee
distinct phenom ena can be noted her e .
The first is related to th e emergence of certain po litical th emes to which
- 2 5 1 53
11. The Effects ofthe Socialization ofConsumption on
Changing Forms ofWages
26 1 53
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(1
As we have already argued, th e repr od uction of social labour-po wer
involves more th an simply its physical rec onstitution from a ne pr odu ction
cycle to another. There is also th e renewal of th e wor king dass from
genera tio n to genera tion. The casts of lhi s repr oduction thus include the
expend iture fur th e maintenance and educa tio n of th e children who are to
replace th e existing labour force . They alsa include th e maintenance of
former workers during th e shar! int er val , as it is on average, th a! separa tes
benefits, and to a greater or lesser exte nt socializes th e financing of certain

risks within th e wage-earn ing dass. In surance ente rs int o th e agenda of
collective barga ining precedure and far ms part of th e co mpro mises of th e
dass struggle. In certain cases, workers' organizations have won the right
to examine th e operation of th e institution s of social insurance . But in
eve ry case insurance , like ass ista nce, ente rs int o th e social value of labourpo wer and is thus entirely subjec t to th e co nstraints of th e law of
retir ement and dea th. Final1y , th ey include insurance costs against
siekness, which puls labour-po wer out of serv ice fur a sha rter or lon ger
accumulation. The mon et ar y flows to which th ese sys te ms give rise do not
po rtian " f its tot al activity. The int egrat ion of th ese needs int o th e working-
co ncern ed . Still less are direct wages co mpensated far by indirect wages.
dass norm of co nsumption , in other words th eir management by th e
~'Ihen
capitalist mod e of pr oduction , got un der way during th e Creat Depression.
nor m of secial co nsumption , as mu ch by th e stagnation of real wages as by

th e deteriora tion in th e financial equilibrium of th e sys tems far co ping with
Since th e end of th e Second ~'Iorld ~'Iar , th ey have developed spec tac ularly,
at an eve r accelera ting pace . These needs are indu ced by th e
transfarm ati on of th e co nditions of existence of th e wage-earn ing dass.
gro w in any regular way , as far as th eir actual purchasing po wer is

th e rate of surplus-va lue is prevented from rising, th en so too is th e
risks , at th e very mom ent when all risks are increased by th e gro wing
They farm part of th e secialization of th e genera l co nditions of prod uct ion .
insecurity of employment . In po int of fact , th e th reat to relative surplusvalue raises th e level of un employm en t by slowing down the overall ra te of
In all th ese cases, th e co vering of th ese needs ente rs int o th e value of s ocial
labou r-po wer . But th e flows of income and th e institution al mechanisms by
accumulation , and by encouraging method s of producti on th at save on

labour-po wer . Now th e social sec ur ity sys te ms can only absorb th ese risks
which th ese needs are met vary greatly from one social far mation to
if th e labour-po wer th at is actually operative can pay far th e labour-po wer
another. Differe nces arise according to whether taxes and other charges
th at is not o This is th e indispensable co ndition far th ese sys te ms to
are more or less socialized, i.e. brought within an institution al mechanism

far balancing out th e risks and costs of collective expenditures. The
guara ntee th e co ntinuity of th e precess of social co nsumption, witho ut

which th e regime of intensive accumulation would tot ally collapse . This
differe nces between th e direct wages paid to simple labour-po wer in
can be fulfilled only if th e nominal direct wages of th ose wor kers with jo bs
different co untries are linked in part to dive rgences in th e ways in which
remain co nstant, as it is to thi s wage level that th e whole sys te m of
th ese needs are co vered .

The structura l far ms of the wage relation which developed in th e United
co ntributions and benefits is indexed . The co nstancy of th e nominal wage is
Sta tes - during th e phase of its genera lization un der Fordism - to ensure
pr od uction to co ntinue . This co ntinuity limit s un em ploym ent by
th e co verage of expe nditures co nsidered as co nstraints indu ced by th e rise

of mass co nsumption were th e sys tem of public assista nce and th e
co unteracting th e ded ine in th e rate of accumulation. The limit ati on of
what enab les a co nsumption pr ecess dominated by artides of mass
insuran ce sys te m. Each funct ion ed th rough a range of institution s.
un employm ent gives th e un employed relative sec urity by maintaining a

flow of co ntributions suflicient to pr even t th e insurance funds from being
Assista nce was financed from th e budgets of th e public authorities, and
exhausted . The benefits from th ese funds create expend iture flows th at
administe red by a spec ial appara tus; it was highly selective and un certain
from th e daimants' po int of view. The right to assista nce was always in
co nsolidate th e level of employ ment. The co nsta ncy of the n omin al
movements co uld exe rcise only an exte rnal pr essur e on it . In surance is a
referen ce w age, th er efare , which can be histor ically observed th roughout

th e per iod of Fordism, is the keys tone of that s ocialization of co ns ump tion
which pret'en ts a cumulative sh ortf all in effe ctive dem and when th e
co nditions of surplus-va lue prod uct ion de te riora te. This is th e fundamental
more codified sys tem th an assista nce, since it relates co ntributions to
lesson th at Keyn es opposed to th e co nception of an automatic eq uilibrium
jeop ard y , both in scope and in the degree of its co verage , as th e assista nce
sys tem was directly in th e hands of bourgeois po litical organs." Popular
11 , THE EFFECTS OF THE SOCIA LlZAT ION OF CONSUM PT IO N
- 27 1 53
28 1 53
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-'
(1
between th e supply and demand fur labour , allegedly defined

independent1y " f a rre another, accomplished by th e flexi bilit y of an
'eq uilibrium pr ice ofl abo ur'.
In the United States, where the ideo logy of individualism is particularly
strong and belief in a link between work performed and remuneration is
pec uliarly per sist ent , th e establishment " f pr ivate insurance funds on th e
whole prevailed over the principIe " f social solidarity in meeting risks. In
study ing th e American insurance sys te m, th er efore , it is pr eferable to
spea k of deferred wages rather th an indirect wages. These take th e form of
th ese benefits to th e cost ofl iving, and significant1y increase co ntributions.

The social sec urity sys te m, th er efore , which up till then had bee n int ended
to establish simply a minimum sta nda rd for pension er s, leavin g eac h
individu al to supplement thi s from his or her own private insurance
scheme, now bega n to be qualita tively transform ed int o a nati on al
penSlOns scheme eve ntually planned to encompass all pr ivate
arra ngements and weld th em int o a single sys tem in which social
distr ibution of risks and pro vision for pensioners would replace individu al
msurance .
insurance funds sel up by wor kers pr ivately , prin cipally fur medical and
A social co nflict of major impo rt ance is involved her e , for pr ivate
surgical expenses, and pension funds for retirement . Private insurance

schemes far outweigh th e public sys te m of social sec urity. These funds
pension funds form very significant reservoirs of capital. They are bitterly
sub ordinate th e meeting of social needs to th e exigencies of capitalization .
defended by indu st rialists and financier s alike. Yet th e defects in th e

operation of th ese schemes are so imm ense th at dissatisfaction with th em
sav ing. This development has been th e source of a gigantic financial
has bee n stea dily increasing. These pr ivate pension funds are a gro tes que
example of th e antago nism between social needs and th e exigencies of
centralization .
accumulation. The ave rage American worker , after co ntributing all his
They are th e principal forms of a very rapid development of co ntractual
The most rapid moJe of financial centralization has derived from th e

expansion of pension funds. The establishment of th ese pr ivate pension
funds slowly de veloped from th e early ~ oth century onwards, for certain
particular categories of skilled wor kers (particularly in building) who were
active life to a privat e pension fund , obtains less th an ~ 5 % of his terminal

wage as a p ension on retirement . In Euro pe th e per centage ranges between
50 %and 7 0 %, with payments guara nteed by th e sta te.
Let us examine briefly th e particular operation of th ese schemes.
Private pension funds developed rapidly with th e establishment of
shielded from th e fragmentati on of tasks and co ncomitant red uction to

simple laoour-po wer by th eir very pos ition in forms of th e labour pr ocess
collective barga ining in th e lat e ' 930S. The rate of gro wth of th eir asse ts
that were relatively bac kward. These wor kers, moreover , were orga nized in
average d 15%from ' 95 0 onwards. The tot al financial asse ts accumulate d in
po werful trade uni on s which co uld barga in with th e employers over plans
thi s way stoad at
for th e establishment of pension funds. But it was only in th e Creat
1960 and 136 billion in ' 97 0 . This gro wth accelera te d un der th e pressure
Depression th at the social sca le of th e pro blem was revealed , when th e

un em ploym ent of million s of active workers left th e retired in a situation of
of separa te but co nvergent forces: th e rapid incr ease in nominal incom es,
~. 5
billion do llars in ' 940 , 1 ~ billion in ' 95 0 , 5~ billion in
indescribable poverty. The Roosevelt Administra tion pr evailed on
th e lowering of th e retirement age, th e need to red uce th e difference

between the incom es of pensioners and the incom es of th e econo mically
Congress to pass a social security plan financed by th e Feder al budget,
active. But th e forces pressing to accelera te th e gro wth in th ese funds were
funded half by deductions from wages, and half by th e employers. This very
also th ose pr essing to abolish th e pr ivate sys te m of capitalization . In a
moJest plan pro vided only an absolute ly minimal benefit, but it did
co mbine individu al insurance with a moJest redistr ibution of incom e .
sys tem of social insurance , in fact , th e benefits paid de rive from pr esent
Administere d by th e Feder al govern ment, th e scheme was gra dually
and accumulated receipts, either dra wn from taxati on on th e incom es of

th e who le po pulation, or direct1y from th e overall exchange-value of
exte nded to a greater number of beneficiaries, but benefits remained
co mmoJities by social co ntributions. In pr ivate pension funds, th e benefits
minimal. Only in ' 97 3, in a situation of accelera ting inflat ion , and un der
pr essur e from social forces that had sec ure d a broad co nsensus, did
obtained by all individu als at th e end of th eir lives are a funct ion of th e
co ntractual sav ings schedule. But th ese benefits are in no way guara ntee d.
Congress raise th e minimum benefits co nsiderably , add a dause indexing
The ownership of th e assets involved , in fact , doos not lie with th e wage-
2 9 1 53
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(1
earn ers bu! rather with th e capitalist dass. The funds are sel up in th e
All th ese co nditions were reversed fr om 1966 onwards. The average ratio
framewa rk of th e co rpo ration , in a scheme cod ified by collective
of annual payments to accumulated asse ts, which had risen fr om 3.3 %in
barga ining. They include a co ntribution from wages, and a co ntribution

from th e emplayer which is seen as a kind of participation by th e wage-
' 95 0 to 3.5% in 1960 , d imbe d to 4.8% in ' 97 0 . This tendency was
earn ers in profits, whose proceeds are deferred int o th e future . In actual
th er eafter strongly accelera ted by th e mor e rapid rise in pr ices, and by th e

persiste nt stagnation on ~'Iall Street as th e pr od uction of relative surplus-
fact , th e empl"yers' co ntribution is no! actually paid , or is so only to a
value reached its limit s. But what th e rise in thi s ratio doos not reveal is th e
smal! degree . Corpora tions lransfer funds to th e accounts of tru sts

centralized by the more powerful commerc ial banks, who invest th em . The
sharp increase in cases of non -paym ent of pensions, either tot al , or at

levels below th ose far which th e workers co ntributed . This crisis in th e
cor po rations thus expect th e nominal value of th e funds to gro w as
pr ivate pension fund sys tem erupted at a tim e when , as we have seen, th e
foreseen by th e scheme, from th e return on th e investments made simply

with th e emp loyee s' co ntributions. Since thi s return arises fr om th e
far ces pr essing far a genera lization of th e pension sys te m and a rise in th e
surplus-va lue pr od uced by th e working dass as a whole , th e circ ular
a po litical issue . The int egrati on of pension schemes int o a single nat ion al
process of exploita tion and accumulation takes care of itself. The more th e
scheme, operated according to th e pr incipIe of a balance between
wage-earn ers pay , th e more th e capitalists accumulate, and th e more th e
co ntributions and benefits und er th e respo nsibility of th e Feder al sta te,
funds rise in value, th e less th e capitalists actually co ntribute to th e
regulating th e use of th e funds and guara nteeing th e stability of payments
financing of pensions. The remarkable result is achieve d that the sum of

retirement pension s th at will be paid in th e future to a wage-earn er who has
fr om th em , is th e only possible solution in th e lon g-run o
made co ntributions th roughout his life depends on th e increase in th e

nominal stoc k-market value of th e shares in which bankers have invested
co nsumption th at is one aspec t of the crisis of Fordism has faund
his co ntributions.
The dynamic elfect of th ese funds far th e accumulation of capital is thus
pensions paid had bec ome stronger th an befare. The pro blem thus be came
In severa l capitalist co untries, th e insuflicient socialization of

expr ession in a dete rior ation of th e financial pos ition of insurance sys tems.
This de te rio ra tion pro vokes a pr essure on benefits which aggravates th e
read ily un der st andable . It de rives fr om th e fact th at th ey are neither
crisis. In th e Unite d Sta tes, th e het er oclite mosaic of pr ivate schemes, in

which th e employer's co mmitment is only co nditional, has bro ught abo ut a
guara nteed nor regulated , leadin g th em to be co nsidered by th e
particularly severe crisis. In th e period when mass co nsumption was rising,
cor po ration as current expenditures that farm an integral part of wages,

while also possessing th e ideal attributes ofl ong-term financial investments
th e managements of th e big co rpo rations themselves favoured th e

negoti ati on of pension schemes in return far trade union aba ndo nment of
resistance to th e transfarmat ion of work organization so as to stre ngthen
(to tal tax exemption, co nstant new inject ion s, liqui dit y needs plannable in
advance ). ~'Ie can also und erstand , however , how th e co ntradictions of thi s
labour discipline . This weakening of th e wor king dass's means of action
type of financial investment are now bec oming eve r more acute. For
played a major ro le in the accelera ted pace of accumulation th at mar ked
decent retirement pensions to be paid in a period of inflati on , ever higher
th e first half of th e 1960s. By th e capitalization of its co ntractual sav ings,

th e working dass gave a massive lon g-ter m credit to th e capitalist dass.
retu rn s have to be obtained on eve r greate r investments; and thi s bec omes
impossible , as th e big banks cannot invest every thing in th ose sec to rs with
a high gro wth rate without th e return on share capital eve ntually co ming to
~'Iith
its trade-un ion leader s placing th eir fait h in indefinit e econo mic
gro wth, it was not only ro bbed to a lar ge exte nt of the real value of its
appea r artificially high in relation to real pro fitability . Up till about 1965 ,
th e establishment of new funds and th e relatively recent character of th ese
assets by inflati on , but very often even of th eir nominal value, since th e
pensions schemes kept th e ratio of benefits to th e value of th e funds low all th e more so because th e nomin al value of shares on th e stoc k-markets
gra nted. There co uld be no more striking expression of th e fact th at th e

wage relation is not an exc hange relation , eve n at th e po int of th e wage
had gro wn stea dily and far more rapidly th an th e rise in pr ices since ' 95 0 .
co ntract o The two antago nistic dasses are not social partners, as is
31 1 53
pension schemes did not olfer th e guara ntees th at any credito r is norm ally
32 1 53
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(1
co mplacently maintained . They are no! player s subjec t to th e same rul es,
a ne simply being stronger th an th e a lher . The wage relat ion determines
of imm ediat ely co nceiving th e unity of th e abs tract social space and th e
qualita tively different dass pos ilions. The two 'players' are no! playing th e
co ncrete space of activ ities , th e spec ific and th e genera l de te rminatio ns of

labour . To relate th ese two spaces req uires th e co nstruction of an
same game, th ey do nat have th e same goals, and th ey are no! subjec t to
int ermediar y theoreti cal space , that of social lo rms. This space has a
th e same rules."
topol ogical and not a met ric structure. Its elements are relations, social
int er acti on s, endowed with a law of repr oduction . ~'Ie know that in a
III. T h e Effects ofthe Socialization ofConsumption on
co mmod ity economy th e arc hety pical furm of mor phology is th e

met amorph osis of the co mmodity C- M - C'. The develop ed morphology is
the Long-Run Movement ofWages
th e genera l circulation of co mmod ities. The law of repr od uction is
The co nclusions of e ur analysis of th e wage relation suggest th e need to

take a further ste p forward in th e int er change between hist orical analysis
exc hange eq uivalence. This space of social furms exercises a very real
mediati on . The co ncrete space of activ ities and use-values is a supp ort
and co nceptual elabora tio n. ~'Ie mus! now deepen and apply th e co noep! of
space fur th e metamorphoses of co mmod ities. The space of social furms,
fo rm to give th e th eory of wages its full range .
~'Ie
have already mel lhi s
final1y , is related to th e homogeneous space of value in th e sense th at th e
co rroep! " f furm in th e th eory of exc hange. The co ncept owes th e pos itio n
th at it occupies in econo mic science to its mediati on between th e
pr incipIe of exc hange eq uivalence imposes an application of th e latter on

th e furmer , i.e. a transfurm ed measurement of value which is th e mon et ar y
homogeneous field of value, whose identification fuunds th at science as
expreSSlOn.
~'Ie
such, and th e co ncrete and het ero geneou s space of producti on ,

distr ibution and co nsumption of use-values. This co ncrete space canno t be
can thus see why it is necessar y fur econo mic science to co nstruct
th e space of social furms, in a two-way movement between observation of
co nceptualized . It de notes th e co ntent of econo mic acts, th e descr iption of

th e spec ific processes by which human individu als transfurm resources in
thi s teeming support space of activities and analysis of th e measurable
accorda nce with particular project s, and create arte facts th rough which
magnit udes th at are impressed on th e homogeneou s space of value. This

two-way pr ocess is of great impo rt ance in th e study of capitalism, where
th ey ente r int o social interaction . The co ncrete space of activ ities refers
th e wage relation is gove rned by a law of repr od uction that is mu ch mor e
th er efure to th e genera l determination ofl abo ur . But thi s co ncrete space is
co mplex than th e principIe of equivalence.
in no way suflicient to characterize a society.
~'Ihat
~'Ie
know that thi s is so because
gives a human gro uping
th e wage relation is a relation of appropriation and expropriatio n. The
th e co hesion th at ena bles us to spea k of a society is a mode 01distribution
division it defines is subjec t to th e pr incipIes of qualita tive difference and

unequ al influence . The reason we have unde rtaken an analysis of th e
oltasks that doos not derive from th eir co ntent but which is imposed on
thi s co ntent oA particular mod e of distr ibu tion of tasks is articulated to a
spec ific and exd usively social de te rmination oflabo ur . ~'Ie know th at th e
co mmod ity econo my is a mod e of distr ibu tion of tasks characte rized by th e
existe nce of independent pr ocesses of pr ivate labour . Social co hesion is
obtained by a particular pr oced ure of social valida tion of th ese pr ivate
labours, effecte d ex p ost on th e pr od ucts of labour , which bec ome
co mmod ities. In thi s case , th e mod e of distr ibu tion of tasks can be
co nceptualized as a homogeneous abs tract space, th e space of value. The
co nstitutive relation of thi s space is th e social relation of exchange, and th e
spec ific de te rmination ofl abour is abs tract labour .
The fundamental episte mo logical problem is th at th er e is no possibility
111 , THE EFFECTS OF THE SOCIA LlZ AT ION OF CONSUM PT IO N
33 153
transfurm at ion s of wor k organization and th e co nditions of existence of th e

wage-earn ing dass is so as to study more co ncretely th e nat ur e of the wage
relation , and its relationships in turn with th e support space of activities.
~'Ie know now th at thi s is not just a simple exc hange relation , eve n th ough it
presents itself as such in th e furm of the free co ntract oNor is it an abs tract
balance of furces, eve n th ough it gives rise to a division in th e
hom ogeneou s field of value. The wage relation co ntains th ese different
pattern s within it und er th e pr edominant de te rminatio n of a relation of
pr oduction , in other words an appropriation by one part of society of th e
resou rces needed to pr oduce th e co nditions of existe nce fur society as a
whole . This is why study of th e repr od uction of th e wage relation req uires
34 1 53
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(1
~'Ie
befare al! else an analysis of th e mat eri al transfurm at ion s th a! are th e bas is
co mplete th e determination of th e nominal reference wage .
of capitalist appropriation. This analysis has enab led us to ide ntify th e

bas le soc ial furms create d by th e development of th e wage relation .
sho w how th e establishment ofcollective barga ining has led to a change in
It is now necessar y to ga further , and sludy th e overall mor ph ology of
shall th en
th e lon g-run quantita tive develop ment of wages, and in th eir regulation in
th e differe nt phases of th e accumulation cyd e .
th e wage relation . Since th e wage relation is co mplex and th e diverse forms

in which it pr esents itself are qualita tively different and dy namic, th e law of
l . The Canalization o Ec onomic Class St nlggle by Coll ..ctiv..
repr od uction of th e wage relation in th e "pace of social forms is th e
Bargaining
pr incipIe of th e organic unity of al! th ese bas le forms.
~'Ie
shall call such a
unity a str ucturalfo rm. A structura l form , th en , is a mod e of cahesion of
It would be impossible in th e pr esent boo k to descr ibe in detail th e
bas le social forms arising from th e development of one and th e same bas ic
pr ocesses of American collective barga ining, on which th er e already exists
social re lation.
In accordance with th e above th eoreti cal elabora tion, we shall now
an ab unda nt liter at ur e ." Our task will rather be to sho w, in terms of th e

co ncept of structura l farm, why and how thi s overall pr oced ure is linked to
pursue th e investi gati on of th e wage relation in th e fallowing directions:
th e regime of int ensive accumulation, as a regularization of th e int er acti on

between work organization and th e socia l consumption nor m which is th e
(1) Structura l far ms evolve with th e mat eri al transfarm ati on s of th e

mod e of pr oduction . This capacity far evolution is pr ecisely what ensures
faund ation of th e genera l co nditions of accumulation spec ific to Fordism .
social co hesion und er th e dom ination of an antago nistic relation of

pr od uction . As a new stage of capitalism bound by th e quest far relative
(a) The tendencies in the trade-union movement afi er the Seco nd Wo rld
surplus-va lue to th e pr edominance of a regime of int ensive accumulation.

Fordism unifies th e different partial far ms of existence of th e wage relation
Wa r. The imm ediat e pos t-war period was dec isive far th e lat er
development of th e workers' movement . Massive strikes inspired by
grieva nces over wages and wor king co nditions that had built up during th e
and co nstitutes a structura l farm involvin g a major legal cod ification ,
war bro ught th e working dass a series of econo mic victories. But thi s was
col!ectit'e barg aining .
th e last such occasion far a long tim e , since in th e same co njuncture th e
The massive development of collective barga ining in th e United Sta tes

was indissolu bly co nnected with th e rise of Fordism . It remains one of th e
labour movement was to lose a dec isive battle on th e po litical fron t .
most esse ntial structura l farms far th e regulation of co ntempo rary

capitalism oIn study ing thi s structura l far m , we shall be able to unde rstand
th e mod alities in which th e dass str uggle has developed.
(2) The far mation and operation of structura l far ms are th e th eoret ical
site of the articulation of social relation s - econo mic, po litico-legal and
The New Deal had seen a significant weakening of th e co nservative bloc

in th e United Sta tes, ejec ted from po wer in th e disarray pro voked by th e
econo mic collapse of th e Creat Depression. But thi s situation was shortlived . The war econo my enabled th e indu st rial and financial co mmunity to
establish dose ties with th e Feder al govern ment and to obtain strong
pos itions in th e administra tion. The same period saw th e beginning of a
ideological. To develop a th eory of collective barga ining as a structura l
major anti-wor king-dass ideological campaign , which enlisted th e full
farm means to co nceive thi s articulation as a unity of th e social pr actices

necessar y far th e repr oduction of th e wage relation . The th eory of
range of means of co mmunication . The ultimate aim of this campaign was
structura l farms is thus a way of laying th e faunda tions far a th eory of the
capitalist sta te. "
campaign reached a new height at th e tim e of th e 194 6 strikes, taking
(3) The laws of repr od uction of social far ms give rise to transfarm at ion s
in th e homogeneou s field of value. The structura l far m in which th e wage
relation is reproduced affects th e transfarmat ion of th e value of labour po wer int o wages. In vestigation of collective barga ining will enable us to
111 , THE EFFECTS OF THE SOCIA LlZ AT ION OF CONSUM PT IO N
to obtain a co mplete revision of th e ~'Iagner Act of ' 935 , so as to break th e

new po wer of th e unions th at had bee n recognized in law. The anti-labour
35 153
advantage of th e sca rcities of th e recon version periodo Even during th e

war , various sta tes in th e South,
~'Iest
and Midwest had passed legislati on
pro hibiting th e dosed shop. The 1946 elections, however , retu rn ing a
strong co nservative majorit y , were to give thi s ideological campaign a
36 1 53
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(1
nati on al jurid ical force . In ' 94 7 Congress passed th e Taft-Hartley Act,

which mel the employe rs' demands in almos! eve ry detai!. This law
obliterated th e pro gressive pro vision s of th e
new charler fur settling social conflicts.
~'Iagner
Act and became th e
un willing to compromise th eir own fre edom of action by recourse to

administra tive int er vention th at might replace th eir own po wers of
decision . This attitude was inspired by th eir aware ness th at wages and
working co nditions were d ose ly tied to major decisions of th e co rpo rations
In its pr eam ble , th e Taft-Hartley Act asse rts th e need to restr ain trade-
over pnces and investments. The Taft-Hartley Act gives th e Feder a l
uni on action in so far as it imperils 'the freedom of exchange'. The chief
govern ment a whole ars enal of weapo ns which fall sho rt of imposing
pro visions of lhis basic law can be analyse d as follows:
compulsory arb itra tion. These indude th e setting up of fact -findin g
(1) The wor kers' right freely to choo se th eir trade-uni on repr esentatives
is co nfirmed .
~'Ihen
a majorit y union organization has bee n chosen by
election in a pr oduction unit , it alorre is empowere d to barga in collectively

in th e name of th e workforc e as a who le . The pr oced ures of uni on
formation , th e renewal of union mandat es, and th eir legal recognition , are
co ntro lled by th e National Labor Relati on s Board .
(2) This co ntrol empo wers th e N.L.R.B. to pro hibit any employer from
co mmissions to make recommend ations which th en bec ome th e sta rting

po int of negotiations, th e summoning of
~'Ihite
House co nferences un der
Preside ntial autho rity , th e possibility of issuing an inju ncti on to force th e

suspension of a strike for 80 days , and th e po wer to seize pr oduction units
affecte d by a dispu te and operate th em unde r th e management of Feder al
funct ion ari es acting in place of th e pr ivate owners.
The trade-uni on movement's attempt to get th e Taft-Hartley Act
obstructing th e legal formation of a trade union . The N.L.R.B. must th en

apply th e following restri ctions on th e freedom of union action: pr ohibition
repe aled soo n petered out . The po litical d imate quickly de te riora ted after
Truman solemnly launched th e doc trine of th e Cold ~Iar . The anti-wor king-
of the d osed shop , and of any strike see king to establish thi s, as well as any
dass ideological campaign too k an anti-communist turn and escalated in
pr essure seeking to force an employer to recognize a union not certified by
virulence. It culminated with th e !Corean
th e N.L.R.B., or any refusal of collective barga ining.
fear and delation. The massive expulsion of Communist militants from th e

CIO-afliliated unions decisively weakened th e labou r movement and
(3) The act atte mpts to define th ose pro blems which should or sho uld
not form part of th e content of collective barga ining, and th e forms in
which thi s barga ining sho uld be pursued . Trade uni on s can be pro secu ted
for breach of contract , refusal to apply a co ntract , or a strike aimed against
th e terms of an agre ement before th at agre ement has expire d. Strikes
against th e unilat er al transform ati on of wor king co nditions by th e
~'Iar,
in a d imate of genera lized
bro ught th e CIO into d ose alignment with th e AFL in th e same nar ro wly
co rpo ratist attitude , with very limit ed objectives. This co rpo ratism
pr ogressively impo veri shed th e co ntent of collective barga ining itself, and
cut off working-d ass trade unionism from th e po litica l forces of th e liber al
petty bourgeoisie. The result was that th e organized labo ur movement was
employers are forbidden . This pr ovision is decisive . It leaves th e workers
abs ent or tailist when th e po litical struggles of th e 1960s got und er way,
disarmed in th e face of co nstant restructu ration of jobs, int ensificati on of
from th e campaign for th e civil rights of min oriti es, to th e fight against
output nor ms, and deskilling und er co ver of technical pro gress .
econo mic discr imination , th rou gh to th e battle to extend th e social

sec urity sys tem and th e mass revolt against th e war in Vietnam .
(4) The act pr ohibits union s from financially supporting any

organizations exce pt in tim es of nati on al electio ns. It deprives employees
of th e Feder al govern ment of th e right to strike.
The po litica l d imate of th e Cold ~'Iar and th e restri ctions imposed by th e

Taft-Hartle y Act were of enormous impo rt ance for th e stagnation of th e
~'Iorld
~Iar .
(S) Finally , th e act explicitly co nfers on th e Feder al govern ment th e

po wer to int er vene in social co nflicts which 'endanger th e nati onal
trade-uni on movement after th e Second
economy '. The definition of th e scope of thi s po wer reflects th e amb iguity
uni on mem ber s even fell from 36% of th e active non -farm po pulatio n in
of the employers ' pos ition. On th e one hand , th e employers were anxious to
' 945 to 28 % in ' 97 0 . More over , th e constraint involved in collective
have at th eir disposal th e institut ion alized force of repr ession of th e
barga ining, once it was institution alized , did mu ch to petrify th e labour

movement . Proced ural rules imposed a new rigidity on th e trade-uni on s,
Feder al sta te , to break large-scale strikes. On th e other hand , th ey were
" THE CA NA Ll ZAT IO N OF ECONOMI C CLA SS ST RUGGLE BY C
37 I 53
No subs ta ntia l
pr ogress in mem ber ship was achieved after ' 950 , and th e proportion of
38 I 53
- - - - - - - - ----{o - - - - - - - - - - - - - - - -
-'
(1
qualitatively redu cing th eir objectives, absorbing th e energies of th eir
and th e improvement of th eir working co nditions. But th e entire drift of th e
oflicials in pro blems of management , and limitin g th e horizon " f soc ial
class struggle in the United Sta tes since th e war has been to transfarm
co nflicts. The Taft-Hartley Act cod ified a co rpo rative un ioni sm , furmerly
practi sed only by cra ft workers, by creating th e po litico-legal relations ta
collective bargaining int o a battering-ram of th e emp loyers. It was th e
adapt it to th e mass trade unionism bro ught int o being by th e social

transform ati ons of For dism . This adapta tion was consolidated by the
recession of ' 953- 54, with its surplus pr od uction capacities, financial
difliculties aggravate d by th e new Eisenhower administra tion's
mer ger between th e " Id co rpo rative union centre of th e AFL and th e new
abando nment of th e cheap credit po licies of th e New Deal, and fall in th e

rate of pr ofit , th at showed th e emp loyers how great a transfarm ati on of
centre resulting from th e d ass struggles oft he ' 930S, th e cro, in ' 95 4-55 .
pr oduction co nditions was needed in order to relaunch th e accumulation

of capital in a susta ined fashion . Their reaction was to unl eash a genera l
(b) General fea/ ures 01 collective bargaining procedure. During th e war,

th e diree! inter vention of trade unions alongside fact ory managemen ts in
settling pro blems of work organization had been warmly encouraged. In
th ose indu stries where th e level of unionization was high , th er e resulted a
series of ru les that sha ped collective bargaining over working conditions.
These ru les often included restri ctions imposed on th e employers' powers
of dismissal. These co uld no longer be discr iminator y ; sub-contracting and
th e employment of tem po rar y sta ff were strictly limited in period s when
assa ult to red uce direct wage costs, which is th e only meaning of a rise in
pr oductivity within capitalist relations of pr od uction . This a bjective
req uired th e rap id genera lization of those transfarmat ions of th e tech nical
division of labour th at had matured in th e ' 930S and th e Second
~'Iorld
~'Iar;
in a ther words th e installat ion of assembly-line work, th e int roducti on

of multi-oper at ion al machine tool s making th e labour pr ocess more
flexi ble , th e mod ification of th e pattern ing and inter conn ect ion of
th e employ ment of th e firm's permanent sta ff was in danger. In period s of
pr oductive opera tions, and th eir segmenta tion and localization ta utilize
new callective means a f pr oduction and new far ms of energy (oil and
reduced activity, sys tems far sharing work amo ng th e regular employees
were jointly operated by management and trade-un ion s; dismissals co uld
electricity ). The capitalists were well aware that such a mutation in th e
only be made after tasks had been reallocated over a red uced working
technical division oflabour, whose aim was ta increase the rate of surplus-
week. Trade-union oflicials often far ced employ ers to noti fy plans far lay-
value, cauld in no way be th e pr od uct of a co mmon elfort. For th em th e

imper ative necessit y was ta eliminate th e regulation s govern ing work
offs in advance, as well as th e reasons far th ese and th e pr oced ure th at th ey

int ended to fallow, so th at th e workers co uld be co nsulted and be able to
organization that had been imposed by collective bargaining. Ta atta in thi s
make co unter-pro posals. Lay-offs were not to be used far a major shifting
of workers between jobs unil ater ally imposed by th e management to raise
output norms. Rights of seniority were in all circ umsta nces to be
pr otected . The uni on s also sought to win rights over th e allocation of
workers to jobs by int roducing pr omotion pr oced ures int o collective
bargaining. They tried to obtain pr ecise job descriptions in th e collective
co ntracts, with clauses far bidd ing th e management to change th ese
unilater ally during th e period far which th e co ntract was in far ce . Finally ,
th ey sought to esta blish a concerted regulation of work schedules and
overtime .
administra tive organization of firms, which impli ed th e need far a

co nfrontation with th e union s a ver th e co ntent of collective bargaining.
The fallowing were th e directions in which th e emp loyers sought ta a btain
th ese transfarmat ions.
(1) The far mulation of a verall wage po lic ies of long duration so as ta
deal with th e unions at th e highest level possible or co mpatible with th e
degree of centralization of capital.
(2) The development of pr ocedures of managerial contro l, fixing levels
of respo nsibility and far ming a framework in which overall wage po licy
co uld be strictly applied in all units of th e industrial co mplex affecte d .
Collective bargaining can thus have a very rich co ntent , and faster an
active trade-uni on life , when it is applied to th e orga nization of th e labour
pr ocess. It is th en a weapo n far th e workers in th eir struggle far security
" THE CANALlZAT IO N OF ECONOMI C CLASS ST RUGGLE BY C
a bjective , pr ofaund changes were needed in the managerial pr actices and
39 I 53
(3) The excl usion from collective bargaining of wor king co nditions, and
th e imposition of new rules gove rn ing th em by th e emplayers; th e strictes t
possible circumscription , in keep ing with th e Taft-Hartly Act, of trade-
40 I 53
- - - - - - - - ----{o - - - - - - - - - - - - - - - -
-'
(1
uni on right s to examine th ose pr ecesses vita l fur th e pr oducti on of surplus-
(e) The role of collective bargaining in the det'e1op ment of U' ages .
value; th e elabora tion of various pr ocedures of disciplinary sanction and

th e mu ltiplicati on of superv isory sta ffcharged with th eir applicatio n.
Colleetive bargaining still kept th e appea ra nee of deeentra lizatio n.
(4) The co mpensato ry development within th e framewark of collective
According to Feder al figur es, '5 0 ,0 0 0 wage contraets were made in 1961
(1 far eve ry 10 0 unioni zed workers). In actual faet , however , th ese
barga ining of incentive and profit -shar ing schemes, insurance funds against
contraets were depende nt on moo els fixed by keynot e negoti ations, which
th e irnmediat e financial co nsequences of dismissal, and pension funds fur
th en sprea d th rough th e industries in ques tion. Sorne 8.3 million workers
ret irement .
These objectives were imposed by th e emplayers after very acute
were covered by only ' 7 33 contraets, and 1.9 million by th e 9 most
co nflicts, bu! th ey co uld take advantage of th e po litico-ideological

development of th e tr ade-uni on leaderships consumated in th e fusion of
ero in ' 95 4- SS.
important contraets.
~'Ihatever
th e level of negoti ation esta blishing th e moo el contraet , thi s
th en bec omes a norm far th e entire industry ; it may be more or less
The content of collective bargaining thus

sh ifted fr om U' orking conditions to monetary gains fr om capitalist
production, and the fo rm of collectit'e bargaining fr om a decentralized
p attern ofdecision to an et'er more centralized pattern.
This development , without whieh th e regime of int ensive aecumulation
spee ific to For dism would be incomprehensible , was imposed in a series of
favourable to th e capitalists, but competition between th em ensures its
major struggles culminating in th e yea rs 1958- 61, whieh tcok th e farm of

test conflicts ending in th e signature of pilot contraets which were th en
charaeteristic feature of Fordism . Not only did wage contraets bee ome
rapidly genera lized.

The ro le of 'govern ment arb itra tion' was dee isive far th e outeome of
peri oos suflieiently lon g to confarm with th e planning hor izon of th e big
th e AFL and
th ese test confliets. The Taft-Hartley Aet gave th e Feder al govern ment a
genera lizatio n. This moo el and th e norm it contains only cover th e bas ic
wage and th e major sehemes far collective bonuses and pension funds.
At th e same tim e as it beeame centralized in far m and alte red in content ,
colleetive bargaining under went a further change th at contributed to th e
inflexibility of th e nominal wage whieh , as we have seen, was a
more and more unifarm and all-embrae ing, th ey were also exte nded to
corporations. The sum tot al of colleetive bargaining pr ocedures thus
whole spee trum of means of inter vention in social confliets, while leaving it
tended to make it an instrument far planning th e development of th e

working-d ass norm of consumption , adjusting th e bas ic wage
a bro ad lat itu de in th e exercise of its arb itra tion. Natura lly th is was
auto matically at certain fixed dates. By divor cing wage adjustments from
arb itra tion only in th e purely far mal sense of th e liter al procedu re
th e business cyd e , colleetive contraets exte nding far severa l yea rs made
ado pted. Effecti vely , sta te intervention meant suppo rt far th e employers, if
only because it broke th e trade unions' principIe weapon of aetio n at th e
th e expanded repr oo uetion of capital less sensitive to th e instability of th e
most deeisive moment in negoti ations. During th e peri oo of th e rise of

Fordism , th er e was no need far constant sta te int ervention. It was
suflieient far th e govern ment to chcose exemplary confliets whose
equivalence relationships of exehange resulting from th e transfarm ation of

proouet ion conditions. Now th at th ey could ineorporate int o capital
adva need a futu re wage movement known with a high degree of
outcome could not but set th e mooel far major see tors of th e economy .'<
pro babilit y , th e corporations sys tematieally int rooueed and exte nded th e
semi-auto matic labour pr ocess applied to lon g and sta ndardized
In th e ' 960s, however , th e Democra tic administra tions th en in power
proouet ion runs. Henee th e accelera ted fall in real social wage costs in th e
bega n to use th e Taft-Hartley Aet in a dual diree tion. On th e one hand , th ey
first half of th e ' 960s, and th e most powerful wave of investment in th e

whole history of capitalism o Henee also th e low sensitivity of capit al
instituted compulsory arb itra tion in certain industries, amounting to a de
fac to suppression of th e right to strike. On th e other hand , th ey sought to

establish a nat ion al wage policy by fixing genera l norm s of average wage
increases (wage guidelines ).
far mation to sho rt-te rm fluetuat ions in output and th e reeipr ocal role of
capital far mation in th e evening out of th ese fluetuati ons.
From th e point of view of th e pr oletariat , th ese lon g-term contraets
were extremely powerful instruments of exploitation . They left th e field
1 , THE CA NA Ll ZAT ION OF ECONOMI C CLA SS ST RUGGLE BY C
41 I 53
42 I 53
- - - - - - - - ----{o - - - - - - - - - - - - - - - -
-'
Ir" for a fercciou s int ensification o f c api!..li.! labour discipline in

production. In fixing lbe nominal basic wage, lhe long-tarm contraet
th e gro wth 0 1 th e nominal teferen"" ..age. Such an o ffi"" had previously

exi" ed o nly in tim e 01wat.
lAUeod itl ind ex atio n ro lbe casI af livmg, so lbat real ...ages d eteriorate<!
tb" more nllatio n accelere ted. Finally. lb.. "Pread Df schernes ror higher
d.. f..rred wagfl, dfligned to cornpl'ftS di r:t wal" inCl'!lo1!re5, meant _ u ....
!u.ve _n - tlu.t worl:ers ..._
a . Tbe D.l enllil... Uon o f Ih .. No m in a l Ref...... n l.'e ....' a ge in Ib e
Un l""" Sl al" " l1d Ih .. Lon 5'"Rull Movem .. nl o f Wases
oft<m \it....aUy robbed in th.. p,aym"nt of

N. sb""..! in Chaptfl" 1 how Ih. nominal Nfur,,noe "ge is formdly
penJ1OflS .
11 is not .urprmng, Ih<m, 1h.l1 lb<! cnstS of th.. c:olloct:lv.. b.rrgnmn
procedures engendered by Fordmn coiDcid..d ...th a blockage of ....unv..

iJUl'Plus-vilue.CoIIoct:I". bargallllDg.os.. structunl form now cont.omoo th.
d.. ~1'1Jgl. W1,hm .. hmooworl: ..h..,." the c.opttahsts could tili
adv.lll"g. of.uJ Ih poISIbJ!'t1fl of exp101tatlon mh..,...nt ro.lll orgnuz.otton
of lhe 1.lbouT procea centre<l OJI lb.. DWSS productIOn o s t ~
oommod!l,... BUI Iber" .ts 1lS<!fuIn..... for eapltilaccumu1atlon c;une lo;on
en d. JI -u ~ In .ts power 10 temedy th .. defiCl""cies of this type of lobour
procea oUld its in.lbibty 10 mer_ dtrect explOltatmll in productlon;ony
fuTtber . 0Il lhe OOIltr.lf)', lb. vo-U>I crins of work w-gan=tmn .ctu.olIy
thf... t9llll oolIec:tIO'e b.ir.'lllnl nd prometes
furth~r st.t~ lllt~rv~ntlOll lll
. XprUI ed u
.. lnnsfonn..! mon"'.rry v.a1u. oflbe r..le ofsurplus-v.a1u. , vi.

lh. <lqlUlion: J, _ ... ,11. ~,. This t.Lotionship lS lbe eHect on lbe fi..ld of
. xch.ang. ",LahOM of lb .. wuty of Ih<I d1lf<Ir<Inl .aspects of lbe ....ge ""LaI1on.

Th. n"l"I'O'. mBu<OnC& of lb . nI. of <IlCpioI1..hOll, synlbes:tzlIlg PI'<IY.ailmg
.cciiI oond1hOM of prodUet1O:!l, lS .m expr""",,Oll of lb e f.o.ct lhal lb .
nomin.ol rOO""ce ....g. dmves from lbe Cilpll.ilis! reLaI10n of

.ppropml1on. As f.o.r u lb. funet1O:!lIll , is con",,",e<!, .... "'ve '"""'" lhal thIS
is .. funet10n of lb. put m.agrntudes of lbe mOllel.rry express:iOll of
"OTbng hour... funetioo lhal '1S.1f ch.anges over l1me. ~ie can lberefore
wnle:
..., - ,. C"', ro "', ... . . .1. ..befe lb.. mte.......1s f ' , f - " .. form p.art of rhe
r'l1 lbe OOlltr.tCtll DeSOb.l.ted. ThIs reJect>on .."" itCCOmp;llllecl by
defim !JOl1 ot tbe Iunctioo l.

~ihal illbe I1gn,fic..nce
JPC'nUMowl ~fUI
freq ue nt t""ards rhe e nd o f rh..
r..lerellC& ..age , in tM uiJe o f an ex eb.ange reLat:1on, is rhi! obj<lct o f a
d<Oc~, puticuWrly ,n those industnes ..bere coUoct!O'e bariI.lllllll
proc.dur. of b rmatioll, in o tb.t W01"ds ,t IS di!n ved fro m a structur.a1 formo
proc.dur... b..d _mee! ltI<Xt b.Mmonious
Loel LU t.aU .. do..r Iook ..t tb. Sltu.atmn. Th. funct10n .. ri!presents tIwt
rhe fixllll
ot ".lelI.
I'rom 1!' oo..ards, ...".ke.. carn e inae.1Slll11y lo

.. b.ich
sr'"
lI>C)A
sopbis tlC.atecl (.utomobila,
ot t!lis exp ress1o n?
,,,,,lf. ItsI O'.a1u~ show rh
It shows lhat rhe nomJ.D..O.!
ffect of cb.ang"" DVi!r 11mi! LO tIwt
SI""I, and .. I<OCtric.a1 construct101:>.). These sporad.1c struggles " ..r..
proc.dur..
concerned W\tb iau..... hicb colloctl". bar.uning had noelected.
mon"!ar)' ..xpt<O#iou of .. "OTbnl hour. Th_
Th. f>r'l"ching tr.nsfonn.Itwns m work w-gan=l1On mlrodUC<ld by

lI'lO-I'OTdmn lll<OVlt.bly I "".n t..d . mo:hic:.o.l1on m colloct!ve bariI.llllllg.
Th. n... f1..xdh ty III lb. aT-atlWl1on of lb. Labour process c.m mili
cb.anges denol. tIwt
O'.an.ablhty of tb.. I"".J <lqUlv.J""1 ..b"" lb. tr.msrormal1On of lb.

con<hhOM of productwn r.ad.1cally cb.anges lb. ..bole s.1 of eqw v.a1..nce
c\.us<Os LO ..xch.ange. Th<O sen.es of l<lrIlpor.a1 mlerv.als d,,/ines lb.. ....y in
"OTbng con<htlOm' once . .Iin.n object of dec<lntr.ahzed neoluhon by
..hich lb. O'wbihty of 1M 1l1011<It.rry expr""",,on of .. worbng bour.ffucts
S<Onli.Ulonomous 1J'OIl~,
furt b.r
lb. ".g. ccntract, Th.. S<II'1~ d""""ds on Ibe "'r.mung procedure .md
d"".lopm""l of . mor... dO'.~ "OTk w-g nlZation. The typie.a1 respons<t

of lb. e.pil.list clan te th .. cri SIS of I'ord,sm , h""eO'er , "'s 1>oon dtr<lct
oonMq u""tlyen lb .. whoi<O S<It of del<llDl,n.ants of 1!Iisstructur.a1 form.

The Law by ..hich th .. nominal teferenCi! " ge LS forme<! 51""", lbal 1M
preesure on ... g
by SI.I. inl ervenl ion. The fct Ih1 Ihis ulhoril.ri.on
evolution ohhis O'ari.obl. may b<l1"i'lim lely describe<! by an econom..lric
det erminatjcn Of
g6 "U impos..d m Ihe Unile<! SIles by Repu blie.n
rel.lionship. bUI fim and foremos! il underlines Ihe cond,liollS of st.bi!ily
. dminist raticn ..hich u riO'..! in offic. mlending lo bndon Ihe direchO'...
for Ihil relaticnship, 11;'lIabl. only if ..age formalion is eHecled according
of ill Democr. 1;C predecesscr , only co nfirms the de pth of th e cr isis. The
lo . delermin.le prccedur e of COll""liO'e ba rgaining ..ith ela uses fixing Ihe

...r.. 01inl er O'al1 and a sufficiently rapid diffusion of madel co ntr ac ts. The
W\lhoul
Ih<lreby
blocbng
Ibe
Nixon Adminiltraticn MI up ntion! offiee eharge<! ..ith fixing norm s for
1 , T HE CANALlZ AT ION OF ECONOMIC ClASS STR UGGLE BY C
4 3 I 53
44 I 53
-'
(1
econometric relations th a! desc ribe th e evolutio n of th e nomin al refer ence

wage are give n a direction only by phases of th e accumulation precess th a!
Wo rld Wa r. Observations co nducted on th e bas is of a long-r un series of

nominal wage rates" permit th e co nclusion th at relatively pro tr acted
phases of rise or fall in nominal wages mat ch almost perfect1y th e phases of
are identified and characterized by historical analysis. '.

The subsla nce of th e econo metric relationship can be made more
th e cyclical movement of accumulatio n expressed by th e gross furmation
pr ecise . In effect, th e variatio n in th e mon et ar y expression of th e working

hour between two dates t and t' is estimated in th e fullowing way , as we
of fixed capital, fur th e who le period between , 860 and ' 9' 4. But thi s
tem po ral simulta neity in no way impli es th at th e two rhythms were one
already saw in Cha ple r
1:
Il1t.
~ ~ ~ ' I~
where " and Pare indices of th e
ave rage change in labour producti vit y and in th e genera l price level
between th e two da tes. The variation in th e rate " f surplus-va lue,
moreover , is given by th e inver se of th e variation in real social wage costs,
which involve nominal wages, pr ices and pr od uctivity . ~'Ie are th en led to
env isage a relationship in which th e variatio n in th e nominal reference
wage is a funct ion of th e staggered delays in th e variation of th e genera l
and th e same. In th e yea rs leadin g up to ' 9' 4, th e phase of decline in th e

cycle of nominal wages became less and less visible. In stead th er e was
simply stagnation or a slower rate of gro wth. After th e First ~'Iorld ~'Iar
th er e was a definite discr epancy between th e two . Gross fixed capital
furmation reached a peak in ' 926, nominal wages in ' 929.
~'Ie
can also observe over th e whole of thi s period an inver se

relationship between th e nominal wage ra te and th e rate of unemp loyment .
level of pri ces and average producti vit y . It is also possible to env isage an
auto-reg ressive relationship , with a delayed gro wth in th e ave rage
In a regime of pr edominant1y extensive accumulation , th e rate of
producti vit y ofl abo ur as th e independent variable.
fluctuates as a functi on of th e rate of accumulatio n and th e evolutio n of th e
In th e long run , relationships such as th ese would be illusory and

scientifically incorrect o A pertinent
interpret ati on
un em ploym ent is d ose ly tied to th e evolution of variable capital, which

organic co mpositio n of capital, in accordance with th e relationship
of quantita tive
established in our first chapter . So long as capitalism has not restr uctu red
movements must be far more mod est in its numer ical precision . But its
th eoreti cal impo rt ance is mu ch greate r. Since we have shown th at th e
th e mod e of co nsumptio n, in effect , th er e is very littl e roo m fur
reprod uction of th e wage relation is the kern el of th e law of capital
unprod ucti ve labour . The rate of unemp loyment varies as a direct result of
th e gro wth or decline in th e indu st rial res erve army. Falls in nominal wages
accumulation, th e different hist orical regimes of accumulation th at we
co mbined with sharp co ntractions in employment were th e ways in which
identifi ed , either pr edominant1y exte nsive or pr edominant1y int ensive , are

characterized by th e expression of th e wage relation in different structura l
th e division between pro fits and wages was re-established . The mor e bruta l
th e falls in nominal wages, th e sho rte r were th e phases in which
furms. The evolution of th e nominal wage and its real purchasing po wer, as
accumulation was bloc ked , and th e more far -reaching th e transfurm ati ons
functi on s of th e rhythm of accumulation, are necessaril y very different in

epochs when th e working-d ass mod e of co nsumption is not stabilized and
of th e co nditions of pr od uction th at red ressed th e balance between pro fits

and wages and co nsequent1y pro vided th e fuund ations fur a new phase of
in epochs when th e norm of social co nsumption is rising, when
accumulatio n. In its wake, thi s phase in turn led to a rise in nominal wages
accumulation cycles are pro nounced and when accumulation is co ntinuous
which permitted an exte nsion ofconsumptio n . The pos itio n of th e workers
with permanent obsolescence, when th e wor king dass is in process of
in wage negoti ati on s thus varied very great1y according to th e phase of th e
furmatio n and when collective barga ining is already codified . It is possible
accumulation cycle, to a po int where th eir trade-uni on organizations
to co ntrast th e regulation of wages unde r th e law of accumulatio n th at
th emselves were ephemera l. The nominal wage was co nsequent1y a very
pr eceded th e First ~'Iorld ~'Iar and in th e expansionary phase of Fordism

after th e Second ~'Iorld ~Iar . The inter -war period is more amb iguo us in thi s
unst able de riva tive of th e value ofl aoour-power (the functi on ,u fluctuati ng
a great dea l), which expr essed th e bas ic co nditions of repr od uction of th e
respect , as a transiti on al phase between two regimes of accumulatio n.
wage-earn ing dass. In thi s way, eve n th ou gh relative surplus-va lue was not
(a) The dwelopment o/ nomin al w ages and real w ages be/ ore the Second
th e mot or of capital furmation un der th e regime of pr edominant1y

exte nsive accumulation , th e division between wages and pro fit still
2, THE DETERM INAT IDN DF THE NOM INA L REFERENCE W\.G E
45 I 53
4 6 I 53
- - - - - - - - ----(o . - - - - - - - - - - - - - -
-'
(1
fluetuat ed sharply while real social wage costs gre w only very slowly.
Changes in th e value of labour-po wer were linked in particular to th e
After th e Second ~'Iorld ~'Iar, th e relationships we have just outlined

between nominal wages, real wages, pr ices, and th e long-term rate of
transfurm ati on of producti on co nditions in agriculture and in th ose

indu st ries such as textiles and leather th a! were amo ng th e frs! to benefit
accumulation
un der went
from th e mechani zati on of labo ur th a! followed th e Civil ~Iar . The pr ices of
regulation of th e sys tem.
far -reaching
changes.
These
changes
und ou btedly reveal new tendencies in th e mod aliti es of th e overall
means of co nsumption un der went a lon g decline th ro ugh to 1896, th en
During th e zenith of Fordism , before th e crisis of work organization
turning and rising slowly up to ' 9' 4. The long-r un movement of th ese
pr ices depe nd ed very littl e on th e rhythm of accumulation by which heavy
seriously disrupted th e overall accumulation pr ocess, th e following patte rn

obtained :
indu st ry was built up in success ive waves. This is why th e real wage rate ,
unli ke th e nominal rate , had littl e co nnection with th e rh ythm of
accumulatio n. Its long-term tendency depend ed esse ntially on th at of th e
pr ices of consumer goods.
The following data trace th e annual rate of gro wth of real wages:
Phase ofl ong-term fall in pr ices (. 865-96) : ' .3%
Re la bt-< d',."cbon of th<

m Ot-<m<nt of accumulab'on
""dech'n<". a cce lerab'on
At-<rag <annua l
groui th rate ( li!
Ba . ic n omina l h ourly waz e
o,
In dex of consu m er pr ice.
~. O
Real weekly wa z e
~.~
....
' 970
,.
,.
dech'n<
L'
o,
- ' 5
Phase ofl ong-term rise in pr ices (. 896 - '9 ' 5): 0 .8%
~'Iithin th ese lon g-ru n tendencies th er e was certainly a modulat ion in th e
The co nfiguration of the previous epoch was now co mpletely reversed . The
real wage rate with th e rh ythm of accumulation, since th e nominal rate
evolutio n of th e nominal wage rate no longer reflected in any way th e
fluctuat ed closely together with it . But th e modulat ion in th e real wage rate
was greatly red uced due to th e fall in market pr ices below th e long-r un
changing rhythms of accumulation. Consumer pr ices, which had

pr eviou sly oscillated around the lon g-run tendency of th e rate of
trend of pr ices when th e rate of accumulation dipp ed , and th e rise above

thi s trend when th e rate accelera ted. In pr actice th e real wage rate
accumulation , now moved in an opposite direction . Real wages, formerly

inflexi ble and pro ne to rise in phases when accumulation dipped , now
increased th roughout , but more so in phases oflow accumulation th an in
moved in th e same direction as accumulation. Their absolute fall in th e
those of high accumulation. The paradox here is only appare nt. The
situation of th e workers might appea r to impro ve when th e regular
second half of th e ' 960s was a symptom of th e onset of th e organic crisis of

Fordism which henceforwar d threat ened th e hist orically established norm
functi oning of th e capitalist mod e of prod uction is jammed . But thi s illusion
is dispe lled when we remember th at th e wage relation affects th e entire
of soc ial co nsumption .

All th ese phenomena expr ess th e pr edominance of relative surplus-
labour force of society. The rise in unemp loyment pr oduced by sharp
value.
co ntractions in accumulation largely cancelled out th e small impro vement
central to th e regime of pr edominantly int ensive accumulation. Changing

trends in real social wage costs now become th e essential de te rminant of
in th e purchasing po wer of those actually employed , all th e more so since

th e tem po rar y decline in working hours co uld itself more th an offset th e
~'Ie
showed in Chapter how a decline in real social wage costs was
th e ups and do wns of accumulation.
~'Ihen
exte nsive accumulation was
increase in pur chasing po wer of th e bas ic hourly wage . In th e Creat
pr edom inant , real social wage costs were mor e stable. The active ro le in
Depression , for example , th e pu rchasing po wer of th e hourl y wage

increased by an ave rage of ~ % per yea r. But wor king hours fell at an annual
th e changing pace of accumulation was rather played by th e fluct uati on s in

th e indust rial reserve army. The fundamental pattern in Fordism see ms to
rate of 4%. Thus th e purchasing po wer of tot al wages fell by 35%in 4 yea rs
be th at th e breaks in th e rhythm of accumulation are not governed chiefly
un der th e crushing effect of th e decline in indu st rial employ ment.
by th e fluct uat ions in th e nom inal wage rate and th e rate of unemp loyment ,
(b) The tren ds in nomin al and real w ages since the Second Wo rld Wa r.
but rather by th ose in th e genera l price level , or more bas ically by th e

co nditions of formation of th e genera l eq uivalent , in other words th e
2. THE DETERM INAT IDN DF THE NOM INA L REFERENCE W\.G E
47 I 53
48 I
53
- - - - - - - - ----(o . - - - - - - - - - - - - - -
-'
(1
evo lution over tim e of the mon et ar y expression of the working hour . Given
The inh er ent un evenness in th e development of th e two de partments
a genera l tendency fur th e value of money to fall, modern capitalism
thus ass umes a furm th at is characteristic of the regime of intensive
exhibits an acce!erated rise in p riees in those p hases in wh ich real social

w age costs are stabilized, l.e. in p hases in wh ich accumulatio n relati vely
declines.
Under th e regime of int ensive accumulatio n, th e radical changes in th e
co nditions of product ion roo te d in th e transform at ion of th e means of
pr od uction and co nsequently in relationships int ernal to Department I are
subse quently or iente d towar ds th e product ion of means of co nsumption .
~'Ie have see n th a! th e ba.ic interaction between th e two departments was
effecte d by th e genera lization of a labour pr ecess which on th e one hand
fragmented individu al tasks and created a collective worker , while on the
accumulation. The revolutionization of th e co nditions of producti on
other hand it co rrelatively gave rise to th e furmation and develop ment of a

norm of secial co nsumption structure d by th e mass pr od uction of
sta nda rdized co mmod ities. This int er act ion is th er efure governed by
relative surplus-va lue. A permanent revolutionization of th e pr od uctive
furces in Department I is th e condition fur lowering th e value of labour-
creates a permanent inst abilit y in th e equivalence relations of exc hange

th rough which links are esta blished between th e compo nent parts of secial
capital. But thi s inst abilit y operates un der th e co ntinuity of an overall
gro wth in th e norm of social co nsumption , in other words under the
constraint 01the injlexibility 01the nom inal relerence w age. From now on ,
th e co ntradictory furces th at both promot e th e un even development of
Department I and co unter thi s development int er act in such a way th at th e
overall value relations defined in Cha pter 1 develop in an un am biguou s
direction over tim e . The genera l characteristics of thi s pr ecess are as
fullows:
(1) The obsolescence of fixed capital investments bec omes genera lized
and permanent , as we have shown in Cha pter 1. Renewal of fixed capital is
th e bas is fur transfurm ati on s of the pr od uction pr ecess. Integrat ed int o
po wer. This dec rease must be suflicient1y rapid , and co nsequent1y th e
investment plans as now a mod alit y of capitalist accumulation,

obsolescence is still sanctio ned by th e law of exc hange equivalence as a
mod e of co nsumption must be transfurm ed suflicient1y quick1y in th e
loss in value. But since a permanent devalorization of capital can be
direction of a diversified range of sta nda rdized commod ities structure d by

th e co nsumption precess, fur accumulatio n in Department I to be able to
pr ed icted pro babilistically , it is incorpo rat ed int o th e tot al gross pro fit in
th e furm of a pro vision fur th e renewal of th e co nditions of pr od uction . The
susta in such a transfurm at ion of th e furces of pr od uction .
more th at an ante rio r obsolescence in Department I takes effect in
These infrastructural precesses operate un der th e co nstraint of
Department Ir and precipit at es a rise in th e norm of co nsumption th er e ,
capitalist appropriation, and beto ken th e exte nsion and reinfur cement of
th e more it must be int ensified so th at th e rate of increase in relative

surplus-va lue makes up fur th e accelera ted social loss of value. In thi s
th e co nstraint of accumulation itself. They operate th er efure in producti on

pr ecesses rende red auto no mo us from eac h other by capitalist ownership ,
whose int er act ion is effecte d only a posteriori by th e genera l circ ulation of
co mmod ities. As we have see n, thi s series of exchanges is ordered by th e
maintenance cyd e of social labour-po wer. It is thus composed of relations
int erconnect ion , th e un even development of Department I is manifest ed in

an increase in th e devalor ization of capital that is more rapid th an th e rise
in relative surplus-va lue. The result is a ra te of gro wth of pro visions fur
amo rtization in gross profits th at accelera tes while th e fall in secial wage
between th e two de partments th at are th e more dense ly woven , th e more
costs slows down . '7 The value co mposition of capital thus tends to develop
th e wage-earn ing dass is exte nd ed and unified , and th e more irrever sible is
in th e direction of a relative expansion of co nstant capital. These
th e norm of social co nsumption . The latter must co nsist of a mass of

exchange-value in mon ey gro wing with th e greatest possible regularity ,
phenomena are pr od uced as soo n as th e transfurm ati on s of th e labour

precess which stimulate obsolescence but are non etheless pursued
and possess a co ntent of use-values rapidly developing in such a way th at
according to th e same organizational plan become incapable of pr eventing
th e product ion of individu al co mmod ities in Department Ir incorpo rat es
th e rising dass struggle in pr od uction .

(2) The devalorization of capital expresses th e inst ability of equivalence
th e new prod uctive furces created in Department I , and th er eby

precipit at es a fall in real social wage costs.
2. THE DETERM INAT IDN DF THE NOM INAL REFERENCE W\.G E
4 9 I 53
relations in exc hange. If it were experienced by individu al capitals in th eir
50 I 53
- - - - - - - - - - - - - - <0 1 - - - - - - - - - - - - - -
-'
(1
cycles of expanded repr od uction, it would take the furm " f unsold
co rnmod ities. The mon et ar y co nstraint of exchange would be expressed in
a sharp fal! in pr ices, which would lead to th e contraction of accumulation
inflexi bilit y of th e nominal reference wage impli ed by th e main tenance of

th e norm of social co nsumption plays a dec isive role .
~'Ie
have see n th at
in Department r , th en to massive un em pla yrnent and a fal! in nominal
thi s inflexi bilit y is ass ure d by th e structura l furm of collective bargaining.

The accelera ted gro wth in th e mon et ar y expression of the working hour
wages in Department II . This is th e precess th a! can be observed un der th e
reacts on th e rise in mon et ar y wages in a pr ecess th at may take th e furm of
regime " f exte nsive accumulation. Bu! when th e devalorizatio n " f capital is
a lagged , sliding sca le of payments. Monetary wages gro w suflicient1y
incor po rated int o th e value camposilion " f th e tot al capital as a permanent
quick1y to prevent a sho rtfall in eifective de mand , but suflicient1y slowly

fur th eir rate of gro wth to remain less th an that of th e pr ovisions fur
mod alit y of accumulation, cornmociities are actually soldo There seems no!
to be any mon et ar y sanction fur th e loss of value.
~'Ie
are thus faced with
th e fullowing co ntradiction : exchange takes place , so equivalence

relationships are respected ; yet capital is permanent1y de valor ized , so
th er e is necessaril y a non -equi valence , a social loss of value. There is only
one way of escaping from thi s co ntradiction , and thi s is by the general
equivalent itself losing value. This is entire ly possible, moreover , because

th e genera l equivalent, as we indicated in Cha pte r 1 and will de monstr ate in
Cha pter 6, is furmed in th e social pr ecess of th e circ ulation of capital M - CM . It is involved in every sys tem of equivalence relationships, but it is
amo rtization incorpo rated in overall gross profits. The pr eservation of th e

gross division between pro fits and wages can thus susta in obsolescence and
accelera te th e whole precess. Capita l furmation doos not collapse ,
th er efure , it simply slows down . The rise in nominal wages accelera tes, but
th at of th e genera l price level accelera tes more quick1y, with th e result th at
real wages gro w more and more slowly and eve ntually decline , as th e
above table has shown.
~'Ie
are now on th e th reshold of an analysis of th e pr ecess of inflation .
But th er e is a further task ahead th at has first to be acq uitted. To study thi s
co nstant1y reconstituted over tim e as th e sys te m evolves. The mod alit y of
pr ecess in co ncrete de ta il and determine its limit s, it is essential to
capital devalor ization inh er ent in th e regime of int ensive accumulation

leads to a mod e of furmation of th e genera l eq uivalent which is expressed
un der stand th e precise characteristics of th e mon et ar y sys tem th at give
in a weakening 01commodity circulation." This happens because mon ey
such a flexi bilit y to th e repr oduction of the genera l equivalent at th e pr ice

of actually weakening commod ity circulation . This is only possible by a
capital accelera tes, as th e co nsequence of a dete rior ation in th e co nditions
careful study of cre dit and th e financing of capitalist accumulatio n on th e

basis of th e genera l laws and structura l co nditions presented in thi s first
of intensive accumulation, th e greate r th e accelera tion in th e loss of
part of th e boo k. The second part will th er efure be devote d to thi s study.
abso rbs and diffuses th e loss in value. The more th e devalor ization of
mon et ar y value th at is necessar y fur exchange to co ntinue , which in turn

indu ces an accelera ted gro wth in th e mon et ar y expression of th e working
hour . This weakening of commod ity circulation reveals a more genera l
crisis, altho ugh one indu ced by th e crisis in th e repr od uction of th e wage
relation ; a crisis of co mmod ity equivalence as th e furm of social unity of all
pr od uctive activities. It is in no way surprising, th er efure , th at inflat ion
leads to a genera l disarray in pri vate econo mic calculation , since thi s
calculation is based on th e social validity of co mpatible values, in other
words on th e rigour of the mon et ar y sanction.
r o; . n ..' . n u l , . f . lfo,h
s,1m;!', L 'Ana ly ma,ro-',onom'ou. dos
m.n n. . ..' -Ko.n.. n h . n. , ... B.

, '. nus, PH " , ' 97 ,.
In 1., mm ",. n ' "., 1 . " " , P,,'n.'h ' .n n" .,.m ,. " lfo,h.. ..m.n
. , ... " ' 1 . mh..l . h ' u. " , ' 1 , n ' 1 u m' , . f . ' ".u' " , ' u m. s .. 'T1 . E<on. m' " . f
Elfo, h .. D.m.n. ', 'n ,;",,.,,h an d I n,o... D'stn'bu"'on; Eays in E, onom', 111'0,," , C. m" ' .'"
' 97 0 .
s .. 'n ' H h,u lH 'B...m , ., <on..mm . h .n', " . 1 num' " . fL aP. n"" " . , n, ' 975; M.
Gu n J.u m., Lo ,apltal .. IDn doubl., PH" , ' 975; , . Bn., mH., Lo ", s"'" dos obj." , PH" ,
(3) At thi s po int we can gras p th e organic unity of mod ern capitalism oIn
order fur accumulation to co ntinue despite th e dete rior ation in its
co nditions, it is necessar y fur the genera l eifect of th e devalorization of
capital on th e declining value of mon ey to recur sponta neo usly. Her e th e
2. THE DETERM INAT IDN DF THE NOM INAL REFERENCE W\.G E
51 I 53
' On '1', ....nh. l m', ... " . Gu n.u, C"apltaU"". " mod. d. "", PH" , ' 97' .
L , du n. H. lfon ' " " L. ID"'" do< dos'g n, PH" , ' 976.
'Blu.-c.ll H Blu...n '1. " m m' l. Lm.', Po"",", , 'un. ' 970.
r o; '1. " l n l m.n' . f u <ism 'n '1. fo, m. h . n . f . 'J.,' . u' -." I" H " . n. '1.
52 I 53
---------~o)---------------
-'
(1
Hm h
fu,"
. f ' 1 . d . ;1-, ; , 1" m m on', ... in puh,u lu P. Bu. n . n o P. S,.." . ,
Monop o/y Cap...Umo, N." Yo", , . 65. T1", u l>. m", ",.nt "".. b. ",j,,,1 . "nomi , t>.
Vu ;o u , " h , l.. in R.di,.1 P. ."'"'"...., 0" ,h. E,onom', Ch,'. of Mo" op o'" Capit.Usm, URPE,
' 975, ...1" , ' 1 '1fu d fth . ,,',;, on " . mo n , ,.u n, . ...1 n o m mon h ...
-s.. '1..... n M I. ... b.
C. Bnd.lot, R. E" "l. t
. noJ. '''l.m.'',L. po"" bo"",.o's'.,
P ui' , ' 97 3.
r o; .n ..t. n " h ,.u f 'hum.n "
. ".1', ... S. D."I
n o H. Gin h., 'Th. P,,'.m " , ' 1
Hum.n C. pi.. l. A >luxan " , h , . u .', Am.""." E,onom', R..i

S.. r.F. p,..n . noR.A. 01. " ",I, Ro,ulaoo.
,h.
, M , ,.,, .
P oo r , Lon d.n, ' 9" .
,.m.. '1",.
" r o; . n in' " . " hhon . f ' 1 . " ' "J.h on in tm n f
... G. 'hu.k,
! . ""du,""o" " " Capital d. K. Marx , Pui' , " 75.

o
P" . <ffu. n ' Mum ' . i. " ,.n ,hi, . uo>" . n , ... N. P.uJ.n" ..,Poh.',.IPo... . .nJ
el.ss, L.n n , NLB, " 74; P. H

, . pit. hsf<, Pui' , " 7'; S. B'unh.ff, Et
So,'.1
" Poh.,ou , ono..'ou 1 pl.mfi,.hon . n "';g'm.

e.pit.l, Pui' , ' 976.
, T" . "".m o" , "".. u . D.C. B on . J.T. Dun l , L. bor . nJ
.h.
Am. "". n eo....un..,.,
' 970; on . L. Lit " ..., 111.Am. "". nL . borMo,.m. n., En ,l. " ... Cli ff>, , . k
~
Th...
mdu
m ' u n".n.
m'.
" n flid,
mmm"
" ..1,
umom.nt>,
l. " m m uni " . n " . " .. on . m..' ,"""in " <!u' in , 'h. fi m u if ' 958 _60.
, 1h... o" . m. " . , . 01, , u , h o . , ,,.<!u,, , . Fu n " in m , u " d. 'l.' lu". n . o> ..J.i,.,
. n Fu n " ou " u n
.0> . m,' m , ' ' ' ' on n 'o>', R ..u , ono..,ou., Jon u u "
' 97 , .
E.H. Ph. l. , B""n on . M.H. B""n . ,A e.nm", ofr .y, 1" . , it .

, F" o ,.,j.....mmo".n . f it> l m.nt> in 'h " 0.' ' <>6'- 75, ' " M. A, li . ..o,
.... n u " infh " .n', in E, ono..'." S'."SOou" A. , ,j ' 976.
, s .. s . B, u n h . ff,Et.... e.pit.l, 1" . , it .
2 . THE DETERM INAT ION OF THE NOM INAL REFERENCE W\. GE
53 153
---------~o)---------------
Part Two
The
Transformations of
Inter-capitalist
Relations:
The Laws of
Competition
PA RT T WO: THE T RANSFORMATI ONS OF INTER-CAPITALl ST
1 I 1
---------~o)--------------
-'
(1
el
" THEOR'r OF CAPI TALIST REGULATION
capital accumulation in gen..ral giv..s ris.. to a ten dency towards

ceneraluatee wilbin tb" ~ lItol101UOUS individlU1 c~pit.Is _ ~ t"n<!flICy
by d~"lopmi an
aM lysir of lhe condi!ions of reproduction of Ih. "age relation . By
alhering togelher lhe threads of lhi. analr ris, we ha" e already arriv&<! al
whicb iI m no w~y r"iu1or or bomog..n"Ola, but oper~t ... r~tber thr'OIIgh

VIOl"n! j'l!l"b lh.al rearr~g.. th.. 1mb betw_ oaprlm. en lb" otb"r hend,
.." shall stu dy the M lur.. of th..... linu th"mselves-. Ju st ~s th.. wag"
r..lation d..v..le pe by way of tb.. creation of structural forms tbat ..xpand
into collectiv.. bargaining,'" th.. oen rralzancn of capital cr"il'" structural
~ by whicb co;Wtions oi ""p1tais ...... formad . Tb<!S& ....e th.. p.lnt
corporeticn and lb" fi..n.incia.I group. Insigh l mIo lb" functonmg of lb_
struetuul fornu will ~llow us to gusp concret"ly tb. Mtur.. of c~pil~list
control of property.
C<'min ov"r~ r<!SU.lts illumino.ting th.. CaU5eS of Ih.. or.mic crisis of

contempor.ory c.ilpltalism "li d lb . rtructur.ol COlldltions of in&otioc>.
Ch.lpler 5 111ld i... !h.. co rnpeti tion of oapil.Is n ~ Pl"<>OeSS. Ow- finl lUlo
wtll be .lII ">:pOSItlon of tbe m.uw'l!l" in whicb th.. g""",aI =~t oi
~". now n~ to .&dv~ m""h furth"f Ul out concrete

coneeptualiaatjon of Ih_ phenomena. Te do so , We mus! lake nlo eeccunt
a dimension of capitalism which did no! appear in OUt the ot"ti cal analysi.
o f th...ag.. reh ncn. This is th.. facr tlLat capital i.s putition.d by its very
Gil ptW ~uLooonb6.us on
indiYidu.al C~p1ta1s . Tlwi wtlll"id lIS lo d"fin"

tbe concept of lb" g"""u l ute of profit. Tb.. M x1 lasl: wtll be to show bow
fragment ed individual capitals ar.. valor izad und..r tb" constraint of tbe
g..neral rat.. of pro fit. This pro blern d ern;meis the mtroducncn of lh"
"'"tur. inlo dtstmct ;md lepMate c.o",t.~ th.ot ~ centres of mdlvidlUl
concept oi ind1Utliol br ~ncb,.lIId INeis10 lbe Lo.... of pnce funn.o11On . en
this ~ of lb. book wlJ de.l! Wllh lb.. lo. . of rom~t>oll. Up till l>OW
ha_ .wdt<!d Ih. i ..n..ral Lo.. o captw
w"
.lCCUmuU.tlOD.
!h.. ba.JiI o f theM resul ll, "" sha.lI lh" n be ~ble lo ul: how tM r..Whioning
of tb.. bnb betw_ c~pruls IIlb]ectoed to c~p1t~bsr Ci!I1tr~bz.l1ion interlff...
..ith th.. la..s of pric.. formation. Tbis analyslS ..mopen th.. ..ay to an
d~ll, au tOflOlnOUS trom th. st.andpomt o U!W vnonuhon. The

second p.ort of OUt WOtl: will thetefore be coll cel n &<! ""Ih Ihe
tra nsformation of inter-capitalist r..latic n . In no way, hO"'"" ..r , can lhi.
aM1r.iJ be simply [uxtaposed to th.at of th" w~g" ""tatio n. R"tations
bi!tw-.n ~utonomous ""p1uls, in f.let, ...... reLotlons of eompetltion, whOSi!
und..rstanding o f lb.. actu al price syst"l1lI thal obtain in tb.. Unitoed St~l ...,
on whicb w" sha.lI v"nture ~ fuw teIllMb.
conNpl "" now h.ave lO constr\lCt. BlIl "" en J.l.y nghl ~w~y lh.al
~utonomous c~p1t~1s ~re in <:ompi!t1t1on b<.c~\lSOt th"y ~ll h~v .. th"
~ttributes of capital in general, i.e. tbe y are all constitut..d by tb.. wage
relation. 11 is correel tber" for.. to uy th.at il '" by way o f competitio n lha!
Th.. dev"lopments ot c..pt.... 4 and 5 wtll ..n.o.ble lIS to fttablish tb"

ccndmcns fOr lb.. fuuncmg of C~ p1t.ilis! ~CC'UDluLo11On. 11 wtll tb..n bi!
possibl.. lo r..tum in Chapler 6 lo lhe basic probl..m ..hich w.. ....r.. only
abl.. to tt eat in a v..ry abetract way m th.. fitst part o f th.. boo k: th.. law o f
th<!Se ""pit.Is el<J>On "nce tb" consl,..inl of th.. Low of ~CC'UDluLolion.

Conv..rsely, this Lott er iI.xpressed lhro ugh l~ la.... o f comptlltlon. Tlwi '"
wby $tUdy of lb" Lo.... of comptl111On iI lb" mos! concr"l" ~5J>"CT of ~
gen..ral thoory of capitalist regulation. N.. sball pureue tbis study in tbe
following manner .
money funn.otion. N" sha.lI mvesttg.ole th.. dyu.omic of credtl on lbe ba.JiI oi
th" COIldttions for lh" wncmg ot Ciprt.ilis! .ccumuLooon. Ther...ut..r We
sh.a.ll prOC<!o'!d te ..xplor. lbe bnl: betw+en money ~nd credrt, and to
demonstrate that lh" d..m~t ..r;~hl.llion of money involvQ ~ structural
form necessary fot th.. preservation afth.. unity af the natia nal curr..ncy: a
centrali:elem
of Oll1" study. ~'f" sh.all _ kc to show how 1M COlllndtct1ons oi tb.. Lo.. of
c~prl~1 ~ceumlll~lion id..nlifioed in lhe first pert of lhis boo k and embo(hoed
in th.. stt uctural conditia ns of infiation condens.. and explade m th.. fot m
c..pli!t 4 invi!Sllg:~t<lS tb" c:on~tr~11On oi c.opil,] , m olbi!t words the

mod.. ott eor.o.mz.loon ot ""pr t..t. in comptl,tlo n. 11 UW yses lM ob~ve
cond1llons of m~t:tfication W11hm tbe C~ p1t.ilis! cLoss. Tb.. ~nolI)'S1s
compri.... t..o alp..cts. en th.. on.. hand We int..nd to inv..stigat.. ho..
THlS "" ~ Of TM: 80()l{ -
I I 1
",
-'
(1
of financial erises. This final ste p will enable us to explain th e phenomenon

of inflat ion and to emphas ize th e originality of contemporary inflat ion as an
expression of th e organic crisis of Fordism.
THIS PART OF THE SOOK -
3I 3
- - - - - - - - - ---j0 > - - - - - - - - - - - - - -
(1
Q.
A THEOR\' OF CA ~ I TA lIST RE GULATION
ccndrtions of . " i.t.nCll o f tb . ..age... armng elas. ..hich form the co ntent of
c.pital accumulanon. Tb. nu t . tep, o n the bui. o f the va loriz.otion o f
-l
The Concentration and

Centralization of Capital
aueonomous c..pital.l, i.I te demon.tra t.. the decisive inf!uen "" o f th .

/iMncing of accumuLition on tb", pl'<lC<'SS ofcon""ntratio n itself.
l . Thll Conc.n l r. lion . nd C.n l r. llza li o n o f I nd ustrial c... p it..1

Study of th. C'OnC\llltntion of Clpitll1 is IDlld" more drliicult by lb., frequ.,nt
confUJion
l . T bf' D... n tuc n o f Co nc... n lral ion a u d its D... t ... runu aut s
OVIlT
the C'OnCllpt of ..utonomous or rndtvtdu.al Clpltll1.
Ah
individu.al e..pitll1 is nllithllT" thing, nor peSSo Ion of. thing. SIn"" .my
individu.al Clpltll1 is WIdoer tb", d<>t<>rmilllltlon of lb" socwl Clpltll1 .md
d..mllOll of Clpltoll ID ll~oer.ll, or socW c.oplt.J. To ""1 th.ot tbere .....
d\lllvllS from the .... gil NLition, ,t follows th.ot It is ""ntr<> of dIsposal OVIlT
.. Cll"CU1.>tiOh flow ..hose form is th.ot of <:IT"CU1.u proc<!'SS of d",nga ID lbll
indl'ltdu.ol COOplt.u. mll.UlS tw.t lhe productlon of surplus-value tlkes pLoC'<l
form of ..ll1u
lb. indmd1Ulu.lt1Oll of c.ilpluls is .Ir...dy unpbcrtly cont.omOO in th ..
., poinQ lhit ;,re dlStlnet ..nd RpMat e from tb .. standpomt of
Trull, tm. pI"OCIla oembuC\lS
prodUctlOD ID
lbe strict
,..,nse. But lbll
"ppropri.IbO!l , lA. oftb ..billty lO control th .. forces uf product>on ""el lo
int\llllty 01 tb indlvidulll Clpltll1 pr<>SllJ>llOS"" eff<>ctl.." control of ;o]] lbose
dtspoM atibe producu oI.xi.l1 Libour. Th1s .. lbe cas<! .he" lbe products
ot Lobour MI IOId .u oommochtles. for lben, ID eff..ct, lb e forNos of
prndlXttOll .... !r..gmenled and productior:l prtX."<'SS'3S are not cocrdm.otecl,
functlOlill .. hicb IDllU ....lonutiOll .. J>"r=ent P'"""""" . This is .. by lbe
"'lh lb. r.wt tb../.l 1M lOCi.lI c lluKter a f ilie procl ucts is expres:s..d onIy
n pOffmori, ID 1M r.. l,ttolll of nclw.nge. It fOlIows from thIs th.ot lb.
indIvidu.ol u pluis u. cw.n ct eru:ed by lb bsene-e u f" =mmon pl..o.n 10.
vdoru.ottoll, ch.! th~ slatld in mutual 0PposIt1011 masmuch "" NCh_b;
[o ~ 1M lOCi.lI chu~"t of lb.. J...bour und....u control, cm wmc,h 'u

0Wll...~tion ,hus d~ds, .al Ihe exp~ of th.. oth..rs .and that th..,
~ onJy ccnnected tog~her by lh..... insertwn mIo
th.. ll,m..r.a.i <:1I'CUlo.tion
ofcolllll1Od>MlI.
!bis demncn of lhe U1<Lmu.alwtwn of th.. SOCLa1 capital Ius th.
.ldunug. of bemg NLitr... to tb ", C'Ondltlons of d"V""lopm"nt of tb.. lo,..,....
of prodw:tion. Il hu notbing in COmInOn Wltb tb.. '.tomictty' oftb.. tb<lOry
of g<mllul <!qu,bbrium. Tbll Li.. of c.plt.l . cC11nIllLotlon st.mps tb
individ""li1.ltion of ..utonomous e..pit .ls Wlth . g"h<>ul tendency towuds
ccncentr..tion, Tbll con/iguution of . ut on om ollS c. pit.ls ch.ong<lS
pbellOlll~OIl 01 OOIlC\llltr ..tiolI m"oIves more
!han lbe parti;oI st. tls!x's
dllViMd l O mNlUTI ,l . eo"rI tr 0110" rs rh expa....'o" o/o ...".....hip o,tI" a

prOn o/,alorVario".
IJ th.is tMoor. ticll1 lI'attmg porn t lS rorgo tten, lben ,t is lmposs!bt.e to
interprllt th<t sutistie&l da t.. coh..r.mt1y. On lb.. contrary, lb..... will tbIln
confuct ...tb OM ..no tb\ll'. IJ o nly lb.. labour P'"""""" lStaken m to ..,.,.,unt,
tbIln Ilmph.uis will bU ou tb. ~ In SI%'!! of faetona . t e-ertain tun....
and in
CIlIUm
indUJtriIll. But th.. tr.msform.tIons of lb., Lobour
proc<lSS
thlll1UlvllS .1CpIlri1lflC't .. dulll InOV<om<mt of segm"""ution .md inl.,gntlOn.

At .. dtfflll"<mt moment m tb d.,v..lopm<mt of lb., productI..., lo,..,...., lbll
SolI11Il individual e..ptll1 =y be..bJ. to ~ lb., scll1., ofIls ...Ionut1On
NUUVIl to otbllTS ..tU1Il ott.m::mg lis Lobour process rn ""na of
dIsporMd unill, wilb tbll t oHUlt th.ot tb.. SI%'!! of lis fucton "", d<!Chn"", in
Nution te those of il' compoet' totS . Has cone-entr .tlon tben rncr ....oo. or
decr..Md? In Ihll Nmll ....y, ..h..n . tt..ntion IS dr .wn to . nother ph.oH of
historic..lly ..ccordin g to .. gen"r. I I. ... To st udy thi. it is nocess.ory to
tb circulancn procesa, ",mph.sis oft"n f.lIs on tb<> sh.or"" of the m.orket

comrolled by dilNrllnl /irm Onell . g. m , it IS high ly d.nger ous to du ..
prOClllld ""p by etep. Tbll /irst Itep is to . n. lyse the essenti. 1determiM nt .
of ccncentr..ticn by .tudy ing th. link be t......n the ind ividu .liz.otion of
concluaone froro Ihi. ene a5pllCI. 1t llSSIlm<lS th .t m.rkets and therefor..

co mmodililll can be dividlld up m te rmo of use- v.lu<lS. !l o.. th ..
ca pit all end th. major tu nsfor mation. of the labo ur pr oceso and
..alorization of an individ ual capit. l in no ..ay implies any thing about lh ..
4 TH E CONCE NT RAT ION ANO CE NT RALIZAT ION OF CAPITAL -
t i 53
2 I 53
-'
(1
use-values which support value pro per . It may happen th a! th e co nditions
livin g labour . It tends, th er efure , in th e direction of a techni cal
of product ion and exchange develop in a way th a! favours a rapid
modificati on of th e co mposition of th e means of pr od uction th at raises th e
diversification of use-values. In lhi s case , it might well be possible to
value mass of th e capital needed to co ntro l pr od uction and co nsequently
esta blish a decline in th e indices " f cQncentration as calculated by taking
to run th ro ugh th e full cyd e of valorization. Simple co ncentration is
th e mar ket shares fur eac h type of use-value in isolati on , eve n though th e
tot al number of firms in th e mar ket as a whole has dropped and th e vQ!ume
th er efure a deriva tive phenomenon of accumulation, its impo rt ance

vary ing according to indu stry and period o As a co ro llary of uneven
of turnover and number ofw orkers co ntro lled by eac h " f these has greatly
inereased . Has th er e no! th en been an inerease in th e po wer of auto no mo us
extent over th e whole field of co mmod ity prod uction .
centres to dispose of social laoo ur? ~'Ie may not e th a! valorizatio n of capital
develop ment of different sys te ms of pr oductive furces is taken int o
in its ma s! genera l sense is th e expansion of hom ogeneous value. This is

why it is th e monet ar y furm of value th at gives th e flow over which th er e is
account, it is possible fur certain domains of indu st rial pr oduction to be
develop ment , thi s phenomenon is int rin sically not operative to a unifurm
~'Ihen
th e co ncrete
a po wer of disposal its dosed and cyd ical furm . It is th e pr edominance of
fuei of co ncentration (e .g. stee l and oil at th e turn of th e century ,

auto mobiles in th e int er -war period , rub ber or packaging after th e Second
thi s mon et ar y furm th at ena bles one and th e same individu al capital to
~'Iorld ~'Iar) ,
direct severa l pr od uction pr ecesses and to sell co mmod ities on severa l

mar ket s, while appea ring as a single centre of pr od uction . Now th e
develop ing, and hence pr op itiou s to th e furmation of a lar ge number of new
redeployment of th e mon ey destined to be employed as capital is effecte d

by financial agencies. Can we infer from thi s that th ese agencies are th e true
centres of po wer and th at th e co ncentration of capital can be identifi ed
with th e financial co nnections esta blished between th ese agencies and
legally auto no mo us firms?'
while others are at th e same time just emerging or are rapidly
capitals (such as th e pr od uction of electrical household goods in th e ' 920S,

or th e electronic compo nents indu st ry after th e Second ~'Iorld ~Iar) .
If simple concentration is a diffuse phenomenon at th e overall secial

level , permanently pr esent but differing in impo rt ance according to th e
different zones of commod ity pr od uction , centralization of capital takes a
quite different furm . ~'Ihile simple co ncentration is a quantita tive fact of
In our view, sorne order must be esta blished in thi s pro fusion of partial
un even accumulation in th e field of value, and pr eserves th e autonomy of
approaches if serious int ellectual co nfusion is to be avoided. This can only
separa te capitals, centralization is a qualita tive change th at rel ashions the
be do ne by pr eceed ing co ncept by co ncept on th e bas is of th e th eory of
centralization of capital. Simple co ncentration is th e imm ediat e effect on

th e fragmentation of capitals of th e uneven develop ment whose origin we
have seen in th e way th at labou r pr od uctivity increases. Each individu al
autonomy 01capitals and establishes new relationsh,ps 01comp etition. It

is a pr ecess th at is discontinuou s in tim e , related to success ive phases of
capital furmation in th e sequential pr ecess of global accumulation
exp lained at th e end of Chapter 1 (see Diagrams 6 and 7), simulta neo us in
its impact on th e econo my as a who le , and irrever sible in its effects. In th e
co urse of centralization , a whole host of individu al capitals disappear ,
abso rbed by others, while yet others fuse together by mer ger or
co nsolidation . The centralization of capital is th er efure a violent furm of
co mpetition . It may happen th at centralization is usher ed in by a mer ciless
struggle between capitals in a particular domain of indu st rial pr od uction .
In that case it pu ts a final end to a period in which simple concentration in
thi s domain was int ense . But th e centralization of capital has a more
capital is a fueus of co ncentration in th at it co mbines th e means of
genera l significance th an th at . It is th e effe ct on the fr agmen tation 01
valorization on an increasing sca le. Since thi s valorization is subjec t to th e
capitals ol the general process 01 dwa lorization by which th e movement

of overall accumulation finds new co nditio ns fur its futur e advance. That is
accumulation outlined in th e first part of thi s work. Only on thi s co ndition

can th e very bulky sta tistical da ta on th e qu estion ofconcentration lead to
genuine knowled ge , or current typologies (horizontal co ncentration ,
vertical
co ncentration ,
co ncentration
by
diversification ,
or
co nglomeration) really enrich our unde rstand ing of th e pheno menon . In
th e pr esent work we shall co nfine ourselves to th eoreti cal analysis of th e
essential aspec ts necessar y to rend er th e laws of co mpetition int elligible .
The first ste p is to distinguish between simple concentration and
law of accumulation, it inevit ably involves a ques t fur relative sav ing on
" THE CONCENT RAT IO N A ND CENT RALl ZAT IO N OF INDUSTRI
3 I 53
4 I 53
- - - - - - - - - - - - - <0 > - - - - - - - - - - - - -
-'
(1
why th e centralization of capital is no! limited to particular fields. ~'Ie shall
produced and th e pr ices at which th ey are mar ket ed are similarly imposed
see below how mer ger s between capitals ""eur in waves, with a precise
on th em . The latter are not mar ket pri ces but simply transfer pri ces. Yet
th ese sub-contracting firms play an essential role in th e stra tification of th e
locat ion in th e overall movement of capital formation . They oceur al th e

end of th e ascenda nt phase , when th e rate of surplus-va lue begins lo dip
and th e struggle against lhi s decline gives rise to an intensificati on of
prolet ari at . ~'Ie have seen th at thi s stra tification is an important form for
obtaining higher rates of surplus-va lue un der co nditions of Fordism . The
obsolescence . They also ""eur al th e end of th e phase of ciepr ession , when
socio-econo mic co nditions th at perpetuate it indude a segmenta tion of th e
centralization seIs in to reor ganize an indu st rial sys te m th a! has been
labour mar ket . The establishment of sub-contracting net works enab les
revolutionized by massive destr uctions of capital. In th e ciepr ession itself,

th e des tructio n of capital far pr evails over th e formation of new capital.
centralized capitals to organize thi s segmenta tion while dispe rsing and
Centra lization is essentially effecte d by th e elimination of businesses. Thus

capital centralization doos not stop with a red uction in th e number of
isolating th eir work-forc e .

2 . The Influence o Finandal Co n d it io n s : y,'av..s o M..rgers
auto no mo us capitals and an increase in th eir size. It establishes new

relations of co mpetition , because th e destr uction of one sec tion of
indu st rial capital red uces th e tot al mass of capital involved in pr oducti on
and gives all capitals new possibilities of valorization. ~'Ie have see n how
un der th e regime of int ensive accumulation, devalor izations of capital tend
to bec ome co ntinuous and form part of th e articulation between th e two
departments of product ion . The establishment of new relations of
co mpetition between centralized capitals is th e mediati on th at organizes
th ese devalor izations, and enab les a co ntinuous transform ation of th e
co nditions of pr od uction by red ucing th e delete rious co nsequences of
bruta l eliminations of capital.
The centralization of capital regroups un der a single po wer of disposal
and co ntro l cyd es of valorization th at may remain distinct from one
The pr epo nd erance of centralization in th e movement of co ncentration of

capital, and th e way it is tied to th e law of accumulation , give great
importance to financial co nditions.
The operations by which centralization is effecte d are changes in
ownership which involve significant po rtions of mon et ar y capital. In th e
flow of th e circ ulation fund th at goes th rough th e various phases of th e
valorization cyd e, th e ability to dispose of free and un committed
mon et ar y resources by simply letting th e cyd e co ntinue is th e decisive
weapo n for maintaining an auto no mous capitalist centre, able both to
defend itself against any atte mpt to take it over, and to pursue an
aggressive accumulation stra tegy of its own . Such an ab ility must be based
on an overall gross profit previou sly accumulated , which can rapidly be
mobilized - what one might call th e mar gin of manoou vr e yielded by cash
another from th e sta ndpoint of th e pr od uction and realization of

co mmod ities. Such a centralized po wer of disposal can only be esta blished
flow not tied by th e need to finance producti ve capital. Now thi s cash flow
by th e creation of new structura l forms. These are chiefly th e giant
is itself engendered to a large exte nt by th e pro vision s for obsolescence
co rpo ration and th e financial gro up, which we shall investigate at th e end
incorpo rated int o ordinary running costs. As a result , not only is
of th e pr esent chapter . But th e centralized organization of capital also

exte nds to th e net work of sub -contra cting , in which firms th at are legally
autonomous and are not co ntrolled by financial holdings still do not form
autono mo us capitals from th e sta ndpoint of th e valorization cyd e . These
capitals make segments of valorization functi on in an integrated series.
Their depend ence is set by technico-econ omi c norms over which th ey
have no influence . Their d ients are imposed on th em . They do not prod uce
co mmod ities prop erl y spea king, but rather int ermediate product s within a
br oade r prod uction pr ocess creating co mplex co mmod ities. The quantities
" THE CONCENT RAT IO N A ND CENT RALl ZAT IO N OF INDUSTRI
5 I 53
centralization indu ced by th e devalorization of capital in its mod ern form ,

which th rows th e cost back a nta soc iety , but it is itself a po werful fact or of
thi s devalor ization . In phases when th e movement of ce ntralization
intensifies, th e cash flow engende re d in th e valorization cyd e is extracte d
from it to fuel a fi na ncia l circ ulation whose effect is to reshume co ntro l
over prop erty . Breaking loo se from its role in financing th e renewal of th e
co nditions of prod uction , gross profit bec omes an inst rument of social
waste, expended in th e overt or hidden struggles unl eashed by capitalist
co mpetition . The more that capitalist co ntrol is centralized, and th e mor e it
6 I 53
- - - - - - - - - - - - - <0 > - - - - - - - - - - - - -
-'
(1
can de pla y a cash flow accruing from severa l different valorizatio n cycles,
fur depreciation in cash flow). It re mains equal, on th e other hand , or falls
th e more formidable its co mpetitive ability to exte nd its po wer " f disposal
only slightly,
over property .
Since what is al sta ke in th e centralization of capital is actual ownership
accumulation.
during the upswmgs of an approximate ly
regular
of th e means of product ion , it is no! surprising th a! lhi s centralization
The characteristic feat ur es of capital centralization are co nfirmed in a

striking manner by examining th e waves of mer ger s shown in Diagra m 11.
canno t be explained in terms of technical and co mmerc ial co nsiderations.
The extre me irregularity of th e phenom enon is imm ediately appare nt.
These lalter susta in centralization , bu! in no way cause il . Nor is it
There are th ree major waves: at th e turn of th e century , in th e late
surprising tha! centralization ""eurs chiefly in period s of financial crisis,

where th e disorders of financial circulation , fed by spec ulation, favour
and in the late 1960s. Each major wave is pr eceded by one or mor e min or
waves. By exte nd ing our earlier analyses, we can explain th e pos itio n of
maJOf red istr ibutions of di. pasable mon et ar y funds. The ma s! co rree!
th ese merger waves in th e traject ory of capital furm ation and establish th e
indicat or to assess th e co ncentration of capital is th er efure th e distr ibution

of th e accumulate d m ass of un committed cash flow between auto no mo us
fullowing pro positions.
capitalist centres. This would give a dynamic picture of th e struggle

between capitals. But infurm at ion of thi s kind is not ava ilable. ~'Ie have
th er efure to be satisfied with th e distr ibu tion of th e tot al assets th at firms
co ntrol. In th e United Sta tes this infurm ation is supplied by th e Feder al
Trade Commission,' which is respo nsible fur applying regulations
gove rn ing co mpetition . The fullowing table shows th e develop ing
co ncentration of assets from
' 9 ~S
to 1968.
Diagra m 11. Corpora te mer ger s ( 1 8 8 8 - 19 7 ~)
!..L _'..J...!.
,.
f'<rc< nta9< ofTotal
' 9 ~ os ,
fJ --c"
Mut< Il<ld bJl
'
"
./
th<'00
th<200
nar
b'99 t./irm.
b'99 t./irm.
' 9 ~5
3 4 5
'9~9
38.~
45 8
' 933
4~5
4 9 5
' 939
4' 9
4 8 7
' 94 7
37 5
4 5 0
' 954
4' 9
4 6 .0
5 4
of mer ger s accur in two circ umstances:

(1) At th e end of a phase of stagnatio n or reduction in capital furmation ,
55 ~
and at th e sta rt of th e fullowing phase of upswing, when th e des truction of
196~
4 5 5
55 1
capital and changes in th e labou r pr ocesses and new inter branch
1 9 65
4 5 9
55 9
19 6 8
4 8 4
60 4
1 95 8
"\
J1
,.
--- - - - --- - ,. ,. -----
SO""'., ,"o"'...
ma ga z' n.
~'Iaves
co nnections engendered by th em red uce th e tot al value of pr od uctive

capital, or slow down its gro wth relative to th at of tot al relative surplus-
Comparison between th ese figur es and Diagra ms 1 and 8 shows th at th e

centralization of capital advances in periods when relative surplus-va lue
value, raising th e rate of surplus-va lue again, and thus setting in moti on a
gro wth in th e overall rate of retu rn on pr oductive capital. The
declines (as attes ted by a deceleration or halt in th e fall of real sacial wage
centralization of capital th en leads to a reor ganization of th e division of
costs), and in periods when capital is being strongly devalor ized (attested
labour , reinfur cing develop ments already un der way in operations of
after th e Second ~'Iorld
valorizatio n, by giving full play to economies of sca le. Those pr od uction
~'Iar
by th e rapid increase in th e share of pro visions
2. THE INFLUENCE OF FINA NCIAL CONDIT IONS: !NAVES OF M
7 I 53
8 I 53
- - - - - - - - - ----{o ) - - - - - - - - - - - - -
-'
(1
un its th a! functi on al a casI higher th an th e social ave rag e al prevailing
purchases and sales of various kinds of titl es to pro perty which stipulate
method s " f pr oducti on are eliminate d; markets th a! were previou sly
th e co nditions on which th e capitalist, i.e. th e holder of mon ey employed
restr icted are opened up ; producti ve forces are shifted towar ds th ose
economic br anches where a gro wth po tential is beginning to sha w.
as capital, agrees to part with his asse ts , and th e rights he acq uires in
(2) Al th e end of a lon g phase " f increased capital formation , when th e

rate of gro wth begins to dip or when th e movement even begins to go int o
retu rn . Financial circ ulation is th e circ ulation space of mon ey capital,

whose bas ic elements are th e buy ing and selling of shares. It is at once
reverse (e .g. 1926 and 1967), as a result of the fal! in th e overall rate of
diversified by th e nature of th e titles th at are issued and negoti able , yet at

th e same time th e source of a formid able centralization of ownership in th at
return on pr oducti ve capital. ~'Ie have seen in Cha ple r 1 th a! lhi s fal! occurs
as scon as th e inerease in th e rate of surplus-va lue is checked or sto pped
it enab les a single capitalist, or a coalition of capitalists, to accumulate

asse ts of th e same kind whose mer e number indicates th e expansion of
altogether, given th e rise in th e organic camposilion of capital. These

overall processes are manifested in a dispro po rtionate gro wth in th e
ownership involved . In th e United Sta tes , th e pr incipal form of financial
different departments of product ion , disturb ing th e flows of exchange-
circ ulation has bee n th e stoc k mar ket , which registered a major surge
value between th em th at are needed for th e expanded repr oduction of the
up war ds in th e last decade of th e 19th century . Essentially a reor ganization

of capitalist ownership, th e centralization of capital operates by way of
elements of capital's value co mposition . In thi s situation , th ose capitals
massive transfer s in th e sphere of financial circulation . The latter must be
that are well situate d see k to stre ngthen th eir pos itions , and pro fit from
sufliciently active , i.e. sufliciently attractive to mon ey capital by virtue of
th eir high rate of return to exte nd th eir space for valorization. The upshot
is a wave of mer ger s pr oceed ing chiefly via th e absorption of sorne firm s by
th e diversity of stocks obtainable, th e intensit y of transact ion s, and th e
others, whereas th e wave th at pu ts a final end to th e depr ession phase
nominal pro fits feasible , to enab le vas t transfer operations to be realized .

This is th e reason why, in a co untry where th e stoc k mar ket is th e
pr oceeds rather by way of co nsolidation .
pr edominant form of financial circ ulation, it always witnesses an intense
This th eoreti cal inter pret ation of waves of mer ger s would be incomplete
spec ulative fever during th e high po int of a wave of mer ger s. Such a fever is
if th e financial co nditions th at directly made th em possible , and which have

already been mention ed above , were left out of account. There are two
unl eashed when th e upswing of capital formation pete rs out, yet th e flow of
mon et ar y facilities remains ab unda nt while th e retu rn on th eir prod uctive
such co nditions.
(1) A n upswing offi nancial circulation. Such circulation is indu ced by
employment bec omes un certain . Large amounts of money capital are th en

th ro wn int o financial circ ulation . The subsequent wave of excitement on
th e financing of capital accumulation , in other words by th e pr actices of
th e stoc k market is highly propitiou s to large-scale manoeuvr es co nducted
financial agencies , either loc ked int o th e circ uit of payments or linked to
holders of unused liquid resources , which capture mon ey already create d
behind th e sce nes by th e financial oligarchy .

(2) A n abunda nt cashjlo w that is not tied up in the firm oThis exists in
and transform it int o money capital. Yet thi s transform ation , as well as th e
tim es of centralization of capital.
investment of mon ey capital in th e financing of pr od uction , are neither
capital or stagnation in capital formation co mes to an end , th er e is on th e
exclusively nor even chiefly techni cal operations. They are transfers of
one hand a recovery of pro fits, on th e other hand a delay in th e materi al

renovation of means of pr od uction co mpared with th e th eoreti cal
ow nersh,p. The bas ic nature of mon ey , a genera l and permanent

pu rchasing po wer as th e repr esentative of abs tract labour , evide ntly
remains when mon ey bec omes mon ey capital. An expression of t he
~'Ihen
a phase of massive destr uction of
renovation th at would ensue in th e average situation , given th e prod uctive
abs tract wealth of soc iety, mon ey capital as a hom ogeneou s mass doos not
life of differe nt categories of materi als and th e usual pers pec tives of
obsolescence . The gaps th at inter vene in th e renewal of fixed capital give
purchase individu al co mmod ities, but it acq uires disposal over th e means
rise to a quickened pulsation in th e use of cash flow, and co nsequently also
of pr oduction in pro portion to its quantita tive impo rt ance and th e forms in
which it is invest ed . This is why transfer s of ownership take th e form of
in th e formation of mon et ar y resou rces th at can separa te off from th e
2. THE INFLUENCE OF FINA NCIAL CONDIT IONS: !NAVES OF M
9 I 53
circ ulato ry flow of valorization. Once capital formation sta rts to recover ,
10 I 53
- - - - - - - - - - - - - {o ) - - - - - - - - - - - - -
-'
(1
effective renovati on ""eurs al a mor e rapid pace th an th eor et ical
indicat ors of th ese differe nt elements of capitalist accumulation showed th e
renovation . It th en rises above th e th eoreti cal level and slays th er e

th roughout th e peri od of regular accumulatio n. Al th e end of th e ups wing
fullowing increases:
e!fective renovation decelerates to a slower pace th an th eoretical
Gro .. Na ti on a l Pr oduct
In du .tr ia l pro ductio n
renovation , th en declines absolute ly .' It faHs be low th e th eoret icallevel

with th e onsel of a recession . The alte rnation between a tumescence and
Capital exp en dit u r e. on the ins t a llation offac to r ie.
detumescence of free cash flow in mon et ar y form fixes certain maximum
Ba n k cr edil
limits fur th e cash flow ava ilable in tim es of merger waves. In th e pos t-war
Capital a ..em bled by fin ancia l int ermediarie. or
470"
a n d the pu rcha.e of plan t
. eekin z dir ect inv e. tment on fin ancial m a rht .
period, th e co rrespo ndence between th e pattern of mer ger waves and th e

gro wth in th e share of amo rtization pro vision s in overall profit can be
(2) On th e other hand , a n wer gre ater p redominance 01 fi nancial
strikingly see n from Diagra m 8. The per iod s when mer ger s leapt furward
th e co ntext of a sharp gro wth in capital furmation , with a rapid incr ease in
interme diaries in the jim ding 01capital accumulation. This pr edominance

is th e bas is fur th e trul y financial po le req uired fur th e furmation of
financial gro ups. According to Goldsmith,' tot al financial asse ts managed
by th e financial institutions mul tipli ed 40 tim es between ' 90 0 and ' 955,
while other typ es of asse ts multiplied by only 18. The eve r mor e crushing
th e share of net profit in value added and a dip in th e share of th e cash flow
preponder ance acq uire d by th e financial intermediari es in th e advance of
set aside fur depr eciation allowances. There was certainly regular
mon ey capital can equally be observed in th e pro portion of sav ings

earmarked fur investm en ts of all kinds th at were not directly pro vided by
(1954- 55 , ' 95 9, 1967 - 68) were three peri od s of rapid gro wth in
accelera te d amortization. The period 1960 - 66 , in which mer ger s were
sta ble, was one of great upsurge in relative surplus-va lue. This tcok place in
furmation of an abunda nt cash flow, but mon ey capital was directly

co mmitted to a producti ve funct ion , and th e relations of co mpetition
between auto no mo us capitals were stabilized.
non -financial agents, but which passed by way of financial institutions. This
per centage has un der gon e th e fullowing changes:'
' 9 0' _' ~
11 . T he F o u nd a ti o n s o f Financia i Centra lization
' 9' 3 - ~ ~
'9~3-~9
In developing th e co ncept of th e centralization of capital, we established an

esse ntial aspect of th e way relations of co mpetition between individu al
capitals are dete rmined by th e law of capital accumulation in genera l.
' 934- 39
19 4 6 - 4 9
~'Ie
1 95 4 - 5 6
have sho wn, in effect, th e impo rt ance of th e furmation of mon ey capital

un der th e co nstraint of th e financing of capital accumulation. ~'Ie can now
go on to link th e laws of co mpetition to th e law ofcapital accumulation, by
1 9 61 - 6 4
1 9 65 - 7 0
,,,
o"'
",
,"
6~"
,e,
""
""
These overall tendencies, so massive and un contest able , show th at in
identifying th e genera l pr ceesses th rough which financial centralization , as
th e lon g run th e accumulation of capital itself creates th e sys te m of
th e mod e of furmation of mon ey capital, is decisively influenced by th e
financing th at is indispensable fur it .
structura l co nditions of accumulation.

The sca le of financial centralization is expressed in two tendencies:
(1) On th e one hand an accumulation 01 money capital that is more
rapi d than that 01the value 01the material e1ements 01pr oductive capital,
th e latter itself bein g more rapid th an th at of th e overall value of th e flow of
marketed goods and serv ices. Between ' 94 5 and 1965, th e characteristic
11 . THE FOUNDAT IONS OF FINA NCIA L CENT RALl ZAT ION -
"
,5 3
l . Financial C..ntralization through the Financing of Fixed

Ca p it a l
The furms fur financing gross fixed capital furmation have developed
co nsiderably in th e 20th century . This is evide nt if we co mpare two major
' 2 I 53
-----------~o)-------------
-'
(1
( 19 ~O -
of capital for mation sepa ra ted by relatively sha r! ph ases of decline (1915-
the stru ctur al conditions ofinflation to the process ofinflation proper .

The pr ed ominance of th e big co mmerc ial ba nks in th e co llection of
savings, in other words in th e tran sfarm ati on of tem po rari ly idle liqu id
resources into mon ey capital, is a striking expression of th e far-reach ing
change in th e far ms of finan cin g. It can be illustrat ed by th e distr ibution of
th e assets held by finan cial intermediaries , as be tween th e two different
categories of institut ion , far th e two types of circ uit by which savings are
21 in th e frs! pe riod, 1957 - 6. in the sec ond). Al th e end " f Chapler 1 we
absorbed. The fallowing table gives th is distr ibution far th e yea r 1968:'
period s, the frs!
29) pr eceding the transfurmat ion of the
pro letarian mod e of consumption , th e se cond ('9 45- 7 0) witnessing the

mass product ion of mean s of co nsumption . The frs! period fel! largely
un der a regime of pr ed ominant1y exte nsive accumulation, th e sec ond was
th e great pe riod of boo m under th e regime " f predom inant1y inten sive
accumulation. These two historical epochs were do mina te d by lon g phases
po inte d out th e th eoreti cal distinction , from th e sta ndpoint of fixed capital
for mation , th a! sepa ra tes th e regimes of accumulation on which th ese two
D<po"t , a' 'n9'

Com m ercial ban ks (Ba n kinz depa r tmen t . )
pe riod s dep end : regular succession of capital far mation and de str uction
Mu t u a l . a v in z . ban ks
un der th e pr ed ominant1y exte nsive regime , and pe rma ne nt obsolescence
Ot h er .avin z. a nd loa n institutions
incorpo rat ed into capital far mation itself un der th e pr ed ominant1y

intensive regime .
The change at th is level gives rise to a change in th e far ms by which
capital farmation is finan ced . The regime of int ensive accumulation
allocates a less major ro le to th e stoc k mar ket in th e mobilization of mon ey
capital intend ed far direct use in th e finan cin g of fixed capital far mation ,
and establishes ev er clos er ties be tween th e big indust rial co rpo rations and
Tot a l depo. it .
Contractuat , a' 'n9'

Com m ercial ban ks (Tr u . t depa r t m en t . )
~ 4 0"
Life ins u r a n ce compan ie.
15 6 "
38"
Ot her ins u r a n ce compan ie.

In v e.tm en t compan ie. (Mu t u a l fun d. )
Tot a l con t ract ual.avin z.
3 4"
4 6 .8 "
th e big collectors of savings. The regime of intensive accumulation gives
The pr ed ominance of th e ba nks in both types of net work gives th em
predom inan ce to funds direct1y engend ered by th e co rpo ration in th e far m

of cash f10w and to direct indebtedness in th e far m of loan capital as
great f1ex ibility in th eir choice of finan cin g inst rument s , and in access to
oppo sed to th e issue of sha res. The result is th e decline un iver sally noted in
alte rnative so urces of refinancing by th e mediation of finan cial circ ulation .
th e ro le of th e stoc k mar ket in absorb ing savings des tined far pr oductive
The overall impo rtance of th e ba nking sys tem, moreover , co nceals a far -
invest ment s, and a stre ngthening of th e finan cial int ermediaries and
reaching hetero gen eity . The Ame rica n ba nking sys te m is supe rficially ve ry
particularly
co nsequent1y replace th e public supply of capital to an ev er greater extent.
decentr alized , as a result of th e stringent legal restriction on th e

geogra phical area in which th e ba nks wer e and still are authorized to ope n
This development has immense co nsequences. Hurled into the
oflices and establish bra nc hes. A very un even de velopme nt has resulted
co mpetition far invest ment by th e need to be nd th e pace and co ntent of th e
from th is , due to th e nature of th eir customers and th e pr oximity or

otherwise of th e ba nks' field of ac tion to indust rial centres , and especially
the
ba nking
sys te m.
Private
finan cial
relationships
obsolescence of pr oduction pr oc esses to th eir own advantage, th e centres

of industrial capital seek to plan th eir fixed capital farmation in suc h a way
th at it will be least affecte d by th e net return on capital already invest ed
to the finan cing of intern ational trade . A ve ry sma ll number of finan cial
centres can thus po larize th e absorptio n of savings via a de nse net work of
producti vely . This is why finan cin g gives ev er greater roo m far th e
int er- bank relationships. This po larizatio n was co nsiderably increased after
incorpo ration into current ope rating co sts of va rio us write-off pro visions
th e ba nk co llapses of th e Great Depression and with th e rise of finan cial
and far indebtedn ess in th e far m of bank credit or new far ms of high-risk
credit th at are supporte d and gua ra nteed by th e ba nks. The fi nancing of
int ermediaries after th e Second ~'Iorld ~Iar . In the ' 95 0S ba nking

centralization crossed a new threshold due to th e mer ger s be tween giant
fixed capital fo rmation thus becomes a decisive link in the transition fr om
ba nks, particular ly th ose of New Yor k, which trem en dou sly accelera te d th e
"
FINA NCIAL CENT RALl ZAT ION TH ROUGH THE FINA NCING O
, 3 I 53
'4 I 53
- - - - - - - - - - - - - - <0 > - - - - - - - - - - - -
'"
-'
A T HEOR\' OF CAPITA LI ST R E GU LAT I O ~
co ncentration of uvingl , ccntraclua) Sd.... ings in pdrtic ular . By 1968, t" elve
l.....
Ne.. York banb held 7 5poT Cllnl of al) pension fund dsset. , Ihese being Ihe
' 9 0
fa!test grOOling of aHuvingl mod, . In th e 19601, Ihe banl:s diver. ifie<! Ih ,
' 912
' 9 22
linancing lIelivili" by Mthng up holding corn""nies Ihat could fr....

thems-elvon from lb. rfttricti oM of NO l: T"lluLotion ud cr ....te bu nch
n..tworb. Al lb. pr-eMll1 lime. lbe i.ool honl:s ..e orga nized mIo b.onl::ing
VOu~, which boesides Ih<t ludll io~ op&rations of proV1dmg fin.once fur
productive ci piu l, inlfl"Vfil" in housing construct:lon , control hous<>hold
fin.aDCll .ubt:iduori a lf!" vmot>s fin.mci.ll ""l'V1ces (1<MS1llg, f.octonn .
insurauc.), and miln.lge ludmg and ...rviee comp.onies .
Qjdol1.....
' 929
' 939
' 9. 5
' 9. 9
' 95 2
' 9 68
' 9 '1.
(p<, nt)
,a
,O
"'0
"
"'o
"
"
"
,,,
"
_' o
ee
"
"
"
"
,.
H1re purebue credr t onIy d....e1oped ..n er 1945 , bul '1 !hen expon'!!IlC<!d
utro!lOIIUC growth.
From an outstandmg CNdtI of 6 b1Ihon dolLrrs in 194 6,

the tot.u gr... to 4 3 Inllion in 1960 , U 3 1nllion in 1968 and ' 55 btIhon m
a . FilUlncUl Cen l r aliu llon through Ih.. Transfol"llliltion o f Ih..

Mod.. of CoMUmpllon
Th"li::mtution ot" nonn o f ~ oonsumption has b.ad .. sul:stanll.al e ll:t
On fio..l.nci..l.l centr i!iullOn. TM stnICtUnnll o f this norm by th.. a<:qU1Sltion
ofoonJUlMr durables h.u t.d ro
~ d.ov. lopm..nt o f bo th
hire pun::b.ue ~
..."'op 001 o / wages. Tb. li.n.l.nrnlg o f ~llSUmer durables b.as to bridge a

double gap , be~n lbe n cb.ang.....alue of!hese good.s and l:UI'Tenl money
mooIDe 011 lh . 011. b.and , and berwHn dir ect _ag... and l:UI'Tenl
OOl1SIImptiOll 'xpeIldllur . 00 !h. OIber.
o.. lop of this , !he sociahza!>OIl of
risb and lbe ooIIectI.... n ptn<blUTes n9CflSaTY lo sl abih:e !he pn... ale
consumpti Oll of in<bvidu.ol OOIIUJlodl ties 1La.... led lo !he fonna!>OIl of an
mduect _ ag. _ bich;' '1Mlfallbe roo! of a double fto-: OIl!he OIle b.and a
Bow of COIltributioM levi e<:! 011 !h. nominal reerence _ age , 011 !he o!her
ILand a fto- of benfli,- _ bicb acqu. lo !he _ag<HMl'1ler5 m forms
indepoendflll of the l:UI'TeDl m.unlenance eyele of labour-po-er . Lel us
bn~y oelUlnun. the mfIUeD<'<l of Ibis dual chala"'er of!he norm of socW.
COIINIllption 011 fin.lncial centraJn.altOD.
(~ DomNtl crtdll a"d . at'i"gs d.-poSlrs. Oomestlc <.TOOt1 t.1kes 0Il !he
forro of bousing 10lns and 10lns or !h. pureh,m, on instalm<ml of
a utomobiles a nd ccnsumer dur..bIM . Tb. o...e u ll long-run m.nd of Io.o.ns
or bousing ccnst rucncn (farm.rs u el ud..d ), and !he s lLaN! of Ihem
provid..d by fiMnrnl inle rm..d id.riM, is s ummed up in the foUowmg ta ble o
' 97 4
~ibilst
beLng _ nti.d to 1M de .....Iopment o f !he collSUmptlon norm,
alld ~nM<uent1y an indut inJtnlment 10. tM financmg of accumuLation ,

!his cre<:!,t . e mainll
~mpletely
d.Jtu>et frnm credJl berw""n captlahsts .
Oomestic credJt il llOt an ~"'iI.ll<'<l 00 pmcIuction , bu l a _ ay o f spending

Wcocne ili.iol ab.orbs tbe d1"'ellence berwHn !he rbythm al _bicb ",come
iI r~...e<:! and lbe rbyt bm ..1 _ bicb '1 .. spenl , lI...en !he lum ptIles:J of
duubl. goad.. JI iI an eXlrem..ly burdensome form , _ ", gbing b....n1y 011
lbe _ ..g....unetT incomes, and C<lll onIy d.......lop 11"''''' suffil.'l",,1regulanty
and HC\l11ty. l1tt inftnibil'/JI ol /h. nominal rt/trm rt 11' 09' is 0'1 ossmtlal
cond,rion 01 nabill/JIjor /hill m tlrt constnlmon. ~i.. ge mcome b.as lo be ..
sufficiflltly reruJ.u Bow, and sufficien tly ..bov.. lot.u CUrTenl expen<btur. ,
10 be ..bl. te forro lbe mOllet ollj' .........M need ed 10 m...1 ....,.her bills.os
mereue<l by the ml erfft cb.u..d, and lO offer .. suffil.'lenl perspectl..... of
soI...ency 10 obum furt her CN<h1 . !bis lS _by !he tr.ansformation of lb ..
made of consumption m Ih. <hNctlon of consumer dl1nbles lS !he sourc<>
of.. moTe n pid mc r _ m mOlletollj' d.posl!s Iban m _ ..ges , so long.os lb ..
ov..nll e 1Ccb.ange-v.uue of Ih. mns of consumer dl1nbles pureb.m!d by
,..._mm
hcusehclds incr....,.. in ...lation lo !he f10w of curnml
upend, tures . M lhis tendency b.as bHn conOOuo 115 e ...e r ..n"" Ihe s..cond
Norld Na r, becon ung especially pronounced in the 19605 , which saw th..
ProporfrDn jir"".w i
rapid creation o f new households as .. rMu lt o f the ead ier rise in tbe birt h
by jinancl<l
ra t.., the gro wth in liqu id d ..posi t. h . bee n . barp . On top o f lbi. , as tb ..
mtermedlanr.
mOlleY Ihul depcsued w... not ..ll int ..nd ed to serve imm ediat e)y as lh e
2. FINANCIAL CENT RALlZ AT IQN T HRQUGH T HE T RAN5FOflM
l ' I 53
15 I 53
-'
(1
means of purchase , th e average duration of its abs ence from circulation
to avoid th e dispersa l and weakening of th eir pawer of co ntrol by th e
made it possible to for m lon g-term cleposits. The finan cial institution s, and
method of pooling mon et ar y resources. At thi s da te th e financial agencies
especially th e co mmercial banks, create d different types of sav ings
really did play a strictly int ermediar y role, th at of exec utors. In th e mid
account, eac h bea ring a slightly different rate of int er est and offering
differe nt co nditions of withdrawal, so as to mat ch as far as possible th e
' 95 os, however , th e propartion of asse t gro wth th at can be imputed to th e
characteristics of th e discontinuous fla ws of expenditure th a! are tied to

th e hou seh olds' man agem ent of th eir stoc k of durab le goods.
(b) Contractu al sa vings. A further major gap between th e social value of

th e repr od uction of labour-po wer and curren! expenditure on
consumption follows from th e establishment and very rapid extension of
deferred wages. This is th e fact or th at genera tes co ntractual sav ings, which
have been th e chief furm of financial accumulation since th e Second ~'Iorld
~Iar . Together with th e growth in long-term depasits, th ese have been th e
essential tool s in th e decisive co ntro l acq uire d by th e financial
int ermediari es over th e advance of mon ey capital. ~'Ie have see n how in th e
United Sta tes th e institution al mechanisms fur balancing risks remain
highly restr icted , furcing wage-earn ers to resor t to privat e insurance
schemes, which furm th e basis fur a centralization of th e major institution s
direct pur chase of shares had fallen to less than
~o%
of th e tot al , and was
down to ~. 5 % in 1 9 6 ~ - 65 . This drastic change too k place even th ou gh th e

rate of 'free' personal sav ing (as a propartion of dispasable incom e) was
around th e same level in th e two period s (averaging 10% in
'9~~- ~9,
and
11%in 1 9 6 ~ - 65) . Thus it is centralization of th e co ntractual sav ings of the

mass of th e wage-earn ing po pulation th at has rad ically transfurm ed both
th e mod aliti es of investment and th e ro le of th e financial intermed iaries.
~'Ie shall go on to sho w th at th e impo rt ance ass umed by th e financial
institution s in th e furmation and investment of mon ey capital has br ought
far -reachin g changes in th e furms of co ntro l of co rpo rate ownership , by
creating th e phenomenon of th e financial gro up.
The accelera ted development of co ntractual sav ings characteristic of
th e mid ' 95 0S was due to th e change in th e co ntent of collective
barga ining. The table below sums up th e most dynamic elements of th ese
sav ings (in billions of dollars ):
th at collect co ntractual sav ings (mutual funds, life insurance co mpanies,

tru st departments of th e major co mmercial banks). ~'Ie have seen how
among th ese funds, retirement pension funds have a major dy namic
significance fur capital accumulation in th at th ey are as a rule
P,",al<p <n" onfunds (n ot z u a r a n teed, m a n a z ed

by the 't r u . t depa r t m en t . ' oft h e biZ
com m ercial ban ks
un guar anteed . Though taken out of wages, th ey are th e pr operty of th e

capitalist dass, acting th rough th e 'trustee' sys tem. All th at th e wage-
CoIl<ch"<p <mlonfund. (zu a r a n teed, m a n a z ed
earners have is a right , not guara nteed, to th e payment of a deferred wage
P<n"on . ch<m o'l1anlz<d bll pubh'c a9<ncl
deriving from th e incom e obtained from th e investment of th ese sav ings

funds which were originally ded ucted from th e furmation of wages. These
The funds of th e public pension schemes are also managed by th e big banks,
funds are th er efure current expen ditures lo r fi rms which have a ll the
th ou gh th ese latter are her e only financial exec utors. The asse ts are
invest ed in th e purchase of stocks with a low rate of return issued by public
attributes 01an ideall orm 01savings lo r long -term fi nancial investmen ts.
They make th e financial sys tem int o th e principal agency in th e acq uisition
of share titl es and in th e operation of financial circ ulation .
The lon g-run change has been a rad ical one . In th e ' 9 ~ os , more th an
half of th e annual net gro wth in do mes tic financial asse ts was made up of
by the biZ !ife insurance compan ie.)
bodies
and
regulated
co rparations
'"
(airlines,
telecommunicati on s
co mpanies, electricity supply, etc.). The pension funds managed by th e

insurance co mpanies are do minate d by th e imp er ati ve of sec urity, and
pursue th e dassical stra tegy of diversified po rtfulios, preser vin g a stable
pro parti on
between
debentures,
prefer ence
shares
indu st rial
shares purchased directly on th e financial mar ket s. The greate r part of th e

shares purchased th rou gh financial institutions were actually pur chased on
co mpanies, and mort gages. The non -guar anteed privat e pension funds, on
behalf of th e personal tru sts of capitalist families, who used thi s procedure
th e other hand , managed by th e big New York banks, are th e spea rhea d in
changing th e structure of financial co ntro l over indu stry .
2. FINANCIAL CENT RALl ZAT ION TH ROUGH THE T RANSFORM
17 I 53
18 I 53
- - - - - - - - - - - - - - <0 > - - - - - - - - - - - -
-'
(1
The co ncentrated assignment of th ese sav ings deriving from pension

funds int o stocks whose returns depend directly on th e activity of business
ente rprises leads th e banks irrevocably int o diree! participat ion in

determining th e genera l stra tegy of accumulation. Yel co ntractual sav ing
no more makes th e wage-earn ers int o capitalists th an doos depasit sav ing.
develop ment .
This results in a profo und amb iguity in th e eeono mic relation of pu blic
expenditure to th e law of capital aecumulation. In th e co nditions of
Fordism , for inst anee , we have seen th at th e development of th e norm of
It is th e massive centralization of th ese funds th a! forms mon ey capital.
social co nsumptio n implied th e development of colleetive serv iees , while

th e prod uetion of th ese means of colleetive co nsumption was not suited to
Contro l over th e formation and investment of th ese capitals, and th e
th e labour pr ecess based on meehani zat ion . The co ntinuous teehn ologieal
co nco mitan! po wer of disposal over indu st rial decisions, are co mpletely
beyond th e influence of th e wage-earn ers th emselves. The co mplexity of
advanees inh er ent in th e regime of int ensive aecumulatio n , moreover , call

for an organization of seientific research which must fall largely in th e
th e financial mechanisms only reinfor ces th e radical separa tion of th e

workers from possession of th e means of social pr oduetion .
public sec to r if it is not to be seriously damaged by relations of

co mpetition, and whieh for reasons bea r ing on th e pos ition of American
capitalism in th e dass struggle on a world sea le , is inextricably int er woven
with gigantic milit ar y spending.
3 . Financial C..ntralization throngh Pnblic Exp..nditnre
These two types of expenditure , even th ou gh violently opposed to one

The thi rd major force th at has determined th e tendeneies of financial
another , form th e major part of th e public budget , and are th e esse ntia l
centralization is governmen t debt and fo rced saving of a jisca l kind,
pr emises for th e co ntinuous inerease in pu blic spending. They form part of
deriving from th e Feder al budget plus th e budgets of th e different sta tes.
th e organic unity of Fordism, but th ey are nonetheless obstad es to capital
Pub lic exp end iture has risen sharply ever sinee th e New Deal, unde r th e
impulse of different forces. In eve ry hist orical period , budgeta ry
formation . The result is th at th ese expenditures are finaneed either by an

inerease in th e pu blic debt or by a fiseal levy on incom es (direet taxat ion)
exp end iture serv es to finanee th ose aetivities , either eeono mic or non -
or on co mmod ity expenditure (indireet taxat ion). In itself an inerease in
econo mic , th at form th e genera l overheads of capitalist prod uetion . The

managem ent of th ese by th e sta te is not bas ieally related to th e co ntent of
th e pu blic debt is no more th an th e acq uisition of rights on future fiscal

levies. In no way is it th e formation of a mon ey capital able to finanee
th e aetivities in qu estion , at least as far as th e economic aetiv ities of
aecumulation. The swelling of th e pu blic debt from sea rcely 1 billion
pr od uetion are co neern ed, but rather to th e genera l co nditions for th e
dollars before ' 9' 7 to
exte nsion of capitalist relation s of pr oduetion , to th e degree of
billion in
fragmentati on of capitals and th e forms of th eir co mpetition, as well as th e
latter may be a levy on wages; in th at case taxati on inereases th e cost of th e

social repr oduetion of laoo ur-po wer , for th e nominal referenee wage must
seope of th e financial centralization und ertaken by th e pr ivate financial

int ermediari es and th e sophistica tion of th e instruments of finaneial
circ ulation . It is impo rt ant to note , ther efore , th at th er e is no inh er ent
distinetion between th e public secto r and th e private sec to r as absolute
and universal categories. Allowing for th e bas ic transform at ions of th e
forces of pr od uetion and th e co nditions of existenee of th e wage-earn ing
'97~
l O
billion in ' 930 ,
~5 0
billion in 194 8 and 40 0
is neeessaril y bound up with th e rise in fiscal exae tions. The
sta nd at a level permitting th e satisfaetion of th e norm of social

co nsumptio n while paying taxes as well. If thi s is not th e case, and taxati on
is too heavy to allow wages to rise , th e inerease in expenditure on
co nsumptio n is th reat ened , and with it th e balaneed develop ment of th e
dass , however , the law of accumulatio n funet ions in eve ry hist ori c period
two de partments of pr oduetion . ~'Ihen taxat ion is a levy on overall pro fits,
it can still take differe nt forms according to th e manner in whieh th e pro fit
to exte nd co mmod ity pr od uetion , while at th e same tim e giving rise to

social overheads which in th e give n co nditions canno t be co vered on th e
is divided between different parties (interest, dividends, manageri al

salaries , fees for various spurious serv iees and emoluments , indu st rial
bas is of thi s co mmod ity pr oduetion . These overheads lie on th e mar gins of
pro fit). As lon g as it remains mod er at e , taxati on on ineom es from capitalist
th e capitalist mod e of pr oduetion , yet are non etheless indispensable to its
appropriatio n need have hard ly any infiuenee on th e formation of capital,
3. FINA NCIAL CENT RALl ZAT ION TH ROUGH PU8L1 C EXPENDIT
19 I 53
20 I 53
- - - - - - - - - - ------{o ) - - - - - - - - - - - -
-'
(1
fur it can simply affect incom e which would otherwise have been wasted on
and benefit from an extre mely favourable regime of tax exemption, which
luxury co nsumption . Bu! lhi s taxati on is non etheless an obstacle to th e

capitalist dass's free po wer of disposal over tot al pro fits. If it bec omes too
makes th em mu ch appreciated as outlets far investment by th e agencies
heavy , it can impede th e formation " f mon ey capital and stille financial
The ste ep increase in pu blic expenditure since th e Second ~'Iorld ~'Iar

has thus give n rise to farms of ownership th at increasingly eva de th e
circulatio n . The sta te th en risks a po larizatio n " f financial centralization

and a pro foun d alte ra tio n in th e dynamic of ac cumulation.'
Capita l ac cumulatio n is still no! imperilled fur al! th a! ; th e war ec ono my
is a good example. Bu! a sharp inerease in pub lic expenditure cannot bu!
make a far -reaching difference to th e relations of cQmpetition between
capitals. Accumulation co ntinues, bu! the exponsion
01pub /ie expen diture
is a po w erful fac tor in the centralizatio n ofcapital in industry and fin ance.
To take indu st ry first of all, it acts by selective and co ncentrated pu blic
contracts (an overall contract with a pr incipal firm which organizes its own
sub-contracting, thi s giving rise to chains of sub-contracting relationships)
th at centralize great amounts of co ntractual sav ings.
catchment of th e tax sys te m, at least in relative terms, while th e latter has

impin ged on th e incom es ofw age-earn ers more and more heavily . Between
' 945 and ' 97' , th e share of Federal taxati on paid out of prop erty incom es
fell from 61% to 37 %. '
As lon g as real sacial wage costs co ntinued to fall , th e increase in
taxat ion could be abso rbed witho ut any da maging co nsequence far th e
advance of real wages. As a result , co herence was maintained between th e
development of pr ivate co nsumption and th e sacialized serv ices acq uitte d
by th e bud get . But th ese different processes were subjec ted to th e unity of
and by research and development programmes in th e most advance d

techn ological fields. In thi s way pub lic expenditure has susta ined th e chief
surplus-va lue. From th e mid 1960s onwards, th e eve r more rapid advances
centres of accumulation and centralization of capital since th e Second

~'Iorld ~Iar . This was th e economic basis of th e 'milita ry -industrial
in th e sacialized dimensions of co nsumption tended to raise th e cost of th e

sacial repr od uction ofl abo ur-power , at th e same tim e as a crisis erupte d in
co mplex'. Thr ough th e effects it genera tes via exchange relations between
different indu st ries, pu blic expenditure exte nds its influence far beyond
labour organization itself. In th e sec ond half of th e 1960s budget

expenditure leaped ahea d while real weekly wages, after tax , remained
th e imm ediat e results of th ese contracts. Those capitals th at are best
stagnant and pr ofits began to diminish . ~'Ihile bud get expenditure had only
placed far obtaining pub lic co ntracts have been able to make use of th e
flows of surplus profit and th e techni co-econ omi c pos itions thus acq uire d
risen from 7 5 to
to set in mot ion a stra tegy of int egrati on and diversification th at further
accentuates centralization to th eir own advantage. The ensuing increase in
th e regime of int ensive accumulation, in other words to a rising rate of
from
1 ~5
1 ~5
billion to
billion dollars between ' 955 and 1965 , it d imbed
~oo
billion between th e faurth quarte r of 1965 and th e
first quarte r of 1969. This increase resulted both from th e milit ar y
th e tax burden was highly selective in its impact , and greatly co ntributed
expenditure occasioned by th e American war in Vietnam , and from a

gro wth in sacial expenditure and outlays on th e administra tive serv ices
to th e changing far ms of sav ing. Taxation acte d to discourage individu al
req uired by Lynd on Johnson's project of th e 'Creat Society'.
sav ing and th e direct atte mpt to make remunerative investments, and to
Mor e impo rt ant th an thi s change in th e actual rate of gro wth was th e
encourage th e far mation of pools of capital in different institution al far ms
new inflexi bility of th e increased expenditure on welfare pr ogrammes and
(trusts, faund ations, holdin g co mpanies) . Finally , th e very size of th e
th e financing of pub lic serv ices. The acute social needs th at th ese
Feder al pub lic deb t has itself involved th e entire financial sys te m in its
management . This was th e chief fact or in th e reconstitution of th e financial
expenditures were designed to meet co ntinued to worsen in th e ' 97 0s. The

rigidity of th ese new budget expenditures carne above all from th e very
sys te m during th e New Deal, and in th e mon et ar y accumulation during th e
rapid growth in th eir costs, particularly in th e fields of health and ur ban
Second
~'Iorld ~Iar .
It th en became an inst rument of th e banks in th eir
int er vention s on th e mon ey mar ket and in th eir pr essure on th e Feder al

Reser ve Bank to obtain liqui dit y as chea ply as possible. As far as th e stoc ks
issued by other pu blic bodies are co ncern ed , th ey are distr ibuted pr ivately
3. FI NANCI AL CENTRA LlZATIONTH ROUGH PU8 L1 C EXPENDIT
- 21 I 53
serVlces.
In th ese new co nditions th e capacity of th e trade cyd e to modulat e
pu blic expenditure lost sorne of its co ntro lled flexi bility , all th e more so
since th e slowing down in th e gro wth of producti vit y and th e harde ning of
22 I 53
- - - - - - - - - - - - - - - - {o ) - - - - - - - - - - - -
-'
(1
~'Ihite
th e struggle over th e division between wages and profits began to make
The crisis of resear ch is now so acute th at th e
future taxation an explosive po litical issue . These phenom ena greatly
br ing together all th e int er ests co ncern ed in a spec ial co mmission ,

entrusted with summarizing th e met hod s and results obtained over th e
co ntributed to th e pr edominance th a! mon et ar y paliey began to ass ume

over budgeta ry po liey in th e ' 97 0S.
The pr esent decade has thus seen th e eruptio n of a crisis of pu blic
finance . Pub lic expe nd iture has co ntinued to accelera te, al th e sta te and
local autho rity level as well as th a! of th e Feder al govern ment. The inerease
in Feder al expenditure from 18 to ~3 % of GNP between 1965 and 197 6 was
functionally distr ibuted as fullows.
F unctiona l Distributi on ofFederal Exp enditure (by fi nancial year, and in
billi ons 01do l!ars)
past 30 yea rs or so, and putting forward new pr ocedures. The

co mmission's task will be a hard one , as th e deterior ation of American
pos itions in vas t areas of technological d evelopment is asure sign of th e
crisis of th e reglme of int ensive accumulation in its pr esent form o
Conce ntra ted as it is on advance d techn ologies stimulate d by militar y
req uirements, American scientific research pro motes centralized po wer of
disposal over techni cal inn ovation s. By guara ntee ing regular co ntracts to a
limited number of giant cor po rations, and absorb ing all excess costs in th e
Feder al budget, th e US sys te m has rend ered th ese cor po rations somewhat
Fu nchon.
' 9 45 ' 95 0 ' 955 1 9 6 0 1 9 65 ' 9 7 0 ' 9 75 1 9 7 6
Defence a n d Internahon a l
Alfa !r.
8 4 6 ' 7 7 4 3 0 4 8 9 54 7
In com e Sec u r ity
L O
Debt Inter e.t
,., "."
,." ., ,.,
18 3
o."
o.,
Health
Educa h on
Tot a l Feder a l Expenditure
~'Ie
Hou se has sought to
9~7
8~.8
90 9
9 5 1
~ 57
4 3 1 1 0 8 . 6 1 ~ 7 4
11 4
18 3
3 ' 0
3 4 6
,.,
~7 6
33 4
'5 ~
18.~
L '
' 3 '
~3
4 ~ 6 68 5 9 ~ . ~ 11 8 41 9 6 . 6 3~ 4 6 373. 5
can not e imm ediat ely th at th e ' 97 0S have see n a rapid decline in th e
relative impo rt ance of milit ar y and associate d expe nd itures. This decline
passive so far as th e co mmerc ial risks of techn ical inn ovati on are
co ncern ed . It would not be possible otherwise to explain how co rpo rations
capable of mob ilizing, th e most advance d pr od uctive forces in th e world
have aba ndo ned witho ut a struggle entire areas of electronics and
electrical enginee ring to th eir German and Japanese co mpetitors. These
relations of co mpetition expr ess th e co mmercial sanction of co mpletely
different structura l forms. German research and develop ment is far mor e
widely diffused : th e sta te pro vides indir ect support by nurturing initiati ves
un dertaken by firms of mod er ate size, but th e active ro le is played by
technological instit utes run by th e pro fessions th emselves. In Japan th e
has bee n un der way for more th an ~ o yea rs, but since ' 97 0 it has ass umed
an accelera te d pace , as sho wn in th e following table o
directions of techn ical development are far mor e sys te matically organized;
Share ofMilitary Exp enditure in Total Federal Exp enditure (%)
centralize and pro spective studies th at th ey make of tendencies on th e

world mar ket .
' 955
19 6 0
1 9 65
' 970
6 4 6
4 7 6
4 0 .8
3 9 0
pr ior ities are set by co mmercial firms on th e bas is of inform ation th at th ey
The milit ari sm th at has bee n so deeply implanted in American society

since th e Second
~'Iorld ~'Iar
and was initially a determining fact or in
situation of renewed int ernati on al tension marked by th e mul tiplicati on of
Atla ntic int egrati on and th e restor ation of mon et ar y and financial
multilateri alism is now one reason for th e exhaustion of th e dynamic of
centres ofl ocal war , a characteristic sign of th e genera lization of th e sys tem
accumulation in th e United Sta tes th at has set in since th e mid 1960s. Yet it
of sta tes th roughout th e globe. Yet th e red uction in th e relative share of
is th e explosion of th e social costs of th e mod e of co nsumption th at has
milit ar y outlays has had an influence on intensive accumulation, since
very largely co me to do minate th e irrep ressible increase in pu blic
th ese outlays have lon g pro vided th e major directions of scientific research
in th e United Sta tes. Though th e mediation s involved are co mplex , th e
expend itu re , and which is at th e co re of th e crisis of For dism . As Hirsch has

shown in a recent boo k on th e social limit s to th e regime of intensive
ceiling placed on milit ar y expenditure and th e red uction in research
accumulation pursued after th e Second
pro grammes financed by th e Feder al gove rn ment are closely co nnected .
of co nsumer durables gives rise to a deterior ation in th e quality of th ese
It would certainly be wro ng to expec t thi s decline to co ntinue , in a
3. FI NANCI AL CENTRA Ll ZATIO NTH ROUGH PU8 L1 C EXPENDIT
- 23 I 53
~'Iorld ~'Iar,
" th e mass prod uction
24 I 53
- - - - - - - - - - ------{o ) - - - - - - - - - - - -
-'
(1
goods and an incessant pursuit " f purely quantita tive differentiations of

soc ial sta tus. The same precess of relative surplus-va lue which
recipients of pu blic assista nce. The sta te itself co nferred institution al

existence on collections of sca tte re d individu als who would not otherwise
sys te matica lly imp ro ves th e co nditions of co mmod ity pr od uction by its
logic of social division and stra tification, creates genera lized exte rnal
have furmed social gro ups, but only co nstitute such in th e co ntext of
welfare pro grammes of one kind or ano ther. The proj ect of a 'Creat Society'
social effects which th e law " f value doos no! take int o account. As we have
saw th e development of th e dassificatory and identificator y logic of th e
seen, th ese are expressed in th e pro liferation " f sta te institut ion s fur th e
sta te with an eve r more co mplex and differe ntiate d sys tem.
sta nda rdizatio n of econo mic activity. Bu! lhi s sta nda rdization is eve r more
The irresisti ble gro wth of pu blic expenditure, des pite all th e warn ings
costly , to th e extent th a! th e pr escr iptive moo els of soc ial custom involve a
and incantati on s of reactionary po liticians, is mer ely th e econo mic effect of
deterior ation in th e co nditions of appropriatio n of space and tim e . The
thi s institut ion alizati on of social re lations. It is simply th e blossoming out

of th e wage sys te m. The suppression of a given soc ial pro gramme now
massive phenomena of urban co ngestion , and th e mer ciless struggle fur a

ru ng on th e hierar ch y of co nsumption , give rise to a gigantic social waste ,
which mounts ever more rapidly with th e rise in indu st rial prod uctivity .
tends to amount to th e annihilation of th e social gro up created by this
The relative pro gress of wage incom es is decr easingly relevant when a rigid
institution alizati on has transfurm ed th e civil rights movement int o a
sca le of social pos itions is inscribed in bureaucra tic structures th at have

bee n ado pted in all large organizations of capitalism in which a po wer of
mosaic of int er ests attac hed to th e defence of one or other pro gramme .
Since th e sta te has reinserted th e individu als involved int o social gro ups,
decision over wage-labo ur is exerc ised. This permanent pr essure on
th ese must participate in th e genera l pr ogress of mon ey incom es needed to
nominal incom es fuels an inflat ion in which th e losers are more numerous
maintain th eir existe nce. The accelera ting mon et ar y cost of th ese
th an th e winners, as th e increase in average incom es is accompanied by a
pro grammes m a co ntext of inflati on is inh er ent in th eir indexati on to
more rapid deterior ation in social solida rity, a palpable increase in
wages or co nsumer pr ices, managed by an eve r mor e co mplex
insecurity , and a degra da tion of th e enviro nment on which th e quality of

th e int er -individu al activities and relationships th at co nstitute use-values
administra tion, and fed by an expanding number of daimants as th e
depends.
This impo veri shment of use-values caught in th e net work of funct ional
socialization spec ific to Fordism bec omes eve r more manifest . The number
norm s indispensable to th e mass pr oduction of co mmod ities has been
million in ' 977, while th e average monthly benefit paid increased from 84
particularly pro nounced in th e United Sta tes. It is particularly ev ide nt in

th e exd usion from th e wage-earn ing dass of a large number of individuals
dollars to 260 dollars. In th e same period, welfare pro grammes expanded
un able to find a place in th e wage hierar ch y by virtue of th eir age, sex or

race . The extent of thi s discr imination in th e great wave of accumulation of
th e first half of th e 1960s gave birth to a po litical movement fur th e
further ance of civil rights. This pr ocess was a revealing respo nse to th e
develop ment of th e sta te as th e pr oduct of co ntradictions inh er ent in th e
genera lization of th e wage-earn ing dass. The struggle fur civil rights was an
acknowledgement of th e disintegra tion of civil society. In stitution al
guara nte es were now rushed furward to meet thi s threat to social co hesion .
This was th e meaning of th e 'Creat Society'. An institution al machiner y was
established to absorb th e po litical expression of co nflicts th at were
furmerly diffuse and sponta neous, by creating new social gro ups as th e
3. FINA NCIAL CENTRA LlZAT ION TH ROUGH PU8L1 C EXPENDIT
25 I 53
pro gramme .
In
exo rc lzmg
its
po litical
threat ,
th e
pr ocess
of
inability of capitalist accumulation to int ernalize th e costs of th e

of th ose entitled to social sec urity gre w from 20 million in 1965 to 34
from a co verage of 4 million to 11 million peop le , and th eir ave rage annual
benefit from 621 to 948 dollars.
~'Ielfare
pr ogrammes th emselves involve a wide spec trum of inequ alit y

between one sta te and another. This inequalit y is a direct result of th e
auto no my oflocal and regional po litical po wer in th e Unite d Sta tes, and th e
fragmentation of struggles which have had differe ntial success according to
different po litical situations. But th e risks invol ved to daimants in
pro grammes with insuflicient resou rces, co upled with th e thr eat s hanging
over non -guar anteed pension funds, are leadin g th e Feder al sta te to
int er vention on an eve r increasing sca le. This tendency was accentuated by
th e worsening of th e econo mic crisis from ' 973 onward , and by th e tot al
failur e of th e 'revenue sharing' proj ect un dertaken by th e Repu blican
26 I 53
- - - - - - - - - - ------{o ) - - - - - - - - - - - -
A T HEOR\' OF
CA ~ I TA lI ST
Admini.tra tion in 197 ' , The F..der al zovern ment's tr ansfer to th e local
authorities o f a portien o f incom e tax revenue "as supposed lo lead lo a
zr....ter involve ment by the local aut horities in "elfare prozramm... and a
zr adual"ilhdra..al o f rhe F..detal zovernment . Bul this did nol in fact tal<e
place . As rhe local a urhoriries are In general very d""",ly tied lo financial
Ford i.m, and James O'Connor " terms a socio-induslrial complex, could
avoid an inte nsifica tio n o f the c ri... of public finan"". Ir " ould be q uile
illuso ry lo beheve rhat recourse te mar l<et mystique and privale iniliahv..
could magicaUy hmir the tal<eover by the sta le o f Ihe social c:osts
"ngendered by rhe e xpansion of commodity re iatiOIl5. ~"e are no " in a
poRtion te define rhe ch iefcha tacte ristia ofthe crut5 of pubhc finance ud
its connect ions wirh rhe general ctists offordtsm.
and property inte reets, rhey used these funds to N!piaoe loaal taJ<ation,
..luch "U reduced or held C'OtISIan t. t...ss than a le nth of the funds
rransterred from the federal budg'i!t .."", used for th" PIUJ'OS'" of pubhe
(/) 11>" (/lXI/lIIl1/(/tlOIl 01dqiClts tllld the bllrdrll
-~.
desptte everything , ,md ..t ..n ev..,. mor e rapid ral". This is partIcularly
evul ent ID the ClM of unemp\oym...,t bon"fits. In so far as these fall Wl.lhin
the com pet ence of the dl/ferent st..l..., th..,.e ar e v<>ry wid" dtspantles from
Olle st..te to anothotr , ID the I...el of paym...,ts, th" l<mgth of time for which
th ey are paid, ..nd the CODWtions of ehgtbihty for th"",. Tbe zt"OWI.DZ
num bef of unemploy ed ..ho ar e lDehgtble Oll grounds of not havtlll held
the same ;oo fw the r.cuislle period of time (e.l . wom"n , YOUllg people,
unsblled ""01"00 " 00 hav e ~lfered forced mobihty ). and th e exhaus1:lOtl
of available fundlI in etain sta tes , led lOf eder al government lIltervention
more in the 197 CW than in the enttre prevtous history o the Repubhc. fmm
1_ than ~ oo billiOll dollars in 197 0 , 11will. reach al leas! 850 billiOll by th e
end of the 197 9 financial ye.ar. Ev..., dunng the upswm g of the lrade cyele ,
th e aVotrage f edotral defiCtI ..u lOlIIe 50 billiOll pe! year. The fact \hal the
f ed....allovernment ilI be.anng .....,. more of th e w",ghl of the soci.aI COSIlI ot
ca pllahml ilI att est ed by lhe llv..,.age llIlIlual surplus ot JO billion dollars m
th. b~gets ot lh e local and sta le lluthonlles. The enormous f ederal debt
dunlrbs li.n.anciaI rireulation in several waY"'. In the fin! pillee, the
pt-..re e xe lted by the iau<l a lld ten_al o f government bonds u..p5
Iong re rm mterest t ates a t very high 1"",,1s,so pow;!rfuIly contnbutmg to
indallOn. Seco ndly, .eme of this pressure Oll natwna1 savtllgs is oifs.er by
th.. key poation enjoyed by 11_ 'iorkc iD iDternatwna1 fin.a=.e. At th..
in 197.0. and 19750 Congrea l>OW aIloeated f ederal funds to guarantee the
paymenr o f benefits fw six ~tion.al mon ths at times whe n 4'" o f the
pop uJation o f a sta te have been out of ooorkc ror three mon ths o r more. Ir
abo elCtended une mployment msuranc:e to workce... woo had not
prnlously been ccvered, a nd aut~ the rantmg o IDlerest-fr....
Federal loans ro stares ..hOM funds had been exhausted. f ede ral asstStance
..u abo extended 10 sociaJ. Me'Unty, ID an attempt to me;1 the explostve
riM in costo of collect1ve consumption. The WV'!!l'S1ty of systems of
retu"ement and S1nea benefit (on1y five stal... had legslatlon mohng
pr....nt momen r, foreign instI.tut1Ons and pnvate indtV1d.uals hold more

rhan zo '" of rhe Federal debt ov..,. the whole range obonds. Thoil5'e fu,.....gn.
h..ld portfohoI; are, however, always hable to redeploymenl. Th..

hquu:la1:lO:ll of even 10'" of the ..pproxunately ,zo billion dollars of d..bl
now held ..broacl ("I"inst onIy . 0 billion dolla... len Y<MI'S ago) would
unieuh severa tensin "Cl'OSS the whol e range of IDI"rest ra l... and
pre<ipit..te .. major fall of the doliar on exchange mar l:els. Thirdly, lb<>
such insunnct obhg.u ory) led 10 .. recasttng ofthe OASO!. This system, ...t
up in the In a., financ:ed old ..ge ..nd dlSabihty penstons fur employees oul
of ccntrib utions levied on ....ges. The ben efits paid ros<> from , 6 billiOll
dollars in 1965 to z9 billion in ' 97 0 and 69 bilhon in ' 975. The Medicar e
prozr..mme, ror inst ..nce , in..uguraled ID ' 965, finan""", medi cal car e for
old people ..nd those in need , ..hile Ihe Medicaid programme pr ovides lhe
continuous riM in publi c debt hu substanliaUy incr....sed. Ihe burd"n of

inlerest , f rom 18 billion doll",. ID ' 97 0, Ihis has now reached 50 billion
(1976); more th an 10 '" of the total is now ""id lo furetgn credilors , which
au ra vat" tb<> deficit in th e curr enl balance of ""ymenls.
The cc ntrrbuticn of Ihe f..deral debl lo Ihe very high and permanenl
dilferent st..t" ..ith subsi dies ror people already r""etving assista nce .
Thi. ana ly":. confirmo our cond uslon that only the tr ansfurmation of
Ihe r9lime of inten .ive a<'C umulalion mIo " hal " e have called leo-
~ I NA N C I A L
CE NT RALlZAT ID N T HRDUGH PU8L1 C EXPENDIT
o/p llb/ie d..bt. The federal
budget has been in de/iCtt for sev...,leen of the past ",ghle;n years. 110
rmprovement ID tm. S1tua1:lO:ll1S ...,vwged, ID fact qwle the reYe"",. If 11
con tlDUa. Oll lts pr.....,t ccurse, U extrapo\a led by the lIlOSt hLtly
fi::>r"ec.tsts for" the end of th e dKade, Ihe fed..,.al debl will. hav e IDcreas<>d
Tbe f ederalgovernment ', sociaJ. budg'i!t has thus contmued lo 1n<:NaSe
J.
RE GULATI ON
27 I 53
2 8 I 53
-'
(1
credit py ra mid of th e American econo my, whose effects we shall sludy in

Cha ple r , has no chance of being red uced O" even stablized in th e near
futur e. No ! only would it be impossible to hall th e rapid inerease in social
capitalist dynamic is not rigor ou sly depende nt on th e pro portion of th e

pr ivate sec tor vis-a-vis th e pu blic sec tor, or of indu st ry vis-a-vis serv ices.
The pertinent th eoreti cal distin ction is th at between th e mon et ar y
expe nditure, bu! th e very weak toleran ce of tax ati on th a! America n society
expression of the co mmod ity pr od uct and th e rights of purchase th at are
exhibits depr ives th e Feder al gove rn ment of any room fur manoeu vre. The
recen! referend um on Pro posili on ' 3 in Californ ia, eve n if it only affects
local taxati on , indicat es th e fiscal borrier th a! is imposed by th e pr esent
mentalit y of man y st ra ta of wage-earn ers, to which co mpeting po liticians
acq uired over thi s co mmod ity pr od uct by th e fraction of th e tot al incom e
th at results from non -mar ket ed activ ities. An incr ease in thi s share may
result from public exp end itures, but it can also result from pr operty
speculatio n or from a disproportionate gro wth in co mmerc ial and financial
are keenly attuned. Yet th e tax pr essure in th e United Sta tes is very light
when compared to th e levels th a! th e Social-Democ ra tic gove rn ments of
int ermediari es. All th ese red uce th e fraction of incom e th at mar ket ed
activities can keep fur th eir own expansion, i.e. accumulable surplus-va lue.
Northern Euro pe have managed to achieve. In th e USA, Congress has

passed a whole series of measures designed to attenuate th e movement of a
In th e United Sta tes, according to Bacon and Eltis's calculations, th e rate

of grow th in th e per capita commod ity pr oduct ava ilable fur accumulation
gro wing number of taxpayer s int o th e higher fiscal brackets. On top of thi s,
th e multiple cecasions fur tax relief pro vided by th e thi cket of an over-
was only 0 .3% in th e period 1965- 74 , as against ~. o % in th e pr eceding

decade. This decline in th e American economy 's capacity to engende r an
co mplex legislati on gives rise to co nsiderable losses of fiscal receipts. This

is why th e co mbination in th e last five yea rs of po litica l pr essure fur a
accumulable surplus-va lue in th e way th at it did in th e past is th e result of
reduction of taxes and fur th e exte nsion of social rights has co nstantly
frustrated th e experts in th eir furecasts of a balanced full-employm ent
in th e rate of increase in pr oductivity and th e increasing rate of

unproductive deductio ns (i.e . unproductive of future surplus-va lue). The
budget, which has now bec ome a real myth . On top of the deficit due to th e
direct result has been a quas istagnation of private per capita co nsumption
sev ere recession of ' 974 - 7 5, th er e is a structura l deficit th at is far more
of co mmod ities in the same period 1965- 74 (a gro wth rate of 0 .4% as
serious fur th e reg ime of int ensive accumulatio n.
against ~. o % in th e period 1955- 65), which is co mpatible with our earlier

observations on th e stagnatio n of real pos t-ta x wage incom es. Contra ry to
(b) Pl.l. blic expen diture and the stijling 01 p rivate investment. A
co mparative macro -econ om ic analysis of th e increase in pu blic
expenditure, or more pr ecisely th e soc ial costs of Fordism , has been
un dertaken fur th e th ree major Anglo-Saxo n co untries (United Sta tes,
United Kingdom , Canada ) by Bacon and Eltis." This analysis uses a
terminology other th an our own , but it is gove rned by th e same
perspective . In th e logic of th e capitalist econo my, only what is pr od uced
as a co mmod ity can be th e object of an auto no mous pr ceess of
valorization. Ever y other social activ ity, whether pu blic or pr ivate , must
be financed by a deduction from th e mon et ar y surplus de riving from th e
excess of th e sale pr ice of th e co mmod ity pr od ucts over th eir costs of
pr od uction . This deductio n reduces th e funds ava ilable to finance th e
expansion of co mmod ity relations by accumulatio n. In th e co nceptual
framework we have adopted here , thi s magnitude appears as accumula ble
surplus-value. Bacon and Eltis argue th e same case . They sho w th at th e
3.
FINA NCIAL CENT RALl ZAT IO N TH ROUGH PU8L1 C EXPENDIT
29 I 53
th e co mbination th at we have already examined of a significant red uction
th e case in th e United Kingdom , th e United Sta tes has not experienced a

collapse in th e rate of pr od uctive investment , but ra ther a parallel slowing
down in th e gro wth rate s fur co mmod ity pr oduction , pr ivate co nsumption
of th e net co mmod ity pr oduct , and pr oductive invest men t . Between ' 955
and ' 97 5 th e pr oportion of pu blic pu rchases has grown from
~3.8 %
oft he
gross pr oduct to 3 4.~ %. But as we have already noted , th e impo rt ance of

lceal and sta te finances relative to th e Feder al budget (until recently sorne
40 % of th e tot al) has led to an extre me region al inequalit y in both pu blic
expend itu re and tax burden. The result has been an ada ptive capacity
within American capitalism which is not ava ilable to other countries. There
was an int ense migrati on of pr od uctive activities (investment and skilled
workers) into regions with low social costs and a reverse migration of th e
mar ginal po pulation in searc h of pu blic assista nce to regions of high social
costs. It was the mobility of US capital, th er efure , expressed in a
geogra phical redistr ibu tion of co mmod ity pr oduction , th at made possible
30 I 53
- - - - - - - - - - - - - - - - {o ) - - - - - - - - - - - -
o
A THEORY
os OPlTAlIST
REGULATION
a ralative maintenan C'e of accumu lation . Bu! lhis for<:'ed mobility involved a
The betrer-off groups aband one<! th .. ur ban centr" on a m...sive se..le ,
te rrible soci al ..aste . The pr ocesll of destabilizing migra tio n led lo a naw
followe<! l..ter by th e middle-incom.. gro ups. More and mo re, th e

popuLotion I..ft in the big eitm WllS DWi.. up of unsl:ill.d. wor l:en cr
fonn ofsocill m.t1o.dy, lhe urball crisis.
\lfImploy.d.,;as ....U U
(e) Thr urhern <TUi.: cm acu re form al tite antagoni>"m h It""'" rUing
IOcial C'OsN and cap;talist ae<:<lrnlllotlon. Th.. ctVll n ghts mO"'f ln"nt of the
early 19601 found i n institutional "xpt $llsion mOl! e sily in lhe lar ge
industrial d lies ..here Democratic . mini. lta lians "'ere . olidly
ontablished. Political coohtions W<ilI"e formotd lo ext..ud public usistance, 10
ltUllOnti"".l(ciudl. frem th.. wag.. syst~.
Th.. mdlgence of toonanlS, and tb. spr....d of r..nt stribs, 11. liond1o:rds to
..b.ondon th.. upk....p of d....lhngs, """,bng ",th..,- to ewm ,nsurancoo fo:r
d..mage , or else el(pecting to profit from .. possibl.. renov ation finance<! out
of municip.ol funds. A chain r ction th en Mt in: degr..da tion of ho using in
v.ory widSpl"Nd IlThan zo
, detericration of col\ol!ctiv.. cilitm ,
re medy rb.. detenontlllg quahty o.nd ~u.a t" qu.o.ntlty of <:oU1!.ve

cihtles, 10 Unproye wa es md worbng COlldlt>ons
.. thnie
br~ o f ..,.,.,., control,
ro.. empWyees in lb..
.oo..mic
deltnqU<!l>C)' and v>o[,.ne-e, ..00
public s",rW:M. Munici p.ol authontt.... had 10 moot a v"I'Y rapid in~ In
fin.oIIy dJ>P'Nfane-e ofLuung budgM"'Y defialS.

Nh ..n th.... ruaho n had l"Nehed .. high degree of soci.1l wrn.. , th..
lb .. opera ting oost. 01lh e.e . er viCfl , and in social ben e ts. In lb e eupho ric
financial co mmunities ...ho m..de up th e chief credito rs of municipalities
almosphere produce<! by lh e rapid growth a f lh at pet iod , th ey ..lectad to
obt..ined th .. capitu l"lion of polilic..l ledden ..nd imposed austerity plans of
combin.. comp~ W1.th tb. d.."",nd fo:r an improv"m..nt in public
,,1(Ireme bruuhty. Tb. eU<!of ll.... York i$ .. ump\.ary in Ibis regH<!. In th..
MI'V1C'I!S, consid"re5 th .. eity Iost 20" of itl tndustri.ll ;obs dIId NW ever more ....l r
..ccommodiolton to tb. pressure oflandloro., """'lllcrur<>rs ..nd finaneiet"l
cLotm.mts llrnV". A pow.erfuJ. popu\M mov"'Mnt ~ed in obtllllling
_ to r<>SlTiet lh.. growth in toutio n . Th.. " n m<lu.l.. solutlon to th.. fmo.noo
th.. high"'l l..vel of social be nefits in th....hol.. Uniled Stal"', th.. mosl
pr obl"m " U th"r"fore unlimit e<! de bt .

This solulion, d...igne<! to ..vo id th e establishment nf the po litic..l
prionti.... _ntul fo:r g"nuID" urhan pl annin g, <l1lllbled rnllny CltlOOS te
...idespre ad net...ork of public hospita ls and the only major free unive rsity .
b..I.ndle contl"~ory inlerestJ fo:r .. deed. or so. Oth..rs . bowever - of
Ml'ViCES. Muni a p.al expendltul.. unde...... nl " st au ermg .."""l..rabon , ftom
..hieh th .. most
t..mou. "XdlIIple i$, of eours<t, u.... York -
Muniei""l officillls "on ,."I." i"" ..nd condilions of .. ork which ..blJOrbed th ..
gllUlS m producti....ty denvl. from th" .. fforts 10 rUIOnali%e the public
..ere propooUed
8 bilhon
doILo.rs in '-;>sS 10 2.3 m 1960 , 4.0 bilhon m ' 9" S, 8 .1 bilhon in
inrc struetur..1 chang... tlLat m..d.. th.. debr burd..n intol"rabl. Th.. rapid
' 97 0 , and 12.6 billion in ' 97 S. Dunng the ' ,?6OS , the banl:s and o ther
gro ..th nf suburbs d ter th.. Second Norld Nu brought ..bo ut major
financi al institution s sa'" it in their int erest to subscribe to tal(-free
clLang"" in th .. distribu tion nf popuLotinn. The bierarchy nf soci..l pos ition
munieip.ol bonds. IM with th e glllle"'] riM in ind..bt edness, th .. "'dreity of
Uf\l.ffied lhe 10PO\oglC" fonn of .. soci.ll\ S'e'gl"oog.. tion of IlThan ~.
e..p'W ..nd th.. su~u..nt lIICT&ilS<! m 1II1<!N!St r..r...., thay ~ te
~t>oll h"r.. is 1ICOD<HIlic, o per..tIIlll through th " pn<:. afland. Al
I\lbscnbe to th
.,....ys, \w<oov,,,, tlnJ economic reLotiOlllhip is sunply th.. gu>s<t .ossum.d.
th.. Clty of ll
Yor\: WllS m th ..... hands.
From ' 97 4 on...ards , the COI! of further e re<!it lIlcrease<! significantly. In
by .. soci ..l re lation in the are n.. o f b nde<! propert y . ["egisl..tion tlLat .....
elctr"m"ly f..vo urable to r"al est..t" o..nen , th" po litical inl1uence nf the
nd imposed .. shortte rm deb t strwtur... HellC<!forw.ml
liotter on loc" ..uthoriti"", ..nd tb.. p.ortieip.otion of m..jor findncilll
spring >97 S the banl:s un leashe<! a financial crisis. Rejec ting th ll issue of
n.... mun icip.al bonds, they imposed .. n.... incr _
in shOM-t..rm debt
insIltutlotlS m th.. constr\lctlOfl tndustry, combin.d. lo tIlllb the U"!
..b.i\.. th. f ed-eral gov.rnm..nt r.. fused to Vant any uCption.olllid. In JUM
Alnencan ah...... veril..ble p.lI".. <hs<> for property specul.1ti01l. The resull
"lIS .. constant prccess of IlThan uph..v" ..hich Locl:ed any plann.d.
1975 th .. Munictp.al Asstst ance Corl'o....tion was cr"'led

COn50hd.atlng this d..bl and restructunng the aty budg
direction ..nd ..... fu more far-r....ching ..nd rapid llLan an ything that has
of
An ..ust<m!y
prog ra mm e of el(treme severi!y "' as infiicte<! on th e po pulati on . Po...er

p.osse<! co mpletely from th e elacte<! authcrities to thll representati ves of
bee n seen in Europe .
1 FltoIANCIA L CE NTRALllATION THROUGH PUBUC EXPE NDlT
th the tm
n i 51
11 I 51
-'
(1
th e financial gro ups. Municipal emp loyees, tax-payer s with mod est
resources and user s of pu blic serv ices were al! affecte d together : dosure of
By th e profound change it effects in th e relations of co mpetition , th e

centralization of capital also moo ifies th e structura l form in which th ese are
municipal hospitals and fire sta tions, red uction of uni ver sit y activities,
expr essed . The enterprise is transform ed int o th e giant corpo ration. The
cutbacks in ur ban transpo rt , inerease in laxes, suppression of sorne tens of
giant co rpo ration is a co herent , autonomous and dy namic structure
thou sands of municipal job s, forced subsc riptio n to municipal bonds by th e

trade uni on s un der threa! of new dismissals. The New York financial crisis,
int eri orizing part of th e social co nstraints involved in th e valorization of
imposed with th e pos itive support of th e Feder al gove rn ment, has an

exemplary significance fur th e forms now taken by dass struggle in th e
sta ndpoint:
(1) The orga nization that is th e structure's characteristic moo e of
United Sta tes.
articulation, in other words th e unifying pr incipIe of th e manageri al
III. Tite F o r m s ofCen tralization o fCap ital : T h e Giant
pr actices inh er ent in th e valorizatio n of pr oouctive capital. This

organization sho uld not be pos ite d in an a pri ori fashion , which would only
capital. Analysis of thi s structure must be unde rtaken from a dou ble
lead to th e abs tract and purely logical analysis of its int ernal relation s dea r
Corporation and t he F in a n cial Grou p
to organizational th eorists. It must be un der st ood as th e pr oo uct of
As we have seen, th e int egrit y of an individu al capital is depend ent on th e

renewal of a valorization cyd e . This doos not just ensue sponta neously.
co nstraints determined by th e relation s of pr oo uction and exc hange, which

obviously indude first and fore most th e antago nism of th e wage relation . It
The int er -connect ion and coordination between th e different phases in the
is alsa a response to co nstraints in th e sense of a resolution of
met amor phoses of value req uire spec ific practices of management . The
organization of th ese pr actices forms a de nse network of econo mic
co ntradictions and th e searc h for a co herent set of econo mic pr actices.
relations, which takes th e structura l form of th e enterprise. The existe nce
Organization is th er efore a structure in mot ion , on which th e

transform at ion of th e social co nditions of pr oo uction sta mps a law of
of this structure makes it possible to effect a certain partition in th e field of

econo mic relations. The int er weavin g of valorization cyd es is not
develop ment .
(2) The planning and co ntro l th at repre sent th e principIe by which th e
eq uivalent to an und ifferentiated who le. Thr ou gh th e unity it pro vides, th e
structure funct ion s, and explain how th e stability a f its a rganization is

ensured , in other words how it is repr oo uced , and how capitalist ownership
ente rprise pr otects th ose practices th at are vita l for th e int egrit y of th e
capitalist po wer of disposal within its bounda ries. This is why relation s of
co mpetition are expressed as extern al relations between ente rprises. All
th e illusions symb olized in th e hypo thesis of pure and perfect co mpetition
derive from thi s. The existe nce of th e enterprise, readily appare nt to all, is
idealized int o a subjec t, an ato mic unit witho ut any significant metabolism
of its own . This subjec t is equipped with certain ad hoc behavioural
orientations, so th at relation s of co mpetition can be expressed as an
is sec ure d. It is necessary to distinguish dearly between managerial

co ntro l and proprietary co ntro l, if we are to un der st and th e relationship
between th e two . It is th e co nfusion between th ese twa types of co ntro l,
co mbined with an analysis in terms of behaviour , th at has led to th e
ideology of th e disappearance of capitalist ownership and th e advent of th e
era of th e 'managers' , in which th e technost ruct ur e is a subs titute for
ano ny mous coordination of decentr alized decisions genera ting a uni ver sal
pro perty .
In order to dispel th ese illusion s, we must study how th e different
harmony . Thereb y the real significance of co mpetition is fundamentally
aspec ts of th e centralization of capital are articulated.
obscured , since th e relations between ente rprises are only scientifically
it is co ntrol over pr operty itself th at is ultimately at issue in thi s

centralization . This is why financial centralization is the dom inant
int elligible on th e bas is of th e determinants of th eir int ernal funct ionin g:

th e struggle of capita ls for valorization un der th e co nstraint of th e law of
~'Ie
have shown how
accumulation, de riving from th e overall antago nism inh er ent in th e wage
characteristic of capital centralization . ~'Ihen th e valorization of pr oductive

capital in indu st rial ente rprises can no lon ger occur witho ut th e formation
relation .
of vas t associations th at hold mon ey capital and convert wage-earn ers'
111 . THE FORMS OF CENT RALl ZAT ION OF CAPITA L : THE GIA N
33 / 53
34 1 53
- - - - - - - - - - - ----<0 1 - - - - - - - - - - -
-'
(1
sav ings int " mon ey capital, ownership is form ally partition ed int o rights
repr esented by share till es, and its unity takes th e legal form " f th e joint -
was satisfied by th e creation of a eentra lized /un etional strueture with th e

fullowing govern ing pr incipIes:
stoc k co mpany . This is why th e question of th e capitalist po wer " f disposal
(1) Creation of /un etional depar tments. Each major functi on of
over pr od uction takes th e form of th e co ntrol over pro perty exercised in

th e ente rpr ise by coalitions of capitalists who wield th e weapo n of financial
management became th e respo nsibility of a central organ , with lecal
centralization to th eir own adva ntage. The name fi nance capital" is

properl y given to th e mediation by which coalitions of capitalists exerc ise
exec utive organs tied to it in strictly hierarchical depende nce . The result
was a product ion d epartment fur eac h category of co mmod ity . If an
ente rprise involves severa l typ es of prod uction precess, th en th e
proprietary co ntrol over th e structura l forms necessar y fur th e co ntinuing
funct ion al structure cuts across it . The functi on al product ion department
cycles of valorization of producti ve capital, th anks to th e centralized

mon ey capital al th eir disposal. Finance capital is no abs tractio n. It takes
is th e organizational structure fur a vertical integrati on of labour

precesses. The central organ of th e functi on al dep artment lays down a
co ncrete furm in fi naneial groups, which are sys tems of inter relation
producti on norm fur eac h int egrated precess, defines th e criteria of
effecting th e co hesion of finance capital. Study of pr op rietary co ntrol is

th en th e study of th e mod es in which th e financial gro ups are articulate d to
per furm ance fur th e different uni ts in relation to thi s norm , notes
divergences, analyses th eir causes and spec ifies th e co rrections needed .
th e str uctura l furm of th e giant co rpo ration in such a way as to fix its
The infurm at ion exchanged within th e department , th er efure , as well as its
stra tegy and direct its operations.
hierarchical relations and respe ctive co mpetences, are strictly spec ified by
th e vertical functi on al structure. This makes it possible to spec ialize plants,
l . T h e Ev olu t io n o Modes o CO'l'orate Organization
abolish th eir autonomy and coordinate th eir activities.

(2) The sepa ration 01 produetion and s ales int o distinct functi on al
The histori cal success ion of th e predominant furms of co rpo rate

organization in th e Unite d Sta tes was engendered by changes in th e regime
of accumulation. These peri od s of change had far -reachin g effects on
propriet ar y co ntrol, by giving rise to major waves of mer ger s. The changes
in organization were thus accomplished by way of crises th at involved
acute co nflicts of ownership ."
departments. In actual fact , once th e prod uction units are spec ialized as
segments of an int egrated precess, th ey bec ome incapable of realizing th e
value of th eir output by sale. A functi on al sales department , organized
vertically int o sales uni ts and a centre fur th e coordination and co ntrol of
th ese units, manages those operations th at ada pt th e ente rprise to th e
co nstraint of realizing value. The sales uni ts receive directives th at set th e
(a) The emergen ee 01 eonst raints on valorizati on. The first great wave
essentially co nsisted of th e horizontal and vertical type of mer ger . It saw
prices of differe nt co mmod ities, method s of pro motion and sales quo tas fur
th em . There is no hor izontal co mmunication between lecal producti on and
th e development of th e co rpo ration with severa l distinct plants, co mbining

un der one single autho rity uni ts which collabo rated in th e producti on of
sales units, only between th e central organs of th ese departments. The
one and th e same category of co mmod ities. A pur ely furmal centralization
of ownership was un able to ensure effective exercise of thi s single
th at uses fixed channels, stabilizing and reinfur cing it .
authority. The furmerly independent capitalists who remained in charge of
funct ion al de partments and subjec ts th eir management to th e single goal of
th e various uni ts co ntinued to act independently in decisions of day-to-day
th e accumulation of centralized capital. To break th e rivalries over th e
management . Changes in per sonnel , eve n if necessar y , were not in

th emselves suflicient. In order fur th e new gro ups of centralized capitals to
co ntro l of pr operty engende red by th e centralization of capital, a striet
be integrated fur th e co ncrete operations of valorization, th e co mpo nent

units had to be co nstrained to act as links in a single who le , by th e
organization of new relations internal to th e co rpo ration . This req uirement
" THE EVOLUT ION OF M ODES OF CORPDRATE DRGA NI ZAT IO N -
35 I 53
centralized funct ion al structure thus involves a circ ulation of infurm ation
(3) The creation of a head offiee th at effects th e coordination of
sep aration must be maintained between routine managerial aetivities, as

pursued in th e functi on al de partments, and the aetivities 01the enterprise
as a wh ole. The latter involve th e furmulation of stra tegic goals, th e
assessment of per furm ances from th e sta ndpoint of th e valorization of
36 I 53
- - - - - - - - - - - - - - - <0 > - - - - - - - - - - -
-'
(1
capital (the criterion of th e rat e of profit ), and lon g-term planning of future
activities. The head a flice takes sole charge of th e activity of th e ente rprise
reflected th e incapacity of th e structure to master th e int er sect ion s of

different funct ion s and econo mic lines.* Per form ance indicators for th e
as a whole , and in a rder to coordinate th e vertical funct ion al de partments

it seIs up departments with a horizontal co mpetence , of which th e main
different departments co nfused different pro blems and no lon ger gave any
dear inform at ion . The ccordination of exc hange flows between th e
are: personnel , respo nsible fur co l1ective bargaining, dealing with co nflicts
and organizing th e manageri al career structure; and fi nancial, responsible
funct ion al departments was thus co mpletely disrupted . Overcapacity in

certain fields went together with un dercapacity in others, since neither
fur accounts and reserves, as well as th e pr epar at ion and application of
product ion norm s nor variations from th em co uld be registe red any
financial po licies. The head a flice itself, which may be organized int o
lon ger . In such co nditions, activ ity by th e ente rprise as a who le became
impossible . In every case in which th e pro blems thus encountere d were
exec utive and financial boa rds, decides on th e use " f liqui d asse ls and
autho rizes expenditures as th e sole centre of po wer in th e enterprise .
effectively analyse d, it was discovered th at eac h econo mic line within a

funct ion al de partment was managed eflicient1y, but what was lacking was
(b) The emergen ce 01 the fi nancial co nstraint. The esta blishment of th e

regime of intensive accumulation gave rise to very serious disturb ances in
th e relations of co mpetition , to which th e centralized funct ion al structure
was incapable of respond ing. A gigantic organizational crisis prevailed for
more th an a decade , punctuated by th e wave of mer ger s of th e First
~'Iar ,
precedin g th e big wave th at culminated in
'9~9,
~'Iorld
and th en by th e
shoc ks of th e Creat Depression. In tensive accumulation forced th e

centralization of capital to change its nature ; it tcok th e new direction of a
diversification of producti on . ~'Iith thi s diversification , capitalist

managements encountered an entire ly new co nstraint . The need now was
to subjec t capital to an overall objective of valorization, in various fields of
co mmod ity producti on in which co mpletely different co nditions of
ccoperation between th e funct ion al departments to ass ure co ntinuity of

valorization in th ese lines. The lack of separa tion between th e co nditions of
pr oduction and exc hange in th e different econo mic lines meant th at it was
impossible to know which was profit able and which was not , where
co rrective action should be taken , and how its impact sho uld be measured .
It was th e sales de partments on which th e most acute inter -departmental
tension s weighed direct1y . New pr oducts were created , but th e social
de mand for th em was entire ly unkn own; th e sales departments had to deal
with very differe nt typ es of customer and market reaction according to th e
co mmod ity involved . The pro blem was less th e lack of market research
th an th e lack of any adequate structure to transmit impulses from it to all
th e operations of valorization.
pr od uction and exc hange prevailed . This problem exerted insurmountable

tension s on th e centralized functi on al s tructure and burs t it aparto The
result was a new divisional structure.
*f"'u. ...
o" om'o "", t"n, ' t h.n" fo" . u . ..
~ "n.m"
h n . ' ;, toohn;" n . -;n t. , ,,t
, .,t.m . f;n. u," ;".
This structura l transform ation tcok more tim e or less according to th e
The fundamental prin cipIe on which th e solution rested was to make th e
particular case , unleashing int ernal co nflicts th at were more or less acute,
un der th e co ntro l of gro ups th at often changed. This was so because th e
co mmod ity rather th an th e functi on th e bas is of th e organization . The new
structure of th e giant co rpo ration is th e outco me of th e co nstraint of

co mpetition , l.e. of po wer relations within th e capitalist dass.
sub-grouping of th e structure became th e division , created by co mbining

th e co nditions of pr od uction and exc hange co rrespo nding to a category of
co mmod ity . It follows from thi s th at divisions are centres 01 profit . The
cyd e of producti ve capital: inability to foresee very differentiated
division must be co nsidered as a sub-ente rprise, autono mous in terms of

day-tod ay management . Each division is organized inte rn ally according to
co nditions of sale and to ada pt to th ese , inability to analyse costs and
th e pr incip Ie of centralized funct ion al structure. But any two divisions
separa te producti on norms, inability to select investm ent project s.

Ccordination between departments was co mpletely bloc ked , and th e head
co rrespo nd to distinct spaces of valorization. In thi s sense, th e structure is
Dive rs ification brought aoo ut insurmountable tension s in all phases of th e
oflice submerge d in th e flood of tactical decisions of a ro utine nature . This
decentr alized , flexi ble and open-ended . The ente rprise can expand int o
new spaces of valorization by adding on new divisions, without th e
structure being called int o ques tion.
" THE EVOLUTI ON OF M ODES OF CORPDRATE DRGA NI ZAT IO N -
37 I 53
38 I 53
- - - - - - - - - - - - - - - <0 > - - - - - - - - - - -
-'
(1
The unity of the enterprise is effected by th e transfurm ati on of th e head
th at we have termed Neo-Fordism. It genera lizes th e division ofl abo ur int o
" flice int o a general office, responsible fur th e planning and contro l of th e
ente rpr ise as a whole. The profit abilit y of th e divisions is th e criterion fur
semi-autonomous gro ups at th e level of th e sum tot al of manageri al
jud ging th eir management . The dominance of th e genera l " flice over the
divisions rests on th e centralization of th e cash f10 w engende red by th e
co ntrol!ed by a co mmo n objective . The pro gramming of th e co nnections

between eac h unit makes it possible to do more th an simply give eac h
divisions and its alloca tion according to th eir pro fitability and th e
objectives of overal1 finance pa liey.
operational agent an exec utive autonomy. These agents can int er vene in
th e overal! manageri al pr ocess on th e bas is of th e infurm at ion with which
pr actices. This genera lization co nstitutes participator y management
th ey pro vide th e central organ . By bringing int o ful! play th e observation
(e) Perspectit'es 01change in the orga nization: the corpo ration as a global
system . Al th e pr esent tim e co rpo ratio ns are in th e pr ecess of unde rgoing
an organizational transform ati on just as radical, if no! more so, as th a! from
th e centralized funct ion al structure to th e decentra lized division al
structure. This transfurm ati on leads back in th e direction of centralization ,
but on a co mpletely new pr incip Ie . ~'Ie have see n how th e pr incipIe behind
centralization on a funct ion al basis was vertical hierarchical depend ence .
ofcompetition by a tr ansfur mation of norm s. It bec omes in its tot alit y th e

weapo n of finance capital in its atte mpt to plan th e rhythm of
The new centralizatio n rests on th e pr incipIe of infurm ati on . ~'Ie have

already seen how thi s enab les co nstraint by directive to be replaced by th e
sys te matic co nceptio n of management has been developing fur at least a
direct co nstraint of pr oduction . The same pr incipIe exte nds from th e

co ntro l of pr od uction departments to th e co ntro l of th e sum tot al of
manageri al pr actices.
Centra lizatio n on th e bas is of a self-mo nito ring manageri al structure
involves th e entire co rpo ration in a single sys te m on which eve n th e higher
levels of respo nsibility are depende nt . Instead of th e coordination of
functi on s being a gro ping pr ocess of hierarchical relations, it bec omes a
planned pr ocess co nceived in advance and organized as a whole . This mod e
of organizatio n has a single ner ve centre in th e sha pe of th e centra l
coordinating and p la nning orga n, towar ds which al! infurm ati on
co nverges. This organ int egrat es al! functi on s of th e co rpo ration and
and initi ati ve oflocal agents, th e firm can greatly imp ro ve its sensitivity to
its env iro nment. The structure is co nceived so as to react to a mod ification
transfurm ati on of th e co nditions of pr od uction .

The possibility fur firms to evolve towar ds thi s mod e of organization
rests on two developments. On th e one hand a more rigorous and
decade . This involves th e pro gressive mechani zati on of al! ro utine
manageri al tasks (assembly of quantita tive infurmat ion , calculations,
presentation of accounts and perfurmance indices, etc. ), th e refinement of
planning and budgeting method s, th eir repr esentation by sequences of
operations th at
are pr ecisely definab le and logical!y linked , th e
impro vement of techni qu es of pr ed iction and co ntrol. On th e other hand ,

th er e has also bee n a mor e recent movement towar ds auto matic
pr oduction co ntro l and co nnected operations. The establishment of
auto matic sys tems of management co mes from th e uni on of th ese two
tendencies. It bea rs within it a rad ical separa tio n between th e tasks of
co nceptio n and of exec ution in al! econo mic pr actices, not mer ely in
transmits th e necessar y directives on ro utine management and its co ntro l.
pr oduction itself. It tends to suppress the int ermediat e levels of th e

bureaucra tic hier ar chy . It has been estimated th at within a further ten
If th e divisional structure topped by a genera l oflice had th e furm of a

pyr amid , th e new manageri al structure takes th e furm of a sta r. The centre
is occupied by th e central coordinating and pro gramming organ. One part
yea rs or so, sorne 80 % of th e dec isions th at are now th e pro vince of

int ermediat e sta ff will be taken auto matical!y. A large number o f
of its br anches is co ncern ed with operational funct ion s of eve ry kind ; th e

others are charged with th e elaboratio n of method s and nor ms. Integration
pos ts from which orders are transmitted th an pos ts of co nception th at
is effected from th e sta rt, with eac h element of th e ente rprise int er acting
with al! others.
This structure cor respo nds to th e new mod e of organizatio n oflabo ur
" THE EVOLUT ION OF M ODES OF CORPDRATE DRGA NI ZAT IO N -
39 I 53
hier archicallevels will be abolished , and th ose that remain will be far less
req uire abilities of genera l knowled ge and synthes is of th e firm's activities.
A higher po rtion of work will be devoted to analysis of th e cor po ration's
economic activity. But th e mat eri al infrast ruct ur e of management will also
bec ome co nsiderably heavier . The sys tem can only be established if th e
40 I 53
- - - - - - - - - - - - - - - <0 > - - - - - - - - - - -
J
A THE OR'f OF CAPITALlST RE GUlATIO N
Planning translales lb.. generall1ralegy of Ihe enlerpris<> mIo normS te
...vin, .rising from Ihe supprHSion of IhIt illt.rmedidte hieruchy mOr.
be pursued and mamlamed ..CC'OTding 10 a procedure mvolvmg: lhe
than ~ up fuI th<>5<! n.... expoetU>eS.
pTedtetton of lbe enterpnse's ftIvuonmenl, lhe -..bhshm"nt of obJectlv.

111 lerms of perforrn.mc.. indtc.. tors, th. insel'UOn of Ibes<! el<!tD<mts m Io ..
calculable framework and lb. interronnllOn 111 hme of thre<! types of
PLo.nning i5
proc>es:l m tegr.tlnl tblt stNCtUr,,', pr~ of m.atW.gem"nt
protb<>ns (long-te rm pla nning inoorporat:mg lbe choices of futura
rtI1K'fUf,,'. principIe of funct>oninl .
OllO<ni<: tines and other prospectl... decistons, sho rt -term planlllng
II ilI . presonptlve process uidmlhe llum eI"QUS d1Slons that hav.. lO be
on<mled lo objectl.. es al divisOoD.il prolil..bihly , an d expenditure bu dgets
IlWd.. d.otIy for capi t;o! lO be " ..IorUed. ThilI J>J"OC"'SS ,....,b lo Muole
pr. ctiNls "er.orchic;o]]y aud 10 fix lhe ~on Di d<>emons. As "
prospectl.... ;oct, .1 has lo pl"oep.ilr. lb st nlCtW"" lo I....ct to unfur~
ch.ong<lS m ,,,<I<!'l'IW1 constTllmtl and 1m mIo " CCOUDI lb_
for lhe Iower-level funct>on.oI um ts),
from [\le to p down, and .. tMrefor. 1M
Th.. mosI general meHUTemenl of th.. economic performances of lboA

umts u..l ar .. c-entres of profil is lhe conlTtbut1O.ll lhey mal:e to Ibe oveuU
tnl Td"p"odenOC'S 00tw"...... funetion.ll units and mVlSioDS.

Bu. pbnnlDg d<>es not d"'"",,iM lh. go.>ls of tb. Cl pttahst <mt<rrpnse;;1
firmo T1us conlTtbutioll

ves lhe managerial bo.rrds .. vfl"Y im portanl sel of data for lb"", control.
Short_le rm targets of profit, i... th. nonns of profitabilily from one y...r to
simply ..rrang". th.. d..pioyrn.. nt o f th.. m....ns to th..m . Th.. <>lis resuh
rhe ne xt, are fixed by the general offiCfl fur the enterprise as a whole. The y
from th. con"traio! of co mpe tition
i n o n-going proc-es. Thi. constraint
furm the principal direc tive for fixing profitability no rms by division ,
fa. hie no lh.. stra tegy of lh.. corporation and lead. lo lhe evolution o f itl
organi:ation . Suc h str ategy ...illlie in antic ipa ting lhe trans for malion of lh..
co nditions of product ion ..ud "xc ha nge the be tte r to adapt it. To th e exte nt
that this is achieved, th e co rpora tion is that mu ch less blind in th e
co mpetitive pr ocess. The normS of planning are the basis on which th e
functioning of the organiution un ifies managerial pr acticas. It astablishes
pri orilies fur re alloc atin g resourcell al a funclion of th e anticip.lted
developmenl of conditions of producticn and exchange. The mOre
numerous Ihe el..menls lhal can be progranun<KI., lhe less mvestmenl p1Ins
<U"<ll'Onsthv.. lo mort-I..rm <!uturb.incell, and lhe mor.. regu1rr IS lb.. !oDg.
tertn g:rawth of lb.. firmo 11 is m Ibis I'OnI'O t/u.l lb.. UD1ly of th gu,nl
corporat1O.ll's SlrUctur'<! nd, strat~ is ..ff..:t <KI. by pla nnlDg nd, lOrms p.ut
Defined as a ra te of return On th e producti..e ca pita l inves ted , this indicat or
al
return on lbe productIv.. COp1Ia1 inVel1ed by lbe
pro..ides a summary measure of pe rforma nce . But the overall rate of return
must be d ose ly linked to th e firm's financial po licy . For th e capita list , the
sale aim of a firm is to make l ure that money br ings mon ey back to its
owneu . The true objective is net earnings pe r sha re . It is th e evoluti on of
Ihis ..ar iable th at pr incipally determinel Ihe markel va lue of Ihe firm by
dirllCtly infiuenci ng Ihe pri ce-earningl ratio, and which Iherefur.
cond;lions ils entire finanClal policy. BUI lhe el ....rrungs figure depends on
lhe ov er all cyde of productlve C..pilal for lhe fum as a whole. 11 ves riM,
lh"""fore, to a dtrecti.v.. as to lhe n t. of return on ;15productIve capllal.
(b) Pfa nnmg is a p rocedure inl'oh-ing all ItI:tls 01 the organl%<ltion .
~endmg from lbe
of th.o ~tion of lb.. c.apital ist mod. of product1on.
first o-rall eI1l.IlUr.. ro th.o lin.a.li::!:ed obj ectl...es .. 00
~ .xpresslon 111 an annual budger, plannmg pl'<lC<ldures ar e mo ....ce
lea
(Q) Tht 9tntral rtrattgy 01 ('olo rizotion .. impOSN on plann'"9 '" tht
proQ"acted to and fro Poc , J J . They l1art Wllb ~ pros>ect>.... longterm
oI ..aIonzatlOll oonc-erns Ibe a>rpOr atioll
scheme proposed by lb e pLonmng departmen l ...thm lb e general OffiCfl,
.. a whol... It is ela boraled ...Ihin lhe g..neral offiCfl ;ond appTOYed by lhe
whic h mleg:rales Ibe reallocatioo of spher .. ofin..estmenl en.......ged in lb
ag"llCies of propnelary control (bo..u-d of dtr<lctors, m ar eholden"

IhNe 0I"d<tn of d<lClSl.on: Ibe ch oiCfl of
I1ralegy of Ibe firmo

lb.. dtVlSion.ol heads J"9Ceiv. Ibis ov erall projectlon, togelher Wllh
Cap11al, th.. dtVlSlon oflbe overall profil
stralegtc dtrecti.ves for Ihe reuttv. d....eiopment of dtffer<ml econonuc
from .oxplOltation and specula tton, and th.. de.6.mhon of g..n",,"a1 dtr tw.
hnes. Th..y lbemselves ha ve .. summary projectlon prepared of Ihe
Ifri('f srnsr. The general strat~
mH1 mg). This stral~ mvol

fi..1d5m whtch lo mvest prodUC1l
for collectlve hargammg and the prrnciples of pel'SOllIlel policy.
2.
P LA ~ ~ I ~GA ~O M A ~ A G E R I A L CO ~ T R O L
42 I 53
_ 41 1 5 3
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~l!d~a
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ca
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1)
.-
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(1
different mod aliti es of valorizatio n bea ring on related activities. This is why
a full analysis of th e int erconnect ion s of co mpany activities is a binding
ability to include detailed nor ms mat chin g th e pr actices of th e functi on al

units within th e divisions. It can also very well accommodate more pr ecise
imperati ve in al! investment planning.
co ntro ls fur th ose very spec ialized units th at do not have suflicient
Routine investments in existing eco no mic lines do no! escape lhi s

imperati ve either, eve n th ou gh th ese are different in kind from
develop ment investments. The lalter open up new fields of valorizatio n and
auto no my to pro vide elements of th e budget.
change th e structure " f th e firm oRoutine investments, on th e other hand ,
levels of co mpetence betwee n planned nor ms and real res ults, th e selection
mer ely ada pt th e ente rprise to th e eVQlution " f th e pr evailing conditions of
of th ose deviations th at need cor rective action because th ey are not simply
pr oduction and exchange. They arise in curre n! managerial pr actice from
furtu itous in characte r, th e de te rmination and exec ution of th e co rrective
th e tension engende re d by th e difliculty in reaching th e indicat ors of
action req uired , and th e observation of its results. If th e results are not
efliciency th at are pro grammed int o th e budget. They involve th e use of th e

tied part of cash f1ow. The main tension s th at genera te th ese ro utine
satisfacto ry, th en th e cycle of administra tive pr actices th at has just bee n
investment proj ects are: a rise in costs above th e nor ms laid down or a fall
The furm in which th e f10w of infurm ati on circ ulates, its period icity, and
in th e pr ices asked by competitors, th e stra tification of a particular

category of co mmod ity int o dilferent varieties whose range doos not
its content at eac h hier ar chicallevel are all of pr imordial impo rt ance fur
The pr ocesses th at make up manageri al co ntro l are th e observation and

recording of real perfurmances, sys te matic co mparison at appro priate
descr ibed is emba rked on again and bec omes a recu rrent pr ocess .
eflicient manageri al co ntro l.
cor respo nd with mar ket needs, or th e pr ediction of an excess of sales
Overall superv ision of th e establishment, transmission and analysis of
beyond pr od uction capacities. The means fur de tec ting and analysing
deviations from th e proj ected norms bring int o play th e plasticity of th e
reports, is carried out by th e financial co ntro l oflice , fur th e co mpany as a

who le. The impo rt ance of thi s oflice is th at it ass ures th e smoo th operation
structure of th e firm , th e density of its co mmunications net work and th e
of th e co ntro l pr ocess . To thi s end, it assists th e respo nsible manager s in
pr ecision of its assignment of int ernal respo nsibilities; it is th ese which

rend er it capable of reacting and responding at th e appropriate levels with
th e pr eparation and utilization of repo rt s, by giving adv ice as to accounting
th e sho rtes t possible delay .
of th eir int er pret at ion . It sees to it th at th e detailed sys tem of norms is such
(d) Manag erial control. Managerial contro l is an esse ntial pr ocess in the
th at co ntro l is applied at eac h level of th e organization to those variables

which really are elfectively co ntro llable at th at level. Nothing is more
execu tion of th e budget.
~'Ie
have just seen how it is in thi s pr ocess th at
ro utine invest ment proj ects arise, hence one of th e elements fur pr eparing
th e fullowing budget. There is th er efure an indispensable chain of
co ntinuo us planning. The overall results of manageri al co ntro l fur th e
pr ofitability of th e firm , moreover , influence and modi fy its stra tegy. The
quality of thi s co ntro l depends entire ly on the pertinence of th e norm s laid
down in th e budget. The exercise of strict co ntro l on th e bas is of
inadequat e norms leads irrevocably to a disor ganization of the labour
pr ocess , a deteriora tion in its atmos phere, vexatious frustrations and
bitte r rivalries amo ng managerial sta lf, and a genera l sce pticism as to th e
top management's capacity fur overall direction.
Budgetary co ntro l is th e furm of contro l bes t ada pted to a division al
pr oced ures, met hod s of co nsolidation , definitions of results and pro blems
destr uctive fur th e control pr ocess as a who le than a peor definition of

perfurmance indicat or s which rend ers a manager respo nsible fur a
divergence outside his range of co ntro l.
If a rigorous correspo ndence between
norms
and
levels
responsibility is strictly respected , th en elfective and pro mp t co rrective

action can be taken . Corrective action is a key link in th e self-reg ulation of
th e structure. In th ese pr actices th e structure selects th ose pro blems th at
are raised at th e overall level and require th e top management either to
redefine its planning objectives, or to reallocate financial resources
between th e divisions.
3 . The Predominance o Propri..tary Control : Financial Gronps
structure, by virtue of its f1exi bilit y , its capacity fur int egrat ion , and its
2. PLA NNING A ND MA NAGERIA L CONTRO L -
4 5 I 53
of
4 6 I 53
- - - - - - - - - - - - - - - - - {O > - - - - - - - - - - -
-'
(1
In the co urse of de velopme nt of the capitalist mod e of production , the

centralization of capital alte rs th e for m of ownership al th e same time as it
had already been co mpleted . In th e greater number of cases , industr ial

firms were in th e han ds of 'ma nage rs' exercising an int erna l control. The
effects far -reach ing changes in the way th a! th e precess of va lorizatio n is
owners , very numerous and eac h wielding only infinit esimal fract ion s of
organized and control1ed . The key phenomenon her e is financial

centralization , which leads to th e fur mation of a new mod e of association
sha re capital, played no ac tive ro le and were co ntent simply to receive

th eir divide nd s. A tren ch ant refutation of th is th esis was produced by th e
between capitalists, finance capital, as defined above. Finance capital is the
Temporary Natio na l Econ om ic Committee (TNEC)," which th e Roosevelt
ultimate mode 01capital centralization. It makes possible a centralization

freed from th e obstacles posed by th e hetero geneity of th e mater ial
conditions of producti on . To lh is end , it prompts th e mutation of th e
struc ture of th e giant co rpo ration into an integrat ed global sys te m. But
finan ce capital is still far from having pushed th e logic of th is centralization
of ownership to its limit , at least in th e United Sta tes. This centralization is
in sorne respects th e co unterpart of th e un ification of th e wage-earn ing
Administra tion had charged with a far -reach ing investi gation into th e
sha res with vo ting rights at th at tim e , an av erage of sorne 35, 0 0 0 sha res for
eac h co mpany , th e average distributio n too k th e following for m : 20 ve ry
lar ge sha re holde rs held 32 % of th e voting rights , 980 major sha re ho lders
held 18%, and 34,0 0 0 sma ll sha re ho lde rs divided th e remaining 50 %
be tween th em . This de gree of inequ ality in th e co mpo sition of ownership
disdosed
dass.
~'Ie
ownership of th e 20 0 largest ind ustr ial firms. Out of a total of 7 million
th e existe nce
of co ntro lling gro ups,
which in
certain
mu st now study how th e finan cial gro ups, as struc tura l forms into
circumstances can become antagonistic, and of alliances and splits as
which finan ce capital is partitioned , are articulated to th e giant

corpo rations. To tackle th is pro blem in a co ncrete way , we have to ask th e
finan cial gro ups restructure th eir investment s in industry , see king to
reconcile co ntro lling po wer and immediat e req uireme nts of profitability .
two following questions:
The co nd usions of th e TNEC study showed th at eight finan cial gro ups
(1) Given th at ownership titles are nom inally distr ibuted to a large
number of sha re -holde rs, who really co ntro ls property?
~'Ih o
played a do minant ro le in co ntro lling th e 20 0 leading indust rial
lays do wn
co rpo rations. It is dear th at in co nditions suc h as th ese th e great bulk of
finan cial po licy and co ntro ls its execution? A proper respo nse to th is
ques tion requires investigati on of th e struc ture of ownership in th e
sha re ho lders serve simply as a reserve for man ipu lat ion , not by th e
'managers' , but rathe r by centralized finan cial capital.
co mpany , and th e de monstr ation of th e existe nce of a controlling group .
More recently , J .M. Chevalier has scrutinized finan cial inter connect ion s
This co ntro lling gro up is th e eifect of th e dominant pr esence , in th e capital
in an atte mpt to upd ate th e TNEC study ." In th e same work, he has put
forward a th eory of propriet ar y co ntrol which is directly linked to th e
ownership of th e enterprise, of a finan cial gro up or an alliance of finan cial

gro ups.
(2) The va lorization of finan ce capital requires th at of th e tot al capital
pr od uctively invest ed in firms. The co ntro lling gro up which de fines
th eory of a centralization of capital do mina te d by finan cial centralization .

Four gro ups of sha re holders are ide ntified her e :
(1) The gro up repr esented by th e boa rd of directo rs , in whole or in part
finan cial po licy mu st ut ilize and mod ify th e struc ture of th e co mpany to
ensure th at it is man aged in accordance with its own objectives. Complex
(gro up I); th is th e co ntro lling gro up.
as th ey might be , econo mic relations within th e co mpany mu st be red uced ,
boa rd (gro up U ), whose behaviour may be either ac tive, if it has a chance
by th eir sub ordina tion to th e co ntrollers of pro perty , to a one-dimensional

and purely qua ntita tive objective : th e self-va lorization of mon ey .
of seizing co ntro l, or passive and availab le to a tacit alliance with th e

co ntro lling gro up.
' 933 saw th e pub lication of Berle and Means' fam ou s work." ~'Ihile th e
whole world was stunned by th e recent finan cial co llapse in th e USA, and
(3) The institutional invest ors , in so far as th ese are not instruments of
either of th e two preceding gro ups (gro up UI). These investors wield large
dumbfound ed by th e pyr amid of int erest s th at th is had revealed , Berle and

Means explained th at th e divorce be tween capital and co rpo rate ac tivity
bloc ks of sha res, but th ey genera lly vote together with th e co ntrolling
gro up, except when th ey co nsider th e corpo ration's pe rformance
3. THE PREDOMINANCE OF PROPRIETARI' CO NTRO L: FI NANCI
- 47 I 53
(2) A gro up po te ntially host ile to th e directo rs, un rep resen ted on th e
48 I 53
- - - - - - - - - - - - ---{o ) - - - - - - - - - -
-'
(1
inadequ at e , in which case th ey sel! th eir shares.

(4) The other individu al share ho lders (gro up IV) are passive and ill-
th e financial gains ens uing from mer ger s. ~'Ie may thus co nclude th at th e
weakening of gro up IV and th e stre ngthening of group nI as a result of
inform ed . Their inertia leads th em to vo te lar gely in favour of th e
financial centralization , itself further ed
estab lished board.

On lhis basis, the threshold of control is a variable defining a limit below
which th e co ntro lling gro up risks losing its pos ilio n. It depends on th e
co ntractual over individu al sav ings, are phenomena with an impo rt ant
elfect on th e co mpetition between financial gro ups far th e co ntrol of sites
percentages " f share capital PI PII , PIII, P1V held by eac h of th e gro ups, and
on th e behav iQura l coe fficients expressing th e probability th a! eac h of
th ey are not th emselves po tential co ntro lling gro ups, and an active one , in
th at th e increased mobility which th ey inject int o financial circ ulation
th ese gro ups will vote in favour of th e boa rd of director s, C
Cr Cr1> Crv.
Propriet ar y co ntrol is defined her e as th e ability to obtain th e abso lute

majority of votes in th e share ho lders' meeting. The threshold of co ntrol is
th e share th at gro up I must hold in order to obtain such an abso lute
majorit y with th e aid of th ose other share ho lders who will vo te in its
favou r . The absolute majorit y is equal to (s o + h) per cent . To obtain thi s,
gro up I must hold a share p such th at :
th e
predominance
of
of valorization. The institution al invest ors play both a passive role , since
pro vides eas ier and more frequ ent cecasio ns far financial groups to change
th eir co nstellations. In thi s pers pec tive, th e purely co nglomerate mer ger s
of the late 1960s can be seen in part as th e attempt to create new financial
gro ups which co uld free th emselves from th e grip of th e do minant groups
and pursue an independent stra tegy.
It re mains to be seen how th e co ntro lling gro up fits int o th e str ucture of
th e co rpo ration , and how it exerc ises its po wer over planning and ro utine
management .
P, .(50 +h}- (PlI C,, + I'," CIl, +P,v C,v):
since it can be ass umed th at e , = 1.

If we view gro up n as a financial gro up with a stra tegy opposed to th at
of th e co ntro lling gro up, th en
by
Study of prop riet ar y co ntro l in th e ~ o o lar gest American co rpo rations

sho ws two chief ways in which th e co ntrolling group inserts itself int o th e
co rpo rate structure. The actual existence of one or th e other type in such a
co rpo ration often de pends on hist ori cal fact ors. But at all eve nts it is th e
Cr = o .
co mposition of th e co ntro lling gro up th at determines th at of th e boa rd of

1', - (.">0 + h) - (1'", Gil" I' ,v C,v),
director s and its sub ordinate autho rities.
(which may fall to sorne 1%of th e share capital) as lon g as gro ups nI and IV
(1) ~'Ihen th e co ntro lling gro up is hom ogeneou s, as a single gro up

enjoy ing a majorit y in th e genera l share holde rs ' meeting th at is very mu ch
hold th e bulk of th e shares and th e co nditions of valorization make possible
above th e threshold of co ntrol, th e boa rd of director s is itself very
a financial po licy th at yields th e institution al invest ors a satisfacto ry
hom ogeneou s in its recr uitment and closely lmit around th e co ntro lling
gro up (the 'inside boa rd '). This clos e co nnection can be elfecte d in two
The co ntro lling gro up can stay in po wer eve n with a weak shareholding
return . Even so, in th ese co nditions th e co ntro lling group might be very
vulnera ble to th e ac tion of a financial group th at sought not so mu ch
directly to ev ict th e existing boa rd of director s as to have th e firm taken
over by another firm already un der its co ntrol. This is how th e institution al
invest ors have played a role in th e last maja r wave of co nglomerate
mer ger s. The very rap id growth in th e funds at th eir disposal, and th e need
far higher profit ability on which th eir own profit s depend , far ce th e
institution al investor s to turn th eir funds over rapidly . Since th ey wield
great blceks of shares and can pursue co ncentrated po licies of purchase
ways. Either th e financial group, which may be mer ely a single famil y and is
th e real owner of th e enterprise, itself heads th e boa rd of director s and th e
main co mmittees un der it . Those exec utive personnel th at it lacks it finds
amo ng th e manageri al sta lf. This is th e case far example with th e chemical
ente rprise E.I. Du Pont de Nemours, which is closely co ntro lled by th e Du
Pont famil y ; it is also th e case with th e Mella n gro up, which enjoys almos t
sale co ntrol of Alcoa (Aluminium Company of America) and has placed
severa l top administra to rs of th e Mellon bank in th e co rpo ration's leadin g
and sale, and since th ese funds are managed by pr ofessionals with a good
pos itions. Alte rnatively, th e financial gro up th at holds co ntro l of th e
lmowled ge of th e stcek mar ket , th ese institution al invest or s are sensitive to
ente rpr ise doos not have a major presence on th e boa rd of director s; in thi s
3, THE PREDOM INA NCE OF PROPRIETA RI' CONT ROL : FINANCI
4 9 I 53
50 I 53
- - - - - - - - - - - - ---{o ) - - - - - - - - - -
-'
(1
case it favours th e perp etuation of a homogeneous directing gro up th a!

buys up shares in favourable conditions by way of option schemes. A d ase
and almos ! un breakable alliance is formed between th e financial gro up
which is th e tru e Qwner of th e co rpo ration and th e gro up of directors who
are int ernal to th e firm o This alliance forms a salid contro lling gro up
dominated by th e financial gro up. It is in lhi s way th a! the Rockefeller
gro up managed to maintain its oil empire even while itself withdrawing
from th e boards of the oil co mpanies.
(2) ~'Ihen th e distr ibution of ownership between severa l financial gro ups
th e personnel on th e goals it pursues. Through its power of disposal over

centralized cash flow, th e co ntro lling gro up can ensure th at th e
distribu tion of pro fit is highly unequ al. To thi s end it can exploit its
co nnections with allied gro ups within financial circulation, and infurm ati on
drawn from its 'inside r' pos itions in a whole series of firms. The sources of
surplus pro fits th at th e financial gro ups can garner th an ks to th eir
proprietary co ntro l co me chiefly from two major types of opera tio ns:
(1) Flows of pro fit that the financial gro ups canalize in th e furm of
is such as to req uire a consensus on th e principIes of financial paliey
overheads int o serv ice or financial companies set up fur thi s pu rpose . If
th er e is one headin g in th e balance shee t th at is gro wing with met eoric
(inereases in capital and exte rn al financing, bo nuses and optio n share
speed, it is th at of'serv ices to th e co rpo ration'. This directly expr esses th e
schemes, amo rtization rules and furmation of reserves, ratios of divide nds,
grip of finance capital. Costs of legal co unsel, auditing, advertising and tax
adv ice are transfer red to spec ially set up companies which charge very
acq uisitio n of new firms and tax evasion, etc. ), th en th e contro lling gro up
high rates fur th eir serv ices. These co mpanies, genera lly havin g only a very
appea rs as a more or less fragile co mmunity of int er ests. A situatio n of thi s

kind genera lly arises after th e gro up which originally owned th e company
limit ed personnel, are no more than facades fur concealing relay-stations
sold off its investments, either vo lunta rily or otherwise . The reorganization
in th e circulation of pro fit . On top of thi s are the directors' fees,
of th e co mpany th en depends on a coalition of banks and other financial
commissions, bo nuses, share optio ns, repr esentation and travel

allowances, which are so many means fur th e members of th e gro up th at
agencies, furming a net work of int ertwined financial gro ups. In thi s case ,
th e boa rd of director s and its sub ordinate agencies must be carefully mix ed
in co mposition (an 'outside boa rd'). This is what hap pened with the
decides on financial po licy and holds po wer of co ntro l over th e overall
consolidation of U.S. Steel, fur example , and with th e reor ganization of
(2) The sec ond type of operation fur capturing surplus pro fits co mes
Genera l Elect ric at th e insti gat ion of th e Marga n gro up. The co mposition of
from th e financial activity of gro ups exploiting th eir co ntro lling pos itio ns
in gro ups of firms that are linked . Her e we cannot list in any detail th ese
th e boa rd of director s reflects th e co mmercial, financial and po litica l

co nnections which th e co rpo ration requires. This is why we can see the
recr uitment by th e co ntro lling gro ups of po litica l or int ellect ual figur es,
cash flow genera ted by th e company to dra in offsurplus-va lue.
furms of financial circulatio n. The fullowing items, however , can be
high funct ion ari es invit ed to sit on th e boa rd to give thi s a broade r base of
mention ed : free acq uisition of lar ge amo unts of shares as pro motion
benefits when new co mpanies are fuunded, and when mer ger s and
support.
consolidations take place ; enlargements in capital base; duplication and
The co ntro lling gro up inserts itself int o th e structure of th e corpo ration
transfer of shares; spec ulatio n in indu st rial land , mines and other sites
by dominating th e genera l oflice . The tool s of management, th e method s of
bought chea ply by property and develop ment companies belonging to th e
personnel po licy, th e hier ar chical relationships and centres of pro fit are
financial gro ups and sold off at high pr ices to th e indu st rial firm s th ey
means fur th e contro lling gro up to unify th e pr actices needed fur th e
co ntro l; share transact ion s making use of th e oppo rtunity to buy stocks at
rates lower than th e oflicial market pr ice and exploiting inside infurm ati on
valor izatio n of capital th at is its raiso n d'i:tre and th e sole source of its
pos ition in soc iety. ~'Iithin th e co rpo ration , th e contro lling gro up must
make sure of a tot al hegemony over th e work furce . It co nsequently utilizes
to sell th em at higher rate s; possibilities fur influencing share prices by th e

impact on th e stoc k market of finance po licy dec isions.
th e structure of th e co mpany and th e pr incipIes of management ,

promotion , propagand a and psychological pr essure , as tool s fur pr eemp ting and partitioning contradictions, to avoid any critica l reflection by
3. THE PREDOM INANCE OF PROPRIETA RI' CONTRO L: FINA NCI
51 I 53
52 I 53
-------------~o)-----------
-'
(1
T1" , t. t fmm o;, .., . " ,...., ... . m on < "uxi,' . " n om ;, " . s .. fo, . .. m pl. F. "onn ,
L.
sIru'''' ...fina n'i.... do< , ap ..aUmo.jNn,ais, P ui. , '.,<.

R.po,", ro ,h. Con, ..." 0" ,h. R . a.....' s o ,h. s ub-c o..m ..... 0" Anh-1hu ' a nJ Monop oly
(. ,,' Con,,,.., ,. 6'_' 0).

T1 ' t" .. n '1 <tul ",h"m.n t . f fi...
".".1. n o ' 1. ,1. ",,,,,1 ",h"m.n t
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p,,,,.s .. F o....... , 'Th. c, u ".l C ' h l G.., ' Mu k.t', ,,, . n o D".m,,, , . 6, .
0<,.
Exoluom, o.nk " ' .''', Out in, luom< '1. o.nk>' h u,t putm.n t>.
Exoluom<" . ".1fr .", ..",d.

R. w. Gol,!<m ;t1 ,f"ina n<' a l ! n'. ,m . doo" ... .. ,h. Am' ''''a nE< onomy
Sin
"
00,
P,;n,,' on ,
,,,S.
S.u , ,,,, u p tm ' 950, R. W. Gol.,m , th on . oth m, A S"'dJi of S a, in in ,h. U.S., P,;n" ton,
" 55- 6 (th m
.01>.); fo, h t"
, ";0.', F. d. ",, 1 R ...,,. Bull..., 'Th. Rol. of F; M n , h l
Int" m ",;.. m U.S. Co. , h l Muk.,,' p on uu. , . 6" ..t. n , ; n " th . n on th. . . .;, of
",." F,.l R...n . ,hh,h ,,).
Sou , ,,, Com m ; t.. on Bonk m , on . Cu m n,., Hou .. of R",.n toh . .. (.oth Con,,,,,,
on ...,,;on ).
F" o h n oM l., ;, of th. <on t,.. , d " . ... . d' of . u'h , fi Mn,m" ... P. MottH,
Ma", ondK. y n.., Lon. on, , . 6 .
r.. .. on th. m <om.. of . h., ;"l . mon m.n fr om ."."t.
+ . md t.... on <om n " .
+ t.... on h n. + n ommol ,om , fr om .uh n " ;n m u , ; t" , .
, r . Hm , h , S o,'aILim'm" <;ro ..,h, Lon. on, ' 976.

o ' om .. O'Con n " , n.. f"l
ICh,u of,h. S 'a .., N. " Yo" , " 73,
, R. B. <onon. W. Elh' , B
a'n'.E' onom" proM. .., TooF... Pro dt<<<.., Lon. on, ' 978.
o. R. Hnf" . m " Finon Copotal. F" o ,,; " u.
o f H n f" . m,~
<on " . t of fi Mn" " . , to l ..
th" ,; ,,;on oh n . " ,h,. " "h " " . ; h h , m, ... fo"..m . l. s . B, u n h off, Lo Poh.io u.
mon . 'a '"", PUl' , " 73,
" A , . n o.h , .",.nhh on , ..... on .ou n nt h;, t";,,l . " u m.n toh on on . , tu.", of
... m . lu . " "', ;' . ',., " A. ,. Ch . n . l", S""'...y ond srru,,,,,,,,, M.I.T.,
,.60-
A. A. B. d. on . G. C. Mun., n.oModo", C0'1' 0""o'on on d p,,"'a" Propo"", N. " Yo", ' 933.
,- TNEC,
n..
D's.r'buoo n of O,,n...h.p in ,h. 200 La",o" No n-Fina n,'al C0'1' 0""oon.,
Mon o,,..h n o. o. , ' 940,

o , . M. Ch . ..h " , Lo stru''''''''finon,'."" d.l'indt<str'. o" .""a'n., PUl' , ' 970'
3. THE PREDOM INANCE OF PROPRIETARI' CONT ROL: FINANCI
53 153
- - - - - - - - - - - - ----<0 1 - - - - - - - - - -
(1
Q.
A THEOR\' OF C A ~ I TA lIS T RE GULATI ON
into monet ary .um., tot al social mCOme and its divisio n int o ..ages and
profitJ:, is not a prc bl..m in ..hieh t..o differe nl thooretieal fields ar ..
5
General Rate of Profit
and Competition
Among Capitals
count.. rposed. Ir is rather rhe
arti~lation
circulancn. Th.. r..o concoepr. rhar enable
lIS
o f c apitalist produetion and

to conO!riv.. this MticuLotion
ar.. rhe monetery ..){pressio n of rhe >rorbng hour and th.. nomilU1
r.. f..r..ncoe ..a g N. hav.. hoeld cver a study oflbe concr<>t.. furmation of lb..
fir7I of lh_
te Cb.Ipl 6, .. it can onIy be und<>rt.1ken on lb" b.l5ts oflb..

reLotionlhipl' bott>tHtl monoty a OO CNdtt und..,. c.lplt.ilism.. But in lb.. fuW
section of Cb.Ipl 3 .... h.ovoe .wwdy studled lb.. -.-ond m d"lm .md
summed up th.. tutllform.ltlOn of Ibe v.J.ue of Lobour-J>O"'"r mto ..as....

Th.. J. ... by ..lncb total 1llCOlDoe and ..ag'OS ..,.., formed "ILOble
I. T he cend u tc ns 01 gxts te nce of a Gen n a l Rat e of
olUll
of
1m. ch.ilpter
is lO ptOYIde .. conceptual fr.omework for lb ..
OOllCf-,,, tonn. ,..I:en by lb. -=o::W 1ink J)etw""" ",ut Ollomous c;pit~. '."e
sh.olItber"fon h,,..." 10 est..bhsh rt ep by st ep. startmg &cm lbe C'OlldUSlonJ

r~b.d 10
W , lbe 00b~ th<lt will en<ible lIS lo oh.,.. bow lb.. lo. . ot
oompetltiOll den.... norousI y ftom Ibe la.. ef ~ulat)On . Tbe sum lot;o!
of tb_ ...... oonItItulell lbe met..bo/ism o lb .. lIl><.'iaI formation.s su b}i:8c1
to Ule p1IM mod. o/ productKln.
To ,,~in thilI obttcti"',
... sh.l.U lintly p~ to d""'p" n o ur
~ysIS
e f Ul. <lI'ticuWtioll be~lI lb.. prod uctx>n a.nd Clr'CUI..otlon e fcommodJ t1es
under c.tpltl1ism.. This is lIOt , n
th<!Ot'l!tioaI prob'"m. Fro m tM
b<>gmnmgof :twpt ' . lb ct, _ h.o. deli.n<!d th.. homog,m"""", ~ o
...;oI"I.os rh.. ~ of ~uiul~ cWsses d'!!t<mnm<!d by .. soc:i.alr<>Lo.t1on,
"Xc hlnge, which ..tcts lb.. socW. ....hdatwn of pnv.at.. Labours tlu.t ......
indp&ndell t from Ih. IU ndpoint of production. This point ofd",p.rrture Ius
"41bl.d lIS 10 show th.lt lllOMY .os tboo support of Ih.. socwl ",Lanon of
,">reh.ionge is in llinJic..lly dIlJer"",' fro m .ny indtvidual commodtty. This
~
m.il\:es
lo
und_.md ..by total prolit , il:rumg from Ibe surplus-v.J.u" produeotd by

..:>ciol J.bour-~, 11, ... oen .. a bomogoeneous mon"t.uy sum, lb ..
Protit
lb.
U5
~flY
..et of exch.oDe mIo .. poLonz<><!. reLotlonsmp 1","1

r..-Jius lbe vih.!. of commod iti'OS, i.e . SOCLOIiv>s the pnvat. Lobour
xpr...wn of a r..l.ltiOIl of dlltnbu tien , a levy en tot.J. soci.ll revoenue.

II II IOI.J. prolit , ..bCM amount 11 detemnned accordmg to reJ. t1onsblps
""ablished iD the fir7I poi" of Ibis bool:. dep emlm g en Ibe .., of amdltlons
otproductiolland exeh.ong. , th.ot is tbe straleglc viln<1ble m Ibe rel.ltlon.s of

COOlpelllJOll bott>tHtl autOllOlnOUl c.pllals . lbe IOl.J. profil th.ol lb.
c.lpllol1llt c...... . .. bol.. c.ln c.lpture .J...a15 expresses Ibe COllSl"'.m l
imposed by lhot 1.1.. of ICCIiwWaIXln o f soci.ll Cl ptl.J.. In d "",penins
OUT
;mo.IYSII of lhot utteulation o f c.lplrahst production and = cul..otion , ....

conw ~k 10 .m investlgat>on of Ibe l:m n m ..bich Ibis COllSI....inr is
..xpr..-i . ~.,. shaIlembarken tlus lD_

shaIl pllr 6orw1rd
mor.
,satlo n m two mges. FLr5l1y, ....
prue ~pr of prmes under ca plt.ilism.;
secondly, ... shaIl dfl1lO1lStt.re rhe e uct form th.ot s..n..r.J. commodtty
csrculanon tIl:ots under c. ptrlhsm. Ttus mvemsatlon willl<!l.d
U5
to .m
unporeanr amcltlllen, Iblt tbe conslr.am t unp<>5'!!d by Ibe J... of

accumulanon is . xpr..-i in the rel.ll1ons ofcompetll1on 15 Ibe forma11On
of . Sll..,..J. ...1. of prolit. Oneot tblS essentul r"""t 15 estabhshed, th.. J....
of compe1.liOll foI\ow "';Iy from 11.
11 is important to not. th . ddference betw....n tbis procedure and tblt of
otXp"ndotd to produce thoem. Mon ey " the plvot oft hose exc""nges th.ot u ..
lhe c1u:sic. 1 doctrine, This d,fferencoe wiU ""ve it. effect. on OUT
organiud int o s.neral commod ity ciTCUlation , bec allS':> it is the expre5510n
inlerpr"'.lion of competition and on th e chlTact eristics of the pricoe system

.. it is co nceved by th . two distinet apprOlches .
of abst ract labour , u . tb homogeneous totallabour of soci ety. On this

basi..... hav.. been abl. to acco unt fur the furmatio n of monetary sums
"ilhin th .. la.. of accu mu lalion il.elf. The lransfurm ati on of abslrael labour
and th .. co ne..pts hnked to il, lh. value oflabour-po ..er and surplus-n lu..,
S. GE NERA L RATE OF PROF IT ANO COMPET ITIONAMONG CA
In th. M.r){ist procedur. th at "e have furmali:ed, the delermillltion of

lh. tot al volum.. of pr ofit logieally pr ecedes that of lhe rale of profil. In lh .
clan ieal doctrine , on lh . co nlrary , pro fil 15 graspe<! only by ..ay of lIs ra l .
t I 51
2 I 51
-'
(1
The unifurmity of the rate of pro fit her e furms th e very definitio n " f profit .
infinit e series oflabour quantities, eae h co mpo unded by th e rate of pro fit .'
This definition however is simply a co nceptualization " f int er -capitalist

relations. This is because th e classical writers, as also th ose moo ern writers
In th e Marxist co neeption , abs traet labour refers to pre sent tim e . It is

th e homogeneous working day of a society. Its bas is is th e actual social
who lay daim to th e dassical traditi on , take capital as an absolute pr emise

of th e econo mic sys te m, thus in no way co nsidering its existe nce as a
co nditions of pr oduetion , forming an indissolu ble unity of teehnieal

relation ships and relation s of pr oduetion within th e organization of labour .
pro blem .
The pri or ity of th e co neept of pro fit over th at of th e rate of pro fit follows on
The Marxis! procedure, on th e other hand , poses a dual pro blem : tha! of
th e one hand from th e faet th at capital is not see n as a natu ral entity but as
th e co mmod ity econo my as co nceptualized by abs trae! labou r , and th a! of

th e wage relation as co nceptualized by th e partition of abs trae! labou r int o
issuing from th e wage relation , and on th e other hand from th e faet th at
~'Ie
only th e pr esent co nditions of pr oduetion count for th e social valida tion of
have sought a solution to
pr ivate labours. As a re sult , th e genera l rate of pro fit is not a constitutive
lhis dual pro blem by developing a th eory of th e forms of social relations
co neept of value, but rather a co neept de rived from th e aecumulatio n of
and study ing th e transform at ion s brought about by th e effeet of th ese
capital; it is first neeessar y to un der st and thi s latter .
social forms on th e homogeneous spaee of value. This has led us to pose
pr esent chapter th at a genera l rate of pro fit is a co ndition of the regular
and develop th e co neepts of th e mon et ar y expression of th e abs traet

working hou r and th e nominal referenee wage , in order to account for th e
funet ioning of th e regime of aecumulation. This co ndition may or may not
th e value ofl abo ur-power and surplus-va lue.
~'Ie
shall see in th e
formation of tot al ineom e and its maero -eeon omi c distr ibu tion . This is why
be realized . Accord ingly, th e genera l rate of pro fit may not in faet exist,
whereas th e wage relation always doos define capitalism oThe formation of
tot al pro fit appears as th e eeonomic form of th e capitalist relation of
th e genera l rate of pro fit is th e result of a co nfliet involvin g two differe nt
pr od uetion . It is a co neept linked to th at of capital in genera l, i.e. logically
dimensions of tim e: on th e one hand th e homogeneous social tim e th at
pr ior to th e division of thi s capital int o fraeti ons.
defines th e spaee of value, on th e other hand th e time of valorization of

capital, whieh seeks a unity between th e past labour crystallized in th e
These divergenees over th e objeet of eeono mic seienee find expression

in far -reaehing differe nees over th e th eoreti cal sta tus of th e rate of pro fit .
means of pr oduetion and current social labour . The dassieal writers
In th e dominant co neeption of dassieal eeonomies, th e uni formity of th e

rate of pro fit is what defines th e co neept of pr ice . First1y th er e is a surplus
co nsidered only thi s see ond dimension, sinee th ey saw capital as an
pr od uet in use-values. The uni form rate of pr ofit is th e distr ibu tive ru le
gove rn ing th e pr iee of th e surplus prod uet , which enab les th e pr iee sys te m
pr edominanee of th e first dimension , sinee it defines capital as an

antago nistic social relation . He co nceived th e relation ship between the two
to be determined . The formation of th e priee sys tem is th e valorization of
tem po ral dimensions as a co nfliet whose solution was th e deva lorization of
th e eeono my. It guara ntees th e repr od uetion of th e surplus pr oduet ,
capital. The ques tion then is to study the ro le of th e formation of th e
ineor po rating th e mod alit y of its distribution. The rate of pr ofit for th e
dassieal writers is thus th e repr esentation of capitalism as a natural
genera l ra te of pro fit in thi s co nfliet as a force unifying th e capitalist dass,

des pite those forces that tend to disrupt it by th reat ening th e valorization
eeonomie order . This is why th ey employ a very abs traet co neeption of
of past labour .
imm anent entity filling th e entire social spaee. Marx asse rted th e
tim e . The faet th at th e surplus prod uet is give n in use-values pr esup poses
th at th e co nditions of pr od uetion have an exd usively teehnieal charaeter
l . The T heoreticai Stat us o Pric <'s
and are independent from th e rule of distr ibu tion . Repr oduetion is th en th e
aflirmation of th e ete rnal charaeter of thi s ru le . It is no lon ger possible to
distinguish between th e unit period of pr od uetion and perpetuity. This is
expressed in th e formal possibility of red ueing th e pr iee sys te m to amo unts
oflabour with definite da tes, in sueh a way th at eae h pr ice appears as an
1, THE CONDIT IO NS OF EXI STENCE OF A GENERAL RATE OF P
3 I 51
At th e sta rt of Cha pter 1 we examined th e exe hange eq uation th at

repr esents th e relationship of equivalenee.
~'Ie
saw th at co ntrary to
appea ra nees, this equation is not an eq ualization of two values but rather a
po lar relationship expressing th e value of a co mmod ity in relation to an
4 I 51
- - - - - - - - - - - - - - - - <0 > - - - - - - - - - -
-'
(1
equivalent, i.e. a representative of society's hom ogeneou s tot al labour . It

fullows from lhi s th a! exc hange is only thinkable as mon et ar y exchange .
purchase and sale; certain co mmod ities do not bec ome use-values,
because th ey remain unsold . Thus th er e is always a pro blem of th e soc ial
Once th e neo-d assical th esis th a! eve ry economic act is an exchange is
valida tio n of pr ivate labours, which makes itself felt in th e form of a
abandoned, produ ction is acknowledged as an original act of value

creatio n , and th e problem " f th e liaison between pr od uction and exchange
is posed, it is no lon ger possible to co nsider th e sale " f a co mmod ity in
a rder to buy another as a diree! act C- C' with only two terms. It is now
necessaril y an act C- M - C' , inv olving three terms, in which th e sale and
mon et ar y co nstraint .
expressed in mon ey . They are realized by th e effective sale of th e
th e purchase are separa te d and fullow a rre another. This is no! fur sorne
co mmod ities, in other words th eir exc hange against de te rminate sums of
co ntigent reason due ta th e pr act ical incon veniences of barter . It is due
mon ey . Al! pri ces are th er efore necessaril y mon et ar y pri ces. Relative
rather to th e very nature of th e co mmodity economy. Product ion creates

use-values while simulta neo usly forming a soc ial purchasing po wer over
prices are simply results of th e sum tot al of mon et ar y exc hanges, and in no
way can th ey be determined directly .
th e sum tot al of th ese use-values. But th e fact th at th e use-values are th e
(2) In exc hange, particular quantities of co mmod ities co nfront
product s of independent private labours gives th em th e character of

co mmod ities. Social pur chasing po wer is borne by mon et ar y revenues; but
determinate sums of mon ey . In thi s co nfrontation , th e prices pos ted are

either realized or not o The manner in which th e realization is effecte d is
it is not yet realized , only po te ntia l. The product s of pri vate labours are not
what causes pri ces to move . Social mar ket pri ces are th er efore first of al!,
use-values for th eir producer s; al! th at matter s for th em is th e realization of

th e soc ial value of which th eir product s are as yet only co nditional
from th e co nceptual sta ndpoint, sums of mon ey denoting th e division of
co unterparts. Thus co mmod ity producti on forms social value. But it can
th e different varieties of co mmod ity . Unit prices are simply th e quo tients
obtained when th e social prices of th ese different varieties of co mmod ity
only do so in a manner th at decomposes it . The realization of value is th e

unity of th e elements dissociated when de te rminate fracti on s of mon et ar y
This co nception of mon et ar y exc hange has impo rt ant impli cat ion s for
th e th eoreti cal sta tus of prices.
(1) Form al!y , pr ices are th e exc hange-va lues of co mmod ities as
tot al exc hange-va lue by social dema nd, i.e. by mon et ar y sums bea ring on
incom e purchase quantities of product s. The expenditure of mon et ar y
are divided by th e quantities soldo Since prices are give n in unit terms,
what imp resses itself on th e obserber is th e relative sta bility of th e pos te d
~'Ihen
price by co ntrast with th e incessant movement of purchases and sales. It is
co mmod ities have finished th eir met amorphoses, th ey actual!y do bec o me

use-values and are co nsumed , either producti vely or otherwise . Their
easy to believe, th er efore , th at in pract ice th e unit pri ces are int rin sical!y
destr uction simulta neo usly abolishes th e value, which however is create d
anew by th e co ntinuity of the act of producti on . ~'Ihen th e sum tot al of th e
tot al sales and purchases are th e pr oduct s of th ese unit prices multiplied by
th e quantities soldo This actual!y is th e way in which th e social co nstraint is
product s of private labours accomplishes its met amorphoses th rough
experience d by individu als involved in exc hange. But in order to gras p th e
exc hange, tot al income is realized . But th er e is nothing automatic abo ut
movement of pr ices as a whole , it is necessar y to investi gate th e
thi s realization . Each auto no mo us centre of producti on creates particular
determinants of thi s co nstraint , i.e. th e formation of social de mand on th e
varieties of co mmodity and forms a fract ion of tot al monetary incom e by
bas is of th e division of to tal incom e , and th e flows of exc hange indu ced by
participating in th e genera l labour of th e society. But th e soc ial purcha sing

po wer borne by mon ey as repr esentative of thi s genera l labour is by
th e renewal of th e soc ial co nditions of pr oducti on , includin g of co urse th e

reconstitution of social labo ur-po wer. '
definition capable of purchasing any co mmod ity whatsoe ver . There is no a
The characteristics we have just descr ibed affect eve ry co mmod ity
pri ori reason why tot al mon et ar y incom e should facilitate th e exac t
purchase of al! co mmod ities of al! kinds. The genera l co mmod ity
econo my. Under capitalism , th e division of to tal income and th e renewal of

th e co nditions of producti on obey th e law of accumulatio n. ~'Ie know th at a
circulatio n may be inter rupted by a break in th e int er connecti on of acts of
formal characteristic of thi s law is th e reversal of simple co mmod ity
incom e is both th e realization of value and its annihilation.
1 , THE THEORETI CAL STATUS OF PRICES -
5 I 51
determined by an equilibrium between supply and demand , and th at th e
6 I 51
- - - - - - - - - - - - - - - - - - <0 > - - - - - - - - - -
-'
(1
circulation C- M - C' int o capitalist circulation M - C- M ' . The mon et ar y
The salutio n of thi s problem is given by a co mbination of two re sults
flow lla ves in a circle , with mon ey figuring al both sta r! and finish of th e
already established. On th e one hand we have shown that accumulatio n, i.e.
met amorphoses of value. ~'Ie also know th a! th e form taken by capitalist

circulation is an effect of the wage relation. Each individual capitalist
th e exp and ed repr oduction of th e wage relation , req uires dete rminate
exc hanges of value between the two departments of pr od uction . On th e
absorbs laoo ur-po wer in return fur a wage expressed as a sum of mon ey ,
other hand , we have seen th at in every co mmod ity econo my exchange is
and begins a pr od uction pr ecess which is a valorization of th e mon et ar y
effecte d in th e form of purchases of determinate amounts of the pr oducts of
advance. The realization of th e sum tot al of co rnmoclities involves th e

realization of th e surplus-va lue which acerues to th e capitalist dass as ils
labour by dete rminate fractions of tot al monetary incom e , and th at un der

capitalism th ese exc hanges have th e form M- C- M', implying the
tot al pro fit . The mann er in which eac h individual capitalist experiences th e
mon et ar y co nstraint follows from lhi s. Al! th a! appea rs in th e sphere of
circ ulatio n is th e relation between two mon et ar y magnitudes, one of th ese
realization of a ra te of pr olit . The co njunction of th ese two properties
being th e tot al capital advance d and th e other excee ding th e former by a

difference which is pr olit , a fraction of tot al pr olit . This is why th e
delines a genera l schema for th e repr oduction of th e social capital which we

have already given diagrammatically in Cha pter 3 (Diagram ?) . The task
now is to analyse thi s schema algebra ically so as to establish th e formal
co nditions of existence of th e genera l rate of pro lit .
mon et ar y co nstraint imposes itself on th e individu al capitalist as th e need
To avoid any logical amb iguity and to guard ourselves against th e
to realize a certain rate 01profito n th e capital advance d. The formation of

pr ices in th e capitalist mod e of pr od uction is indissolu bly bound up with
objection of co nceptual circularity , we remind th e reade r th at our
th e realization of th e rate of pr olit . By spec ifying thi s co nstraint more
delinition of th e departm ents of prod uction and the relation ships obtaining
between th em owes nothing to th e fragmentation of capital int o
pr ecisely , we shall de monstr ate th e nat ur e of th ose exte rnal relations of

co mpetitio n between auto nama us capitals th at follow from th e law of
autono mous units. These are rather concepts directly deduced from th e
wage relation and th e formation of surplus-va lue as a continua us pr ecess.
accumulatio n.
In order to express th e formal conditions for the existe nce of the genera l
rate of pr olit , it is necessar y to ass ume th at relationships between th e two
2 . T h e Expa n d e d Reprodnc tion o Socia l Ca p it a l
departments of pr od uction are inscribed within a capitalist co mmoo ity

circ ulation in which tot al incom e is realized and where surplus-va lue
Ind ividual capitals sta nd in a relation of co mpetition because th ey have th e

characteristics of capital in genera l. These characteristics are sta mped on
th em by th eir subjec tion to th e law of accumulation, which forces th em to
co nsequently flows bac k to th e capitalist dass in th e form of tot al pro lit .
an ave rage of th e individu al rates weighted by th e sums of capital advance d
(a) The general rate 01profit and the realization 01total exchange -value.
Let us express th e exc hange-va lue composition of th e departments
pr ooucing means of proo uction (Department I) and means ofconsumption
(Department Ir) as folla ws:
as expressed in mon ey terms, it would form no co nstraint on th e
U, + S , + P, _ VI:' ,
valorization of th ese capitals. The co nstraint of competition req uires a

soc ial law pr eceed ing from th e nature of capital as a social relation , which
(; , +S, + f', _ VE ,
realize a certain rate of pr olit . ~'Ihat rate of pr olit doos thi s involve? It
canna t be deduced from th e individu al rates. If it were nothing more th an
operates as th e law of formation of a general rate 01profit by which th e

valorization of individu al capitals is forcibly gove rned. If thi s is th e case ,
The tot al amo unt of wages S th en = SI + SIl; th e tot al pro lit P = PI + PII ,
and th e tot al incom e VP = S + P.
~'Ie
th en th e genera l ra te of pr olit is th e bas is of co mpetition . ~'Ie are thus led to

investi gate why and how th e law of accumulatio n gives rise to th e
know th at VP is transform ed int o abstract labo ur VA by th e

realization of th e tot al exc hange-va lue, in accorda nce with th e relationship
formation of a genera l rate of pr olit .
m = VP/VA , where m is th e monet ar y expression of th e working hour . The
2. THE EXPA NDED REPRODUCTION OF SOCIA L CA PITA L -
7 I 51
8 I 51
- - - - - - - - - - - - - ---{O) - - - - - - - - -
-'
(1
mass of wages is tr an sfurm ed from abstrae! labour on th e basis of th e
write th e co ndition far th e full realization of th e tot al exchange-value ,
formation of th e nominal re ference wage :
th an ks to which the value farmed according to th e macro st ruct ure

VA,/ VA, is effectively realized by th e social de mand borne by th e fract ion s
ofo verall mon etary income .
First step
From lhis it follows th a!
1',
VI' -S
.'i-------,- -
P
1', + 1',
S S J +S,
'"
m (l H) - l
1', SJ
- t -'--
S, S, ,
5,-- _ _,
-----81 + ....
S,
The amount of wages and th e tot al income are divided between th e two
departments of producti on in accorda nce with th e division of society's
homogeneous labour : VA = VA , + VA,.
~'Ie
VA ,
. . VA , -
-S - (1 +
/'
-~ (l H ) - I - (I +
.' ' .'
s -(I+ k'J)r
U'
is in fact th e nominal reference wage ,
i.e. th e expression in mon ey of th e soc ial casI of th e repr od uction of

labour-po wer . P is th e tot al pro fit , as defined prior lo its division between
th e different parties involved . The re is thus no need la add in th e
operations of th e sta te; th ey are taken int o account in th e categories her e
.'
, ),
.:;:: (l H) -I -(1 t k' , ),
may note th a! in lhi s genera l scherna th er e is na need lo int roduce
dir ectly th e operations of th e sta te,
VA ,
V A,
,.-_--''''
Second step . In order far th e tot al exc hange-va lue to be realized in such a
way as to renew th e co nditions of pr od uction and expand accumulation, it
is necessar y far a determinate fracti on of th e incom e far med in Department
I to pu rchase a determinate fract ion of th e exchange-value of th e prod uct
defined . In a more detailed examination of th e schema, it would be
of Department n . In actual fact , S, and th e share of pro fit P, th at is either

co nsumed or earmarked far th e expansion of th e labour-po wer employed
necessar y to amplify th ese basic magnit udes. ~'Ie must lastly not e th at th e
schema as written here applies to a single turnover tim e far th e capitals in
in Department n directly purchase th e co rrespo nding po rtion of th e

exchange-value of the means of co nsumption prod uced in thi s department .
th e two de partments.
The fract ion G, of th e exc hange-va lue of Department I , mor eover , renews
Ifth er e is a genera l rate of pr ofit , it is defined by :

, -
1',
~-
- -
G, +S ,
by its pu rchases within Department I th e means of pr od uction far thi s

department which have bee n co nsumed during th e period in ques tion. In
1',
-- ~
G, + S,
order far th e tot al social labour to be realized in th e genera l exc hange of

co mmod ities, it is necessar y that th e incom es far med in Department I and
Let us now define k', = G,/S and k', = G,S,; we th en have P'/S, =(1 + k
',, and P,S, = (1 + k' ,)r; k' , and k', are transfarmed functi on s of the
organic co mpositions of capital in th e two de partments of pr oduction ,
functi on s th er efare of r.
~'Ie can call th e allocation of th e soc ial labour VA between th e two
departm ents of pr od uction th e ma cr os tru cture 01 p roduction. This is
defined by th e relation VA,/VA,. The farmal co ndition far th e existe nce of
th e genera l rate of pro fit involves two ste ps: we first express th e link
not spent in thi s department , i.e. not spent on th e renewal of th e means of

pr oduction co nsumed or in pu rchasing additional means of pr od uction ,
sho uld exac tly purchase th e exc hange-va lue of th e means of co nsumption
not otherwise assigned within Department n . This enab les Department n
to renew its own means of pr oduction and to pu rchase from Department I
th e additional means enab ling it to exte nd its accumulation. The farmal
co ndition far full realization is thus expressed as fallows:
between th e macro stru cture of pr oduction , th e determinants of th e

far mation and th e distribu tion of tot al incom e , and th e int ernal
characteristics of th e capital advanced in th e two departments.
2. THE EXPA NDED REPRODUCTION OF SOCIA L CA PITA L -
~'Ie
9 I 51
th en
10 I 51
- - - - - - - - - - - - - ---{o ) - - - - - - - - -
J
SJ . P, -&G , ~G . + "'G ,
S , 1', S ,
...
S. S, S,
- - -- Mie,,
,,
. "I S.2 _ It' (l
o f accu mulanon from which new condit ions o f pr oo llction drise dfter d
'"
mdlOive d evaloneation o f c<lpital. But ifthis condition is d r....l o ne, it is not
"' ----'..!
G, '
th e ume with rhe supplemeneary conditio ns rhdr ir rnight be ternptin g to

ad d . Th_
VA ,
VA
'\" , C! '"
loO , )
th"Ory of bela nced growth, whic h gi!n..rdlly con"",v... <!COnomic
".
-'~
reLationships of growth only wirh all proportions in th.. <!COnomy held
1'" (1 .It' ,ir -Ir' , Ag, '
Bringing log~hfl" lb. two " >NSSions of VA,
IvA.. ..""
obtoin th..
condrnon OT the fonn.iotion of lb. I<mOOT.J. ral .. of prolit. Its SlgmfiOlllC<l IS
d NT fiIOIlgh . By .xpr"";0l tboo toct tlu! lb.. l'Nhzation Df th.. tot.I
eJtch.ong......alu.
mUSl b<t COlDp.otlbl.. Wlth lb e m.ocrostru<'tUre of
produCh OO , 1m. COllmtio:lllll4lUs expli cit lb .. ..xchang .... of v.J.ue betw een
lb two departmen ts of productlOD which lleu tr.wz", th.. tend en cy lO
un.... 811 d....lopm9llt . Tb
form.otioo of lb.. g""..,.al rat e of pmiit tbus

Cilft.omly denv.. from lb J,,.. of C.llplt.J accumulat>OIl.
(60)
Ih.. gffl#f'1I1 raf e 01profir arrd rhr co" tr a d,mo.... ni lIC'C'U mu/a tio... Tbe
I,"n.r.ol OOIldlt>oll expreaed .bove .... synchronic one . It _ouI d be

lemprmg re ..xt en<! 11 by ad<ht>onal comh oons which ..ouId lead ID lb e
oonJtnKtioD o/ OM o/ rboM ~ls Df Nlanc! gro wth "'" dear to lb..
OllOmutlI . CM would only n~ ~ tha t lb.. . b.are Df pr ofil ",veste<! is
d1vi<Md Wltb.in ..eh <Hprtawnt of productlon ",to .dG and AS', in such ..
....y Ul.lt lb.. coefficwnts
l.lue r ue pure ly irnagindry. Thi!Ywould be borrowings &orn the
t . and t ', ~ const.l.nt. and to add .. constralllt OT
const.an r. The MannJt proc.du~, how""",", has no noo<!. to impose tlus

yok.e on ilHlf, smce it hu rigorously constructoed &om the outRt .an
economic Jp.ac. m which <1 tNI. medSUt<!1ll<mt c.an 00 define<!: th..
homog"lleouJ Jp.ac. of ...Alue. Tb.. d..linttton of tlus opace in no way
~1llnlS oltIy .mdicill '"'jwhbnwn
con wtton.
Yet lb.. constumt of thdull r6ali:atton of exc!wng<>-v.Alue doeJ express

a CW10lUl concept of '"'jUllibn um. It defines a baLm"" of force.s tha t may or
may not be brohm . If It;' brol:en , how""", . economic ph""omena do not
lb ..,..by become 1... mt elligtble. 1'hlS" retndtl: <mdbles us to gtve a more
preciJe delinttiOll oi .. h.lt It ;. "e meen by lb e un"""" development of lb e
1WO depar1menll. ','fe h.I..e ~ III rtudymg tbe 1.1.. of accumulat>on that
reLotlvellltpl1JJ-v.Alue ;. crNtoed ooIy by a w -reaching tr .msformat\On el
lb e conWrtollll al prodllCttOD . Tbis tr dnsformat>on altero lb e c b..uactel"1ltK:
proportionJ al socW eaplt.Al . ..lwtever may be lb e rn.acrostructure o f
prodllction or rhe derenmnants o f lb.. wV1S\o n o f rotal incorne.
<1
consequeru:eo, ro uy rb.ar de"lopmi!nr IS not un...... n is not ro u y tha r u...

1WO departments o f product\01l grow ar lb.. s.omi! rdre , ..hich would bit
tr.msfurmat>ons m lb.. condJ.t>ons of
absurd. Ir
co<lffici"llll and thei r N utionships, SO
r...Uy do. u ist <In '"'juilihrium u t.. of prolit . This would be a sur.. way of
Al a l"ftllil , <1 rupture in th. coh oesion of tb.. regtm .. of dccumulatton iJ <In
cver <lUphenomenon ..hich h.ls nothing to do Wlth tb.. flexibility or rigidity
ru nning int o <1 d...d end.
of market <ldj1JJlm~nts. It ta1:es th.. fonn of unev en development in the
In aClu al fact , the condition IOr th e full r....IiZdtion of totdl exchang4value ;' an ..lWctive lOCial const u int reldtoed to th e cohesion of th.. r"llim..
st rict senH in ..hich " e have und..rstood thi. , ~nd puts in quest ion the
formatjcn of a g..nen l rat.. of pr otit. ~'e h~v .. .....n th~t ~ mut~tion in th..
of aCCllmlllu ion . It may ..ith er be ri!Spectoed or tr dnsgressed . If it is
fcrc.. of production necessat i!y ha. it. origino in the dep.ortment

producing mean. of product ion. 1'Ihen it OCCllro within ~ pdrticllldr type of
~ ~'tIOn
<l5
10 rnvffitgdte whether tb..r..
trd nsgrflned, th en th.. res ult i. an Ilneven development Iedding to d crisis
2. THE EXPA NDE D REPROO UCTION O, SOC IA L CAPITAL -
mNnlI
r<lrhet rb.ar
u...
of socW Labour b<!twftn thi! two departments by

~lUfUIg rh. ~Lat\On VA/ VA, to ti!IIW.ln constant. In tlus " <lY "" would
o bten <1 ~. of b.iLInc+d growth m ..hich thi! gi!ni!t M tUi! of profit
would b. const.anr <lOO th. u ti! of growth of totM C<lpttM IOrmatton would
b. detflllUn.d by tM t . u ttonship N.G ... SJ/G ... S = Q r, ..hi!ri! Q is th..
sh.o.r. of lhelotM profil th.lt iUCC'IImuLatoed. On tb<! b.ms oftlus mti!U<IctIul
construction, ... could doevot. ourselvi!S to tb<! mi!thodtcM .an.alysis of tb..
tM
productlOn, which ue mhet""r ro rh.. oltItilgomsm of thi!" <lg.. t<>Latton , ue

inr..rccnnected in S\lCh <1 "<lY rhat d..v..lopm<mts m lb.. mac:rostruetuN of
productton and rh. WV1SlOtl of tot.AI mcom.. ar<! compattbl... 1'hlS"
comp.atlbihry is expressed in tM socW constrarnt of lb.. full re.>ltza11On of
lot.AI u c hang.....Alue. Th.. is th. profound Slgmicance of lb.. lOrm.atto n of a
g..""r.AI nle of prct.
11 I 51
12 I 51
-'
(1
labour pr ecess witho ut a major tr ansfurm at ion of lh is pr ecess, th en it doos

so by a deepening of th e principIe of mechani zat ion th a! indu ces a rise in
social demand for means of co nsumption . In th ese co nditions, th e

co nstraint of full realization of exchange-value is transgressed . The
th e organic campo silion of capital as th e co unterpart of th e saving on

labour-po wer . Relati ve surplus -value inereases th an ks to an ever more
difference in rates of pr ofit leads to an over-prod uction of means of
int ensive renewal of th e means of pr od uction . Department I co nsequently

gro ws al an eve r more rapid rate o
Department I , and a restr aint on social pr oductivity th at blocks any rise in

th e rate of surplus-va lue.
Now in th e case in which th e tran sfurmat ion of th e co nditions of
pr oduction . The result is a relative co ntraction of accumulation in
~'Ie
prod uction takes place by a saving of labou r-po wer without a saving of
can now co mplete our synoptic analysis of th e organic crisis of th e

regime of intensive accumulation whose origin we situated in th e mid
co nstan! capital, cor respo nding th er efure to a rise in th e organic
1960s and which we illust rated by a who le series of diagrams in th e sec ond
camposilion of capital, th e social pr oductivity of labour can inerease only

if wage costs fal! mor e quickly th an th e pro portion of co nstant capital in
half of Chapter 1.
tot al exc hange-va lue rises. If thi s is not th e case , th en th e tot al costs of
pr oduction increase , and th e rate of accumulation slows down until a major
transform ati on of th e labou r pr ocess devalor izes a po rtion of co nstant
Diagram 1~ pr esents th e movement of th e net pr e-tax rate of profit ,

along with various differe nt indicat ors of th e development of tot al pr ofit as
related to fixed capital. The variations in thi s indicat or may be taken as a
capital and brings abo ut a techni cal revolution th at econo mizes means of
reasonable estimate of th e variations in th e genera l rate of pr ofit . In th e

co ntext of a long-r un tendency to fall , bo und up with th e slow but stea dy
pr od uction . If total costs of pr oduction fall , th e result is an increase in th e
rise in th e organic co mposition of capital since th e Second
genera l rate of pr ofit and an accelera tion in th e rate of accumulation. But
possible to observe th e scope of th e turn expe rienced in th e sec ond half of
thi s pr ocess can be impair ed by diverging forces. On th e one hand , th e
th e 1960s. ~'Ie have seen th at th e first half of thi s decade was th e period of a
int ernal development of Department I ru ns too far ahead, since th e social
formidable accelera tion in capital formation , permitting a ra pid fall in real

social wage costs.
demand for means of pr od uction must be ever greate r to susta in a

suflicient sav ing of labour-po wer to permit th e fall in th e costs of
pr od uction to co ntinue . On th e other hand , th e exchange-va lue of wages
Diagram
1~.
~'Iorld ~'Iar ,
Profitabilit y Ind icator s (1948- 197 1)
distributed und ergoes a relative decline , whilst pr ofits build up more and
more , particularly in Department 1. A mom ent is necessaril y reached when
th e rate of pr ofit in Department I increases relative to th e capital advanced,
by virtue of th e accelera ted develop ment of thi s department, whereas
"
accumulation in Department II is restr ained by th e res triction of th e social

demand for means of co nsumption . The pro portion of incom e assigned to
purchase th e exchange-va lue of Department II grows far less quickly th an
-,
.-.
th e pr oportion of incom e ass igned to pu rchase means of pr oduction , with

th e result that Department II can no lon ger pur chase th e means of
pr od uction at th e rate required to co ntinue th e gro wth in soc ial
pr oductivity . There is th en an inevit able differe nce between th e rate of
...
,,,.
na>
.'
"" orpofOl
pr ofit in Department I and th at in Department II . The result is th at

Department II bec omes un able to pu rchase suflicient means of prod uction
to mat ch th e rate of growth in Department I , since th e distr ibu tion of
incom e develops in a way th at dces not enab le th e formation of suflicient
2, THE EXPA NDED REPRODUCTION OF SOCIA L CA PITA L -
13 I 51
"
14 I 51
- - - - - - - - - - - - - ---{o ) - - - - - - - - -
it is
-'
(1
Ea ch var iable i . r elated l o n e! fixed capital.toc k in n on -financial cor poratio ns
oc
The division of capital int o independent capitals derives from th e fact th at

capitalism is a co mmod ity economy in which social labour is not th e result
Ne! pr ofit ca.h flow + d"t r ib u t ed div id endo

_Depr ecia ti on a llowance.
of a collective organization of pr oduction but rather of a co nfrontation

between independ ent pr ivate labour s. This co nfrontation takes th e furm of
These co nditio ns of accumulation brought about a spec tac ular rise in th e
a pr ceess of co mpetition in which th e independent capitals seeking to
genera l rate of profit al th e same tim e as th ey fustered th ose tendencies ta

uneven develop ment whose roo ts are to be fuund in th e erises of th e
realize a ra te of pro fit fur th eir valorizatio n are co nstrained to adjust

th emselves to th e genera l ra te of pro fit . The pr ceess th ro ugh which capitals
repr od uction of th e wage relation .
oppose one another is thus th e same as th at in which th ey express th eir

solida rity vis-a-vis th e wage-earn ing dass , since it tends to re duce th em to
11. Tite Competition o fIn d ivi dual Ca pitals on t ite Ba s is
th e sta tus of 'equivalent capitals', simple fractions of a social capital th at

appropriates a total pro fit and divides it up amo ng its co nstitutive elements
of t he Gene ra l Rat e o f Profit
in pro portion to th eir respective sizes. Defined in this way, comp etition is a
The furmation of th e genera l rate of pro fit unites th e relation s of capitalist

pr od uction and distribu tion by way of th e realization of tot al exchangevalue. This is a social law fuund ed al th e macro -economi c leve!. The
scherna of th e expanded reprod uction of th e social capital embr aces all th e
determinants of th e furmation and division of tot al income ; it furms th e
th eoreti cal bas is fur nat ion al accounting and sho uld make possible a
rigoro us retheor ization of its pr incipIes. This social law owes nothing to th e
behav iour of individu al capitalists. On th e co ntrary, it determines thi s
behav iour. There is no microeconomi cs as th e pr axiology of a ration al
subjec t detached from all social co nditioning. There are laws of
co mpetition th at take int o account , un der th e co nstraint of th e law of
accumulation , th e diversity of furms of co mpetition and th e diversity of
pr ice sys te ms that fullow from th em . In study ing th ese laws we shall
pr ceeed one ste p at a tim e . The first task is to demo nstra te th e ways in
p rocess 01 unification 01the capitalist e/ass. But it is not enough in itself to

accomplish thi s unification , which is dosely depende nt on th e creation of
structura l furms, particularly that of th e co mpany, in which th e vita l
pr actices of valorization are int ernalized and pro tected . ~'Ie have alsa seen
th at th e centralization of capital is a pr ceess of unification in its
remod elling of proprietary co ntro l itself. ~'Ie must thus be more pr ecise .
~'Ie are now going to investi gat e co mpetition as an extern al econo mic link
between capitals that already enjoy auto no my and are organized int o
co mpanies with independent proprietary co ntro ls. ~'Ie can call thi s
distribu tion of capitalist ownership fuI! comp etition. Only after havin g
established th e laws of full co mpetition will we be ab le to dea l in th e last
sec tion of thi s chapter with th e co mplications arising from the furms of
co mpetition engende red by th e centralization of capital.
The exte rnal relation s between ind ividu al capitals can be defined on th e
genera l rate of pr ofit . This will lead us to int roduce new co ncepts to
bas is of th e co ncept of indu strial branch. This co ncept designate s a division

in genera l co mmod ity circ ulation . Between indu str ial bra nches th er e are
elucidate th e social link between individu al capitals, and will yield an
mar ket s on which different categories of co mmod ity circ ulate . As th e
int er pr et ati on of what are genera lly kno wn as pr ices of pr od uction very
co mmod ity is the fundamental pr incipIe behind th e individu alizat ion of
which individu al capitals are co nstrained in th eir valorization by th e
~'Ie
shall th en take int o account
capitals, th e indu strial bra nch is a co mmo n are na of capitals which, while
th e effects of th e centralization of capital fur a study of th e co ncrete pr ice
remaining individual , pr od uce th e same category of co mmod ity and
sys te ms obtaining in th e United Sta tes. The de ta iled analysis of th ese

sys te ms , however , cannot furm part of a work whose aim is to develop a
co nsequent1y are valorized un der th e co nstraint of th ose co nditions of
differe nt from th at of dassical econo mics.
genera l th eory of capitalist regulation .
pr oduction th at are sceially do minant. The appropriate ness of th e co ncept

of bra nch fur th e investi gati on of relations of co mpetition between
autonomous capitals is co nfirmed by th e structura l furms created in this
l . T he Modalit ies o the Di v is ion o Capital in to Fr actions
11 . THE COM PETIT ION OF INDIVIDUAL CA PITA LS ON T HE 8A SI
15 151
econo mic space. The pr ceed ure s of collective barga ining over wages, in
16 1 51
- - - - - - - - - - - - - - - - - <0 > - - - - - - - - -
-'
(1
effect , ""eur within th ese bra nc hes, and it is al lhis level th a! firm s organize
int o th e typical institution s of dass struggle tha! are emplayers'
th e turnover period is th e same for capitals in eac h differe nt bra nch, th e

definition of th e pr ice of pr od uction is simple, since it is expressed as a
associatio ns. This point is a fundamental a rre. It d early shows ho w

competition involves a capitalist solidarity indu ced by th e wage relation .
dominant conditions of pr od uction :
The fact th a! al! ente rprises in an indu st rial bran ch can co unt on ide ntical
rules as far as th e fur mation and ev olutio n of th e basic wage is co ncerned is
Theor etical cost of prod uction xC ' + r) = pri ce of prod uction , where r is
th e genera l rate of pro fit , dete rmined in adva nce together with wage costs.
an esse ntial element in th e fur mation of th e soc ially dominan! co nditions of
This sys tem is not homogeneous; it dete rmines th e monet ar y prices.
mar k up on th e th eoreti cal cost of pr oduction th at reflects th e socially
pr oduction . Bu! th e organization of firms int o an indu stri al bra nch in no
Given an exac t understanding of th e significance of th e norms of
way implies tot al similarity in th e concrete pr eces"es of pr od uction . From
pr oduction and exchange , we can give a synthetic definition of th e
lhi s sta ndpo int, a bra nch may well pr esent itself simply as a diverse variety
of lines of pr oduction . This sho uld in no way be surprising. The
industrial bra nch. The branch is the economi c space for med by capitals
homogenizati on of pr oduction conditions takes place exd usively in ter ms

of value. If, over tim e , old pr od uction pr ecesses disappear and new ones
are created , thi s is a pr ecess entire ly dete rmined by th e evolutio n of th e
subject to thesame norm ofp roduction and exchange .

Certain results can alrea dy be dr awn from this pr eliminary elucidation
of th e laws of capitalist competition . The formation of pr ices of pr od uction
is a pr ocedur e spec ific to capitalism o It spec ifies exchange-va lues by
homogeneous relations of value.

~'Ie can now define th e way in which the constraint of competition is
imposing a constraint on th e field of value. This constraint forms part of th e
imposed via th e division int o br anche s, th er eby formulating at th e same

time th e secially dominant conditions of pr od uction . Let us recall th at we
despite th e fragmentati on th at commod ity pr oduction implies. It is th e

only commod ity-prod ucing mod e of prod uction in all history th at has such
are discussing a situation of full competition . Qur definition , th en , is that

th e exchange-va lue of th e sum tot al of commod ities is divided between the
a unity . But th e formation of th ese prices of pr od uction signifies nothing

more th an th e universal dicta to rs hip of th e law of accumulation, which
differe nt bra nches in such a way th at th e tot al capital invested in eac h
gro ws as th e wage relation is genera lized. A pr ecedure th at is int ernal to a
bra nch yields a ra te of pro fit equal to th e genera l rate oThere th en exists a
particular mod e of pr od uction can in no way daim to be a universal ru le of
sys tem of exchange relations that is evidently stab le only in so far as th e
social efliciency . Its rationality is entir ely contained within th e formation
division of labo ur remains unchanged . There is an instantaneous sys te m of
of the genera l rate of pro fit , in which social labour-po wer is redu ced to th e
norm s ofproduction and exchange th at is not exactly respected by th e
pos itio n of an ingredient of capital. Prices of pr od uction are indissolu bly

linked to th e existe nce of wage-labour . Those who believe th at thi s
valorizatio n of individual capitals, but to which th ese are constrained to

refer , and which governs th e distr ibution of tot al pro fit . This sys tem of
norm s implies that tot al income is divided in such a way th at a monet ar y
social demand purchases a dete rminate amount of eac h category of
laws of regulation , since it signifies that capitalism has an overall unity
rationality can be used to regulate a socialist mod e of pr oduction are

victims of a serious illusion , commod ity fetishism . Under thi s illusion , th ey
commod ity , so th at th e rates of pro fit realized on ave rage in eac h bra nch
conceive socialism as optimal contro l over a planned mar ket . In reality ,

however , th e adva nce ment of th e working dass demands collective
approximate th e genera l rate of pr ofit . Given th e unambiguous
master y of social labour , th e end of wage-labour and with it of th e blind
determination of thi s social demand, eac h indust rial bra nch operates on
logic of pr ices of pr od uction . It is at th e overall level of the form ation of

incomes and th e coherence of th e two departments of pr od uction th at th e
average in conditions of pr od uction th at are socially and actual/y

dominant . Ever ything hap pens as if a single social capital were valorized by
dividing up int o a set of qualita tively differe nt commod ities. The unit pri ce
th at follows from th e norm of pr oduction and exchange in eac h bra nch is
known as th e p rice ofproduction. In th e purely illust rative case in which
1 , THE MODALlT IES DF THE DIVISIDN DF CAPITAL INTO FRA
17 I 51
means for a socially master ed regulation are locat ed . Social master y of

newly created value abolishes th e law of accumulation. The conditions in
which the local agents of economic activ ity operate are then necessarily
transform ed . The constraints th at th ey expe rience can in no case be
18 I 51
--------------~o)----------
'"
-'
A T HEOR\' OF CAPITALIST R E GU LAT I O ~
govern th e
expressed as Ibe formation cf a Iy.tem of pricM of pr od uc tio n.
soci~I
ptodUClion and
:l . The SINgle Betw_n
c..pit.a1. in the Transfonnation 01
pri ce . But thi, i, not what takes place . The norm of
exch~nge
by lhe 1JOCi~1 demand , expteued in money le rm" thal purch ases th e ma""
of co mmodili... in lhi,
Non,,! of Productioll Alld EX"h,mge
follow, from th e divi. ion of total exchange- valu e
~veuge, ~nd
C~IeOty. lbe
social unil ptice is COn""'lUelltly an
n"""",,,rily ""dowe<! wilb
cetlain inet tia . Relati on, of
The concep" ... J.,... just d9V"loped will en,oble llS lo dIldlyse Ihe pr oceslr
commodily exclung.. sanction lhe soctal priC<t, ~n<l ma mmch as lh e ne-
of compottition itNlf. lb. so<:iIUy domin.ont condttions of production m
condilion. of production tem.oin lhe u C<tption, lhen lh e ptevious1y form e<!
e.och industrill hunch Ar<I lr.nsform<l<!. by Ibe sum total of torces

iDt","flling in r<tLil1ive ~l\l$-v,}u" , as"," h.o.v.. studted thoese m Ihe Iirst
p.art of tlus book. Tb_ condmons He .o1W.lys changmg, and llus ISwby tb..
S)'SlfiD of uonns of prodllction <l.nd ,""ch.ang.. dev..lops av..,. tun... This
d~elopmftll goes as f.or as to pUl ro quest10n th", p.rrbtlon of loto.!
price Itill
..xch.ing+-"alue intc C"I~OlWs of commodtty. A ud1cal qu.antltatl.V<!

ch.ange ID. th"li:m:ft of prodlKtlOh. UI ef~, gtv<!S l1S<! to th.. dlsa pp!!MaD<.'e
ofcert.l.ill bruu:Ms UId tM cr...tion of...... o ....... Ther.. is <bsp~ment o
the constrllIl o f compellt>Oll m tM homogelleous "Id 0 1va.lu", and th us
A" instbiLity 0 1 reL.tions 0 1. "ch.ang. uinl""<>l over tune. It IS none the
less ~ lUl !M ronJtI rutio n a f tM gene ral eqwva.!.m t guaran t""" that
pric<ls penlUnently pr~e le u. .....e!>C.ll st ~tus <l emo nstr~ tecl ~t tM
begmmn
ot thui
dupter . ollld W l u. ey ;<re
;Jw~ ys
detenrunate. Tbe
....oIuliOll ollb rystem olllOrlla ol productlon ;ond exchange is u. er erore

lUlle ol
rystelll of t ..!.ollons of eqwvalellce whicb ar e
lhe ....oIution
lJl
~lw~ys define<!
in lhe Iollll" ~b.tt~ct bomo.."eous spoce .
Compe!ll1Oll conMqu.."dy only l..us on ;ony llle.lll1llg in U.e COIIaele
J>TOC'tSS llul
tr~nsfomu
lhe
con<hltons of productlon. Sucb
tr.msform.,l1Oll ISlJlltloile<! by lhos& mdlvuiua! C<Optlals WI fin<l lbelllSelves

in
poI:Il1Oll lO a..ll" condmons of pro<luct1oD. W I are exceplIonaIl y
f.ovour~ble lJl
reLiol1Oll lO lhos& llul are socwlly <lolll1llalll. lbey se! m
ptev~i1s. During.
perio<l of lr.lllSllIon everything happens ...
jf
lhe Liobour of e~lional productlVIly CO\1Il.le<!
complex Lahour lhal
coufett"" en lhe C~ p11alut. whc <:\IspoH of ,llh
<lv;onl.g.. of ....l1ing Iherr
p.tttiC'ular commo<lth'" .bov. lb... in<ltvtd.ua!pnc<!. Th""" c.pttals t,""",ve

Ule of profit tugher than rh.. gen..tal t U... Th..y . ppropnal... surplus
pr06.l in lhe lOlal <ltstriblltion.
However, lhe strIlggle b&r-en C<Opttals t1u t forms lb.. stlmulus for this
e xooptiotW pro<luetlVlty cr"'llll for.,. t1u t t.. neIs lo <:.a.ne<!\ out ,ts
..xcept>on..J dut.tcter . Tbe ll[\U.llOn which en.obled u... <ltfference betwftn
tite Yirtu.l.l mdl vid ual price ;on<I tite
pricoe to anse <ltsappe.an as
oo mpelItlOn forees more ollld mo re c.pttilists to
~dopt
U.e ne w con<lttio ns
of pro<lllCtion. In arder re benefil from u. ese . u. .. most efficient C<Optt.lists.
_he beoome more ollld more numerowt . recluNl U.err pnces below U.e
former .xi.itl pr;e.. To lhe eXl",,1 Wl U.e n.... COIIdltions of productlon
hecome gen er al . ~n ever V"'ler porllon of social de =d purchases
oommodtti... producecl in lb .. n.... w~y. lb.. social prire changes lo Ibe
eXlen l llul
V"'ler port1Oll of lhe ln.lS5 of commodtlIes ar e produce<! m
lhe new oon dttiOlls. ~ih.." lh_ Laner hecom.. lJOCiaIly domin.ml . Ibe Deprice of productson ;.
~CCOTditnce "'lb
est~b\isbecl,
;on<I "","bIes Ibe C<Optlals opeutmg m
il te ..eeiv... t.l.. of profil "'lua! lo Ibe g"""tal t.le. lbe
oont1Dwly of the price rystem 15 t espo<:lOO m lb..
COI1I'5<!
of Ihe
motiOlI lebcur whicb is exceptionally pro<luct:lve , . 1 Ibe ICIOlllevel, m
tr~lISol1lloition, which nuy
NLiotion !O llul embcdied in lb.. fornulIoll of Ibe soctal pnce presen.t1y
SI[\U.l1Oll of oompet,lion. Th.. oob_on of ilXch ;ong.. ,.."LalIons 15 maml.amoo
prev~iling
even lbough lhe r..LiotiOlls of "'luival..ne<o ..volv... Bul SlDe<! Ibe
for lhe vari..ly of =o<llly in q UestiOll. The spur h..... 15 Ibe

quest for lhe highest poaibl.. t.l.. of profit, which mobilrz"" Ibe sum lotal
of lhOM pr.ctiC'ft of ccmpa ny mlrLlge m..nt t1u t we stu<lied in Chapter 4. If
lh.. price of prcducticn was imm""iA.t..ly go v..rned by Ih..... m~rg,rLll
oondilions of prcduc ncn , i... thOM o f u""pliolLill pro<luctivity . lhen lh..
unit pnce of lh ..... oo mmoditi... would be lower tha n the social price . l he
latter woul d imm ediately diJappe~r . ~nd the mest efficient firm woul d
2 . THE STRUGG LE 9ETWEE N C A ~ I TA LS INTHE TRA NSFORMA
1 ~
bt lllOT" OT 1... t.pid .ccordmg lo Ibe COD"""e
tulISol1lloil'ion of lhe condieions of pro<luction i.s p<>rtlLilIl.. nl , lb.. soctal

mlrkel prie<o is oo nsl.nlly influ..ncecl by n..w fornes , 50 lbat Ih.. prie<! of
pro<luetion is in pe rpetual flux. Th.. no rms o f pro<luction an d ..xchang.. that
are in OOUrH of transform~lion. hcw..ver , make compe tition intelligible for
..hat it il. a procelll and no t
~ It~tic
sta te o f eq uilibrium . In thi . ...n....
It.til tical oblerv~tionl o f the prices of produc tion mu.t be co nce iveci as an
20 I 51
I 51
-'
(1
average over a period of tim e in which , in a situation of full co mpetition ,
funct ion of th e po int of de parture, i.e. th e co nceptio n of th e co mmod ity
th e rate of pro fit fur th e indu st rial br anch in question tends to fal! into line
with th e genera l rate of pro fit .
itself. Thro ugh th e noti on of genera l equivalent, th e Marxist pr oced ure is

able to fau nd an objective measurement th at is pr ior to th e de te rmination
In th e originating movement of th ese new co nditions of prod uct ion ,

th er e are always individu al capitals un able to fullow th e transfurm at ion .
of th e pr ice sys tem. Once th e genera l co nditions of co mmensurability are
They make pro fits belQw th e genera l rate , or eve n experience losses. This
co nditions on pr ices to rend er econo mic magnitudes measurable .
established, thi s pr oced ure doos not have to impose any artificial
means th a! th e labour expend ed un der th e;r direction cannot fully co unt as

socially necessar y labou r . This disability may lead to th e;r eliminatio n. The
It is incorrect th er efare to oppose pr oduction pr ices to market pri ces.

~'Ie
only solutio n th en ava ilable to th em is to int er rupt th e;r curren! precess of
have seen, however , th at th e norm s of pr od uction and exc hange are

pr ogressively transfarm ed over tim e . Now histor ical time doos not just
valorizatio n and ga int o massive debts to acq uire th e new and very
have one single dimension o It is rather a co mplex tem po ralit y in which
expensive means of production required far th e new method s. They can do

thi s only by a more or less bruta l devalorization of a po rtio n of their capital
severa l rhy thms of transfarm ati on are superimposed. It is quite possible

far phenomena to arise which act on th e mom entar y exc hange relations
presently imm obilized in producti ve functi on s. The most drastic far m of
witho ut involving th e transfarm at ion of th e co nditions of pr oduction . As a
devalor ization is th e dismantling of plant and th e dosing of pr od uction
result , fluct uati on s in mar ket price may exist independent of th e pr ocess of
transfarmati on of th e norm s of pr oduction and exc hange we descr ibed
units. In certain cases, an atte nuated de valor ization is possible by a

running down of the old pr od uction units.
~'Ie
can thus gras p th e meaning of de valor ization from th e sta ndpoint of

th e co mpetition between individu al capitals. This is a pr ocess of expulsion
by which norm s of pr od uction and exchange are imposed , and th e
unification of the capitalist mod e of pr oduction co nsequently
acco mplished. It is th e necessar y complement of th e struggle between
capitals co nstantly in sea rc h of new advantages. The capitals left behind are
threat ened with disappearance as auto no mo us centres of appropriation of
above. Two types of phenomenon must be careful!y distinguished her e .

The first kind is only local in scope. It derives from th e fact th at th e
different po rtions of capital th at a firm invests in pr od uction do not have
th e same turnover tim e . The transfarm ati on of th e co nditions of
pr oduction involves planning by co mpanies which antic ipate future
exce ptio nal co nditions of pr oduction befare creating th em . In fact , thi s
transfarmat ion genera l!y requires th e operation of new durable means of
pr oduction , and eve n th e inst al!ati on of new pr od uction units. Organizatio n
of such proj ects pr esupposes th at a lon g-term social de mand in th e bra nch
social labour. They can only reinsert themselves int o social capital at th e
cost of a far -reachin g reor ganization of th eir pr actices of valorizatio n. In al!
in ques tion has bee n antic ipated, making it possible to pr ofit from new
cases, th ough , th er e is always the sanctio n of lack of social valida tio n far
investments of pr od uctive capital. These are th e stra tegic investments
pr ivate labours.
analysed in Cha pte r 4. The functi on of pr oduction pr ices is to express in th e
3 . Production Prices and Fiuctuations in Market Prices
hom ogeneous space of value th ose social!y dominant co nditions of

pr oduction whose evolution is co mmanded by th e rhyth m of structura l
changes. But th e circulating capital whose turnover is th e co ncern of th e
At th e po int we have now reached , th e genera l pr incipIe of capitalist
day-to-day management of th e firm , is bo und up with antic ipations of
co mpetition has already been established. Al! pr ices are exchange values.
effective de mand in th e flows of circulation , whose period icity is genera l!y
Prices of pr oduction are pr ices regulating th e transfarm at ion of th e
mu ch shorte r. These flows may be affecte d by al! kinds of disturbances and
co nditions of pr od uction . This int er pret ati on of pr ices directly permits a

co ncrete analysis, because it is linked to a co nceptualizatio n of histor ical
tim e . This is why it is rad ical!y different from th e definitio n of th e dassic
pr ice sys te ms as sys te ms related to a logical time . This difference is a
3. PRODUCTIDN PRICES A ND FLUCTUAT IONS IN MA RKET PRI
2 1 I 51
errors of pr ed iction , which genera l!y cancel out and cor rect th emselves in
th e co urse of structura l changes. But th ey nevertheless have th eir effect on
th e flows of receipts and expenditures far th e firms in questio n, affecting
th eir gross pr ofits in th e sho rt ter m o Price fluct uati on s are far from
22 I 51
--------------~o)---------
-'
(1
long-term rise in th e rate of surplus-va lue. The genera l crises of
absorbing al! of th ese disturb ances. They are abso rbed rather by buffer
flows which are relatively flexible within the ayd e of metamorphoses th a!
accumulation are th e most striking manifestation of th e fact th at
forms the valorization of the individual capital. These buffer f10ws involve
co mpetition and mar ket relations are sub ordinate to th e dass struggle.
iner eases and decreases in stoc ks of finished co mmoclities and supplies,

fluctuations in credit which enable stock. to be financed and expenditures
III. Th e Formation of Prices in t h e Movemen t of
on a new pr oduct ion ayd e ta be initi ated without having to wait fur
Centralization of Capita l
pr oceeds from th e pr eviou s ayd e , and greate r or lesser recourse to liqui d

reser ves th a! are no! sel aside fur any imm ediate purpose . Even sa, th ese
~'Ie
buffer f10ws can th emselves amplify th e disturbances in demand , if a lar ge

eno ugh number ofcompanies create a sudde n de mand fur stoc k in addition
to th e current effective de mand o Such amplification is th e root of
spec ulative behaviour , and of precau tion ar y measures against th e risk of a
valorization cyd e being enda ngered by shortages. Shortages in turn are
caused by th e co mbination of precaution ar y purchases th emselves. Such
unst able situations give rise to violent pr ice fluctuation s which have
situation of full co mpetition . This is why th e norms of product ion a nd
nothing to do with th e evolution of product ion pri ces, and have no serious
have put forwar d a th eory of the formation of prices of pr oduction in a
exc hange involve a rule of distr ibution of th e overall pr ofit which

un am biguou sly dete rmines a normal profit for eac h bra nch. This normal
pro fit is such as to give a ra te of pr ofit in line with th e genera l rate , when
related to th e producti ve capital invested in th e prevailing social
co nditions of pr oduction . The evo lution of th e norm s of pr od uction and
exchange un der th e influence of th e transform at ion of th e co nditions of
pr oduction in th e econo mic sys te m as a who le implies th at these norm s
The sec ond kind of phenom enon relates to a far more impo rt ant and
funct ion as forces giving co mpetition its bea rings over tim e . They are
dy namic co nstraints which reflect the social interdependence between
genera l inst ability . ~'Ie know th at th e formation of pri ces of producti on is a

functi on of relation s of co mpetition th at are bound up with th e genera l rate
capitals and tend to red uce local differences in th e co nditions of

valorization th at are co nstantly recreated anew un der th e impulse of th e
of profit . But we also know th at accumulation as a whole is subjec t to
antago nism of th e wage relation , which forces eac h auto no mous centre of
antago nistic forces which may give rise to genera l crises, initially th rou gh
direction of th e pr oductive forces to see k out its optimum co nditions of
th e uneven development of th e two de partments of pr od uction , but

prolon ged by th e non -realization of tot al exchange-va lue. In situations of
exploitation . As a result , th e effective eq uality of rate s of profit on th e
thi s kind , th e co nditions for th e existe nce of a genera l rate of pr ofit do not
genera l equalization of rate s of profit must be un der st ood as an average
obtain . The regulation of prices thus br eaks down , and relations of
over tim e in a doub le sense. On th e one hand , th e spec tr um of rates of

pr ofit within a single bra nch has a range that fluctuates as a functi on of the
effect in th e lon g run o
co mpetition are th en rad ically modified . From exte rnal relations of co nflict
on th e market , waged by capitals whose auto no my is still preser ved , th ey
bec ome a force restr ucturing property in an open struggle for co ntro l,
th rou gh waves of mer ger s in which ava ilable mon et ar y resources are
individu al capitals is not actually realized at any give n po int in tim e . The
intensit y of the structura l transform ati on s taking place ther e , and th e

differe nt ente rpr ises do not always occupy th e same pos ition in thi s
spec trum. On th e other hand , taking all bra nches together , pr ices of
mobilized . In th ese periods, typically cautious behaviour in all mar ket s

gives way to a genera lized over-prod uction of co mmod ities and a massive
pr od uction may be co nsidered as tendencies govern ing prices behind
devalor ization of capital. The genera l pr ice level first rises and th en falls,
co nditions of accumulation make possible th e formation of a genera l ra te of
accompanied by maja r distor tions in th e relative evolution of prices for
pro fit .
possible transient distur bances, in historical periods when th e genera l
It is d ear enough th at th e co ncept of norm of proouction and exc hange
particular categories of goods. Relation s of co mpetition can only be

reor ganized once genera l transform ation s of th e wage relation create a new
doos not de pend on th e application th at is made of it to particular exte rnal
overall co hesion for th e regime of accumulation, by opening a new phase of
relations between individu al capitals, relations of full co mpetition . This
3. PRODUCTION PRICES A ND FLUCTUAT IONS IN MA RKET PRI
23 I 51
24 I 51
--------------~o)---------
-'
(1
co rroep! enables us to give a th eor eti cal int erpret at ion of th e division of
tot al exchange-va lue th a! is eifected in capitalist co mmod ity circ ulation .
Its significance as an expr ession of th e socially prevailing co nditions of
pr od uction remains int act when th e centralization of capital creates new
possible to define co mpetition co nceptually as a structura l form of

capitalism , in dose relation with th e genera l co ncepts used to analyse th e
wage relation . This is necessar y in particular to dispel th e illusion s held by
man y Marxists abo ut the 'power of the monopo lies', and to avoid making
relations " f co mpetition . The norm s of product ion and exchange still define
int er -capitalist relationships int o th e chief do main of th e transform ati on s
certain co nstraints on th e hom ogeneou s field of value, bu! th ese
of co ntempo rary capitalism o ~'Ie have begun thi s th eoret ical analysis of
co nstraints are no longer expres sed in th e form of a genera l equalization of

rates of profit . Compe titio n still furms pr ices of pr od uction , i.e. prices
co mpetition by defining th e unity of separa te capitals as a sys tem of norms

of pr oduction and exc hange. It is now necessar y to sho w in greate r de ta il
regulat ing th e valorizatio n of capitals in period s of structura l change . Bu!
th e precise ways in which th e co ntinuous transform ati on of th ese norm s is
th e norm s of pr od uction and exchange emb ody relationships of
possible without th e separa te econo mic units being de prived of any social
asy mmetrical influence de riving from th e centralization of capital. Price
refere nce for regulating th eir behav iour. The elements of thi s problem are,
sys te ms are created which mat ch th e different forms of co mpetition , are

co mpatible with a structura l and permanent differe ntiation of rates of
as we have see n, the monetary form of pr ice and surplus pr ofit . The
pr ofit , and tend towards a permanently un even distribution of tot al pr ofit .
questio n now is to disdose th eir th eoreti cal significance. ~'Ie should not e
th at thi s pro blem canno t be raised in either dassical or neo-d assical
The co ndition for pri ce sys tems of thi s kind to bec ome solidly established is
or thodoxy. Even th ough th e price sys tem ass umes a very differe nt sense
ev ide ntly th at the social demand for different categories of co mmod ity is
co ngruent with th e asy mmetrical relationships of co mpetition . This is why
for eac h of th ese schaols, it always possesses th e characteristic th at it can
th e hier archical stra tification of incom es based on th e differentiations

within th e wage-earn ing dass is an indispensable co mpo nent of what we
th e co nditio ns of pr oduction and exc hange. Transition from one set of
can call monopolistic comp etition, as opposed to full co mpetition .' It is

also why direct actio n on th e formation of soc ial de mand bec omes a means
only be defined in relative terms and depends on th e exogenous variable of

co nditions to another is tot ally unintelligible her e . Only th e Marshallian
schaol has sought to tackie thi s pro blem with a typol ogy of equilibria over
tim e . But for want of any support in an adequate th eory of value, thi s
of co mpetition , th rou gh th e vario us pr actices th at see k to manufacture
empirical approach canno t analyse th e real hist orical pr ocess of
co nsumer sta tuses for differe nt incom e gro ups and different social
irrever sible transform at ion s of th e co nditio ns of pr od uction . Only a th eory
pos itio ns.
of value for which th e mon et ar y form of pr ice is not a disguise, bu t rather

th e exdusive mod alit y of homogenization of pr od uction activ ities and th e
l . The Role of SU'l'lus Profit und..r Full and Monopolistic
co nditions of existe nce for exc hange relations, can go beyond th e noti on of
Comp..tition
a co herent sys tem of relative pri ces. The permanence over tim e of
In order to distinguish mon opolisti c co mpetition from full co mpetition
mon et ar y pr ices makes it possible to u nd erstand th e incoh er ence over

tim e of th e pr ice sys tem as th e characteristic of any real dynamic - in other
th eoreti cally , befor e surveying th e co ncrete forms th at gove rn mar ket

behav iour, it is necessar y first of all to show how th ese two types of
words, one th at is irrever sible and radically uncertain for th e individu al
relationship between capitals are distinguished as ways of realizing relative
econo mic agents caught up in it . Surplus pro fits and mon et ar y losses reveal
th ese incoh er ences via-a-vis any und erlying sys te m of norm s of
surplus-va lue th ro ugh th e transform at ion of th e co nditions of pr oduction .
pr oduction and exc hange, and are at th e same tim e th e imm ediat e forces
This analysis is of co nsiderable th eoret ical int er est , since it makes it

possible to define more pr ecisely what th e co mpetition of separa te capitals
for th e transiti on from one sys te m to another.
involves. A demonstr ation of how two types of co mpetition are
take a simple schematic example th at can be treat ed numerically . Conside r

th e situation of a bra nch pr od ucing a co mmod ity of which all units are
co nstitutive mod aliti es of two types of regulation supposes th at it is
1 , THE ROLE OF SURPLUS PROFIT UNDER FULL A ND M ONOP
25 I 51
To co mprehend mor e pr ecisely th e significance of thi s pr ocess, we shall
26 I 51
- - - - - - - - - - - - - - ----{o ) - - - - - - - -
-'
(1
hom ogeneou s and whose un it exchange-va lue is expr essed as fullows, as a
funct ion al relationship . It de te rmines th e surplus pro fit th at will actually
functi on of th e actual co nditions of pr od uction :
be obtained . The redivision of mar ket shares is th e coe rcive force th at

pushes th e other capitalists to ado pt th e new manufacturing pr ecess or else
W; - C + V +S~'
S~
abando n th e bra nch in question. This is why th e mar ket price is gra dually
1+ O . ~+ O _ 2
This is th e mon et ar y expr ession of th e norm of producti on and

exc hange pr esently obtaining in th e bra nch in ques tio n. Le! us now
co nsider th e int roduct ion of a new product ion procedure th a! makes it
possible to daub le th e appare n! pr od uctivity ofl iving labour in th e bra nch.
For th e sake of simplification, we can ass ume th a! th e co nstan! capital
co nsumed per item remains th e same, as lhi s in no way affects the nature of
th e problem we are study ing here .
To analyse the manner in which th e new pr od uction method is
genera lized, we can fullow frs! Marx'. own argument, which relates to th e
situatio n un der full co mpetition . ~'Ie can dra w a genera l co nclusion from
thi s, and will th en indicate how it should be applied to th e case of
mon opolistic co mpetition .
The new product ion precess is character ized in our hypo thesis by an
individu al exc hange value:
red uced to $ 1.5, which bec omes th e new social mar ket value. The pr oo f
th at th e new pr od uction norm has really been esta blished is th e
disappearance of surplus pro fits, which coincides with a new distr ibu tion of
mar ket shares.
This pr ecess as a whole has th e following th eoreti cal significance.
Transitory su rplus profit is the expression ola me asurement in the space

01existing social values (the norm s of pr od uction and exc hange in force) 01
conditions 01production that do not pertain to this system 01values. ~'Ihen
surplus pro fit disappea rs, thi s is th e sign th at th ese co nditio ns now do so
pertain ; but th e old co nditions of pr od uction will th en have been destro yed
and th e capital still fixed in th em devalor ized . The repercussion of th e new
social mar ket value in th e br anch in questio n on th e norm of co nsumption
is th e pr ecess of conversion 01su rplus profit into relative su rplus-value. It
attes ts to th e fact th at th e lecal transform ati on of th e prod uctive forces is
VE' _C +VA
socially necessar y from th e sta ndpoint of th e logic of development of th e

wage relation . This ability of th e mon et ar y de termination of pr ices to give
11 5 .
an objective economic repr esentation to lecal changes in th e division of
\< 0 .5
This applies to a particular and still virtual exchange-va lue, since th e new
co nditions of product ion remain exce ptio nal in th e br anch . The prevailing
exchange-va lue, i.e. th e secial mar ket value, is still determined by th e
former pr oduction co nditions. Since th e social norm remains un changed ,
th e innovating capitalists can in pr incipIe sell th eir co mmod ities at any
po int in th e range between th e particular value and th e social value,
realizing a greate r or lesser surplus pro fit . If th ey are to realize th e
maximum surplus pr ofit , th ey must be able to sell twice th e number of
units repr esented by th eir current share of th e mar ket in pr evalent selling
co nditions. To th e extent th at th e social demand for thi s category of
co mmod ity is unchanged - a hypo thesis retained by Marx , which ass umes
th at effective mon et ar y de mand remains co nstant - th en th e sale of th e
inn ovating capitalists' output req uires an expansion of th eir share of th e
mar ket by a red uction of their mar ket pri ce below th e soc ial value, but still
above th e individu al value. The fixing of this mar ket pr ice (say $ 1.8, for
example) is a stra tegic decision th at cannot be repr esented by any
1 , THE ROLE OF SURPLUS PROFIT UNDER FULL A ND MO NOP
27 I 51
labour beyond th e co herence of a sys tem of pr oduction pr ices can be

called th e piv oting 01 value. It is th e co ntinuous evolution of nominal
mar ket pr ices th at maintains over tim e th e soc ial link between individu al
capitals, des pite th e hetero geneity of th e co nditions of pr od uction . The
pivoting of value is thus th e hom ogeni zati on by th e mon et ar y exc hange CM through which th e value genera te d in a partic ular pr od uctive operation
is measured within th e current sys tem of norm s of prod uction and
exc hange. The superiority of th e pr od uctive labou r performed in
co nditions of pr od uction th at are still exce ptio nal is socially co nfirmed in
th e form of a greate r right of appropriatio n over social surplus-va lue.
Surplus pr ofit is th e diffracted measurement of value pr oduced in thi s
pr oduction pr ecess.
In th e above pr esentation , th e fact th at th e reduction in surplus pro fit
takes th e form of a dec rease in mar ket pr ice is due to th e ass umptio n th at
th e effective demand addressed to th e sum tot al of prod ucers in th e bra nch
in ques tion is invari able for eac h of th em at a give n pr ice . The restr ucturing
28 I 51
- - - - - - - - - - - - - - ----{o ) - - - - - - - -
-'
(1
of competitive pos ilions which enables th e new conditions of producti on to
associated with pr ocedures of collective wage bargaining, and with th e
penetr ate can only be achieve d, th er efore , by th e exclusion from th e

market of th ose capitalists who per sis! in using th e old producti on
socialization of risks, gives th e deployment of effective demand over th e
methods. This exclusion is effected by a reduction in profits, oc even th e
moreover , has given rise to organizational forms which link pr od uction ,
incurrence of losses. Effecti ve demand ends up by increasing ex p ost, bu!

only as a result of th e fal! in mar ket price. Yet we mus! still distinguish th e
commerc e and finance d ose ly together . Thus th e size and means of action
of innovating firms are now in many fields such as to allow th em to plan th e
th eoreti cal notion of th e pivoting of value from th e concrete modalities by

which lhi s pivoting is effected. To understand lhi s distinction properly , it is
tendencies of effective demand in adva nce by incorporating int o th eir

calculations th e pro bable effects of new structura l forms. The result is th at
necessar y to not e th a! in a capitalist economy moved by permanent
th ese firms no longer have to take th e demand for th e bra nch as a constant,
transform ati on of pr od uction conditions, th e social value in eac h br anch is

not dete rmined by mar ginal conditions, which are always eva nescent and
once pri ces are given. They may on th e contrary consider th at an output
increased by new and mor e eflicient methods can be sold at a mar ket pr ice
obtain only for a small number of pr od ucers with negligible influence. In
equal to th e former social value. A new mod alit y of pivoting of value th en
actual pr actice , th e distr ibution of pr oduction conditions is not continuous
bec omes poss ible. It denotes a new form of competition inserted within a
but discr ete o Social mar ket value is a means of distr ibu ting individu al
values corresponding to th e different pr oduction pr ocesses th at coexist in
mon opolistic reg ulation. There is still th e formation of a surplus pr ofit , but
th e conversion of th e surplus pro fit int o relative surplus-va lue follows a
th e bra nch, as weighted by th e shares of th e mar ket th at th ese pr ocesses
different course.
supply. The weighting coe flicients, th er efore , do not depend solely on th e
int rod uced above.
different bra nches an autonomous force. The centralization of capital,
~'Ie
shall demonstr ate thi s by return ing to th e example
spec trum of techni cal conditions, but also on th e tot al effective monet ar y
The pivoting of value is necessaril y accomplished by a modificat ion of
demand th at can be tendentially satisfied, i.e. witho ut a temporar y increase

or decr ease in stocks, and witho ut abno rmal over- or under -utili zation of
mar ket shares. ~'Ihen th e effective demand for th e branch doos not have a
dynamic of its own , th en th e tot al size of th e mar ket is given. This is why th e
pr oductive capacity . Variations in stocks and in th e utili zati on of
reallocation of mar ket shares in favour of th e innovating capitalists takes
pr od uctive capacity are th e elements of flexibilit y th at make momentar y
place to th e detr iment of th e volume of sales made by th e other capitalists.
mar ket pr ices diverge fr om socia l mar ket values. The result is th at th e
concrete formation of relative surplus-va lue th ro ugh th e pivoting of value
Price wars derive from thi s situation. If, on th e contrary, a regular gro wth
involves in pr incipIe a do uble pr ocess: variation of th e distr ibution of

individu al values for th e pr od ucers, and variation in effective demand
between th e differe nt bra nches. This double pr ocess gove rns th e dy namic
in effective demand is th e effect of a set of pr ocedures of soc ial reg ulation ,

th en th e innovating capitalists will be able to impro ve th eir market shares
by capturing th e increase in demand at a given pr ice. The other capitalists
th en maintain th eir level of sales. The conditions of competition make
poss ible an int roducti on of technical pro gress which can be planned in
reallocation of social labour. In th e form of regulation of competition th at

we have descr ibed only one of th ese two pr ocesses comes int o play. Since
adva nce and is far less beset with obstad es. There is no need at all to invent
effective demand is assumed not to have any genera tive force independent
any 'mono poly power', as th e majorit y of econo mists do , to reach thi s
of pr ice , th e fall in mar ket pr ice is th e mechanism that sets th e pivoting of
result oIt arises from th e combination of structura l forms involved in th e

develop ment of th e wage relation and issuin g from th e centralization of
value in mot ion . It redistr ibutes mar ket shares and makes poss ible th e
emergence of a new social value.
But th er e is no reason to believe th at competition can be reduced to thi s
partial pr ocess.
~'Ie
can be quite certain, in fact , th at thi s is not th e case
once capitalism has entered th e historical phase of genera lization of th e

wage relation . The formation of th e social nor m of consumption that is
1 , THE ROLE OF SURPLUS PROFIT UNDER FULL A ND MO NOP
2 9 I 51
capital. 'Monopoly power' is in rea lity simply th e effect of th e sum tot al of

social structures on economic adjustments. ~'Ie can bette r denote thi s
effect by th e term monopolistic regulation. The illusion of a 'mono poly
power' is related to th e fact th at if th e bra nch is considered in isolation
instead of being see n as an element in a sys tem of no rms of production and
30 I 51
- - - - - - - - - - - - - - ----{o ) - - - - - - - -
o
A THEORY
os OPlTAlIST REGULATION
Total Sale P.. CiI
exc hange , then everyt bing hap pens as if lhe innovati ng firm o ereatOO th eir
own market.
The pivotllll ofv.uu.. may tben W:e ptae. wtthout a tall ID price. ln the
1.1_ example, the forme r IIOCWJ marbt ....Ju.. o 2 dollan renrns lb.
b.uJs from which th. introduetion of ..xcepttona! pro<!uctiOll condltiOM
dep.o.rts . The rurplus proti.t is far largar tha n in Ihe contelCt of full
competition. It givel lhe ian cvators a e..oh 110" which lhey can use to
exp.ond their productiva cap.ocili.... The Ilr ategic decision i. lhe one lhat
fil.lbl"", them lo ch<xlM the optun.ol fal.. of incrw5e in s.ol...... ThilI invoh...
i ll incre.aH in _age c:oJU denYUlI both from a prtl-ll redlJtribul>on o
.urplus pro6ts to lb. ..age-earn...... by "ay of compens.otioll for the.r
a~ptanc. of tech nical changH, and from an inc:NUe in lhe co mrn..r<:i.l
overheads necessa ry to se11 lhe inerease<! oulput . The unified for mation of
... g... in Ihe bu nch. whethoeT Ihis lS dir"'" by coUective b.orgaining

proc..dur...., or in<hr.ct through .. dtffusKm rHUltmg from the mobihty of
labour-power. p ves ri5e lo a ganeraliutioll ef tbe wage llIcr~. Two
_nttal oeff~ follow from lhU. ~",thm Ih. braneh, oth",.lirms ho,... lO
match the inerea-oo ..ages that . nsue from the initialive o f tha innovato l"1l .
If they ehng to the old conditions of produ etion, then they axperienea a
reduction in Iheir profils. In order lo r....el, Ihey are obliged ";Iher lO
IlItroducoe th. n.... t.chniqUel th.mHlveI, or e\se to 1..... . tJt., br.wch
ahog..tber. So fa, al Ih. posIlJOIl of tb. braneh in Ih. scocW cbV1SlCll al
labour IS concern..d, the wag.11S" contnbules lo m.untaining Ih g..n",a1
proc<!ss of regular inerease in monetar y incomes. Thus tht increasO' in
mon etary u:ages p lays the rolO' in the pi .'oting of t'aluO' that frll p reviously
to tht atertast in prictS. lb.. uymm..lrical movtm.nl of wagel, re!ristanl
to a faII an<! pull..d IIp.. ard by tb.. ehonges 10 prod<tctiou cond1tions,
b<lComel an _ntW .u:pect of Ih valorUatiCll of <:.ilpllal, by P"fM'ttmg Ih.
socWvahdmon ofinv<lSOn<mU lhol transform produCl1on m~hods.
Assuming that daily output under formar conditions of produ ction "as
10 unit. , ..e could con. truet the follo..ing lable lOdescribe the full effects
of Ihe piVOling ofvalu.:

Da.J, Outpul
Uml Sectal Valu.
D&11, W"ze
Tolal C""t P" CO
~-
11.... ' _
ao d.llar.
d<lciston of 1Ji., innovalors. t..t us then usume that und." Ih form."

COlldJtionI lb. production of oo. unIl of a OOmmod,ty r"'lUlled 2 boun of
lebour ( 1 hour dtrect liobour 10 Ih br.wch and 1 hour embo:hed liobour).
seee .. hat is involved , under our hypot h....., " labour tim. performed
aeeordins to Ihe norm of produelion and exehanse prevaihns before the
lechnical innovalion, Ih produet af a ne hour'. abslr act labour ;. validaled
by !he marbl al 1 dallar. In th. n_ S1tu.1tion, !he urul ofthe C01l1IIlO<I.tty IS
J.. ays soId al "dol1al"1l. bul ,IS productiOll nDW reqUll" cnIy 1'h boun ( 1
hour'. embo:hed liobourplus 'h hour dtrect Iabour, i'v.n tbal produCI1'i'lly
il doubled).The produet o f 1 hour's ab.tr aet labo ur il therefore no" valued
al 1 \\ dollan . Our cond usion is thal a complete pi .'oting of.'alue IS effa ted
tllrougll a ri$t in tilO' monttary "prtsJion of an IIour's abstrad labour.
n.
dallar wmch form",.ly ~presented 1 hour's abstraet Iabour (al

validated by tbe marl:et en NI.) nDW r. presen U cnIy 'V. bour. lb.
COCS"'qu<mc. of IhlS IS qwle fundam<mul for th. nalUN! of comp<!!l1lOn
1
under monopolistie r<lgulation. The conversion of surplul pro fit into

relative surplus-value combines into a single proceso the rise in nomin~l
wases ~nd lb faII in lb valu. of money. This is lb. fundam"",laI prin cipl.
o f Cf"ffplng infla rion, ..hich is a regulation of tb<l r<!gllll. of IlItellSlV.
accumuUllOn tbal tnal:es poJSIbl. tbt conlmuOl1S eociaI ..~bdallon of a
p"rman<mt lunsfonnt1on m th.. con<htlOrlS of produCl1on. lb.
eharaeteristies of the monetary institution that in lu ro make cr...ping
int1ation possible ..i11 be stu died in the fo11owing ch~pter .l.<It u. note for
the mom"",1 lhol Ih. Ibeoretical definitiCll of infliolion h.ts uotbing 10 da
...tb tbe riM in an . mprnoo wdu of prica. In tb<l schemattc exampl.
lJIu<hed h~., cr....ping infliollon lal:es lb form of lJIabilily of nominal
price in th. pr"""nc. of a dcubhng of Ih. a pp,arent prod uCl1Vlty of Iivmg
l~bour. This result is par adoxieal only fur fanatical defenders of the
quantily Ihaory of money . It is . nlirely lagica] in th. real economy, which
;. mon~aTY through and through and ;. in no way lb iuxt~p""-tionof an
exogellOUll IIlOnelary maso "'lh sysIem o f reianv. "'Iuil lbrium pncft
2 0WUU
d",enmned mdepelld<lntlyof any men~M)' con<hllon.
ad.Ua"
8 d. llar.
18 dollar.
2doU,,"
12 dellar.
32 dollar<
2. The f ..cl o rs Ih..1 Differellli..le Ral... of Prefil
d.!!a"
Her.. il ;. Ih.. ri.., in wag... from B re 1 ~ doUan Ihat ,. th tr ategie
1 0 WUU
1 . Ti'iE ROl E OF SURPlUS PROFIT UNDER Fl.U ANO M()IoIOP
40
n i 51
11 I 51
-'
(1
In a rder to sludy mon opolist ic co mpetition , th ou gh we can only deal with
capital is not abs tract (hence essentially mobile) value. These firms are tied
its basic principIes her e , it is necessar y frs! of al! to return to th e conoep!
to particular techni cal co nditions and have no way of transfer rin g th eir
of indu st rial br anch . ~'Ie have see n how br anches divide up market s by
differentiating between categories of co rnmod ity . No w th e structura l
activities to a differe nt field of co mmod ity product ion , even one

imm ediat ely adjacent. This is th e essential criterion of the pseudo-
determinants of th e centralization of capital alte r th e very existe nce of
co mmod ity and technico-econ om ic dependence. In thi s case , th e norm of
these br anches, by prec esses of int egration and diversification of

pr od uction . ~'Ie shall th er efure examine th e co nsequences of th e
centralization of capital on th e stability of th e division int o br anches,
befare proceedin g to analyse th e relations between th e giant co rpo rations.
pr oduction and exc hange is established fur th e int egrat ed econo mic line as
a whole . It imposes on partial segments of valorization certain techni co-
(a) In tegr ation 01 branches and transf orm ation 01 commodities. The
specializatio n of pr od uction precesses, th e creation of zones of int egrati on
in th e division ofl abo ur , and th e diversification and transfurm ati on of usevalues are infrast ructural pr ecesses of th e development of norm s of
product ion and exc hange un der th e regime of int ensive accumulation th at
we have labelled Fordism . Spec ialization and vertical int egrat ion of
product ion destr oy br anches th at previou sly existed without involvin g th e
disappearance of th e cor respo nding labour precesses. These bra nches
bec ome technico-econ omi c lines in a larger and reor ganized bra nch. The
pr od ucts th at leave th ese lines are no more th an pseudo-commodities,
ente ring int o th e pr oducti on of co mplex co mmod ities as int ermediat e
pr od ucts. They are pseud o-commod ities in th e sense th at th ey are not
product s of labour th at have directly to seek secial valida tion in genera l
circulation . The labo ur spent on th eir producti on be comes th e object of
coordination within a genera l plan fur th e int egrat ed enterprise . ~'Ihen th e
relations between ente rprises take th e furm of sub-contracting, th en
economic dependence in ways other th an th e exte rnal relations of
co mpetition is read ily appare nt. But thi s depende nce exists eve n where
th er e is no sub-contracting in th e strict sense. There are genera lly a swarm
of small-sca le firm s operating on int ermediat e segments of valorization in
int egrat ed econo mic lines, and supplying th eir product s to a small number
of giant co rpo rations who hold th at link in th e chain towar ds which
eve ry thing upst ream must necessaril y co nverge , and on which eve ry thing
downstr eam must be exclusively depende nt. This is why th ese small firm s
can co ntro l th e techni cal characteristics of th eir labour precess
independently witho ut having th at economic auto no my which would make
it legitim at e to spea k of centres of capitalist appropriation. For th em ,
2. THE FA CTORS TH AT DIFFERENT IATE RATES DF PRDFIT -
33 I 51
econo mic norm s that de te rmine transfer pri ces fur th ese pseudoco mmod ities. There can be no genera l rule fur th e distribution of profit
within th e int egrat ed line oIn vesti gat ion s must be made case by case . The
rates of profit fur th e captive firms are not necessaril y low in period s of
normal activity, if th ese firms manage to benefit from the superexploitation of a sub-proleta riat made up of categories of disad vantaged
wage-earn ers trapped in secluded reservoirs of labou r . But th ese firms
operate in a situation of tot al econo mic insecurity , witho ut any possibility
of reacting to delete rious changes in genera l econo mic co nditions.
J ust as th er e exist zones of int egrati on in co mmod ity producti on , so
th er e exist zones of dive rs ificatio n, where th e obsolescence of use-values is
very pronounced and th e norm s of product ion and exchange do not
stabilize sufliciently fur distinct indu st rial bra nches to separa te out ,
encompassing different gro ups of firms. Compe tition between capitals her e
bec omes a stra tegic co mbat fur th e elimination of adversa ries. 4 The
objective of eac h capital is not simply to make sure of a do minant pos ition
in a particular econo mic line , as a bas tion of valorization with a particular
variety ofcommod ity as its support. It is to co ntrol th e means and rhythm
of diversification itself. As lon g as thi s struggle co ntinues, th e relations of
co mpetition are th ose of absorption, mer ger , and association of firms. The
impo rt ance of stra tegic investments, th e tim e th ey take to mature , th e
great variation in lecal co nditions of valorization, all make it impossible to
spea k of a co mpetition gove rned by an imm anent social norm . But th e
outco me of th e stra tegic struggle is always th e emergence of a new bra nch
or gro up of bra nches in which norms of pr od uction and exchange are
established . At th e same tim e , a few giant co rpo rations co nsolidate th eir
pos itions and stabilize their exte rnal relations by int er connecting th eir
investments in th e different econo mlC lines within th e field of
diversification . The resulting furm of co mpetition is th at of str atified
o/igopo /y. This furm is characteristic of th e regime of int ensive
34 I 51
- - - - - - - - - - - - - - - - - - <0 > - - - - - - - -
-'
(1
accumulation. It exte nds to al! categories of commoclities included in th e
~'Ie
may take a br anch in which a nor m of pr oduction and exchange is
social norm of co nsumption , once th ese have reached th e stage of
alrea dy esta blished. Let Q. be th e quantity of commod ities of a particular
maturity . The formation of lhi s type of competition is closely bound up

with th e development of th e social norm " f consumption. The 1alter is
variety pr oduced in th e br anch in a given period of tim e , indepen dent of

any sho rt-te rm disturb ances. The esta blishment of th e pr od uctia n pr ice
organized according to functi on al precesses th a! furm th e supports of
under full competition can th en be determined as fullows.
dense complexes " f commod ities. The complementarities indicated in
Let K be th e sum of fixed costs transferred in th e period fur which
Chapler 3, and th e need to overc ome th e financial pro blems involved in th e

acq uisitio n of consumer durables fur th e bread mass of th e wage-earn ing
normal pr oduction is Q . K depends on th e relative size of th e fixed c apital,

its age structure, average turna ver and th ose structura l costs related to th e
dass, mean th a! th e expansion of commod ity product ion co nquers th e
management of pr od uction.
spheres of consumption a rre by a ne. ~'Ihen a new sphere is annexed, it is th e

base fur a new zone of diversification , in which th e processes descr ibed
pr oduced : th e cost in circ ulating constant capital, in variable capital, and
above come int o play , while th e increase in effective demand responds to
sales cost oIt is unde rstood th at all th ese costs are determined on th e bas is
th e phenomena of diffusion th at are studied at length by th e th eorists of
of a valor ization of th eir elements at pr ices of pr od uction under th e
consumption . ~'Ihen th e new sphere has come fully int o mass consumption ,
and th e social demand fur it is sta bilized and largely a response to th e need
pr evailing sys tem of nor ms. These are th er efure manet ar y magnitudes.
The tot al cost of pr oduction per unit pr od uced (i.e. th e th ea reti cal lon g-
fur replacements, th en competition between capitals in thi s field becomes
term cost of pr od uction) in th e soc ial conditions of prod uction of th e tim e
mor e rigid and mor e predict able. This is th e period of stra tified oligopoly ,
cor responding to sta ble exte rnal relations between centralized capitals.
is: K/Q. + V.
(b) Co mp etition between fi rms in stratified oligopoly. The relations of
Let V be th e tot al direct cost of prod uction fur eac h of th e units
If we call p th e pri ce of pr od uction in full competitia n fur th e bra nch in

ques tion, and r th e genera l rate of pro fit , th en p is determined as fullows:
K
competition th at are characteristic of stra tified oligopoly can be summed
p _ ( _ .V )(l )
up under th e concept of barriers to entry . Barr iers exist to entry int o a field
Q,
of commod ity producti on if capitals outside thi s field th at try to invest in it

and esta blish a new valorization cycle experience conditions th at set th em
The existe nce of barriers to entry is expressed in th e fact that
at a persiste nt disadvantage in relation to capitals alrea dy esta blished. This

disadvantage may depend on various different structura l elements, such as
th e pro tection of manufact uring sec re ts, contro l over supplies,
crystallization of a variety of mar kets in which pos itions of competition are
rendered rigid by a br and hier ar chy , major economies of sca le in
pr od uction , etc.
In or der to define more pr ecisely th e influence of th ese barriers to entry
on th e furmation of pr ices, it is useful to refer to th e pr ice of pr od uction
under full competition as pr eviously analyse d, which fullows by definition
from th e constraint of competition where th er e are no barr iers to entry.
Let us investigate whether a price of pr od uction fur mon opolistic
competition can exist, and if so in what relationship it sta nds to th e pr ice of
pr od uction under full competition .
2. THE FACTORS THAT DIFFERENTIATE RATES DF PRDFIT -
(K/Q.
V). is structura lly grea te r fur new capitals see king to estab lish th emselves
in th e bra nch than th e
(K/Q.
+ V),fur capitals alrea dy operating. ~'Ihat is
involved her e , th er efure , is not just a simple distr ibution of individual costs
of pr oduction around th e nor m. In th e conditions under investigat ion , in
fact , th e very ma vement of capital is fundamentally affected, since nane of
th e capitals see king entry is able to realize th e genera l rate of pro fit at th e
pr ice under full competition . The upshot is th at th ey do not invest in this
bra nch. But if thi s is th e case , th en th e same pr od uction Q. can be realized
at a pr ice higher th an th at unde r full competition , and can yield a ra te of
pro fit higher than th e genera l rate , up to th e esta blishment of a limit pri ce:
K
P, . ( - + V lr( I + I', )
Q,
such th at capitals newly ente ring exac tly realize th e genera l rate of pro fit :
35 I 51
36 I 51
- - - - - - - - - - - - - - - - - - <0 > - - - - - - - -
-'
(1
el
.. THEOR'r OF CA PITAL IST REGULATION
K
p, C -
Q.
~ V ).O ~ r)
capital ,mpose themselves, th anl:s to th eir disposal Over me re and mOre

coloaal lIlllSell of mOMY capilal.
n . h=l poo p, is pnc", o ( productioD of monopolistic oompe [tton .
11 em bcdres .. ~lus prolit Ih.o.t is corn..,...j by th hr. nch u ....hol md

dividad . ma ng lhe gianl corpor.lion. in a Ilutified oligopoly. Tbe t ale of
lhis surplus pr etil is equ alla:
T, _ r .
p, - p
K
1-
Q.
\ '),
11 can be taken for gtantad lh at lh islimit pri ce involve. a restricticn on lh e

volume o f output, sin~ lh.. same " ffective d.mund o n mone)' t.. rnu LS
sabs:6.d ., .. hlghoer W>ll price _
>rice c.>ll be fonned .."d m.ilmt.nned 110
nu.
th.. objbvi! M te rm1D.Ults o f tM b.lrnrs to "ntry su~. lt

lIenuiMly LS .. pnce of productton of mon opolistic compelllion, "mee 1I
doos no! result fto m scm e 'imperfection' In exchange, bUI lS aclu ally
founde<l In the local conditions af production.
long
!he st.bihry of this price is lbe st.bthry of th.. hiom"rs to ""'try. TbIS
stability LS not .. medunical OM, but involv"" eh.. pel"SlStellC<l of ..
m..t_.ble swe Ib.t m.y be of long dur.llOD , m which the fonn.otwn of
stratified oligopo ly is alre ady the resulta nt of the conl olidation of
competition in a :IOne of diversific.ltion.'
] . N..... Moda li l ies o( Deva lol1u lion : PLonned Obsol.......n C'ea n d

A.,.,..,I.. r a l ed Amortiz .. Uon
The effect of rhese n" lO ge n..rai modaliti.. o f d evalo riz:atio n o n th.. la... o f
compenrion IS onIy mlelhgthle if"e bear in mmd Ihe SJ"IC1fic mod e of
COheholl o f tM ~ o ( rnt"hJI~ a=
ulatIon. This regt.l1l.. can only
d..velop by CT<Nlmg Ihe I1ructlll"allOrms n+edoo lo confronl lb.. n.... gui""
lb lOhich the con ttadictio ns of the lalO of acc umulatio n pres ent the mselves.
The ce ntralizatio n o f ca pital, c hietly in ils financia! aspecl, and Ih..
transttion from
tu1I com petItwn 10 monopohsnc com pet ,tion .,.. Ibe
condltions ter!he.... n.... moda4!>e1 o f devaloruabon lo ansa. At th. 1oca.I

l<!Vel of Ih.. firm , Ihase modalil,es ar<O charaetenud. hy lb.. faet lbal
dev alorie aticn il anticipated and compensatoo by a financial /lolO lOhich is
inccrporated a p riori int o the rost of pr od uction entering into th e
formalion of th e pn:"" of production 1lllCi"," monopolistic compelt tIon. This
IS th. cLus.c c_ of a lr ansgr.....OIl of th. sanctlon of monecary e>:change,
smce a dow of gross profit IS produc<!d in condltions whicb should l10t
""rmil a comple te valori zatio n of the capital investoo. Cettainly, the
macr o-eco nomic Ilgnificance of thil pr ooed ut e is not ""rc eived by th e fitm
lbvolved, for lOhich il mer..ly ""pres<mts a financial insuranc. against lb..
Th~1S therefore a general allerabon in th.. developm ..nl of th.. nonns

of productron and e>:chang .. as d'3SlCTlbed rn the S1tu.ation o ( tu1I
compehtwn. In p1Ice of a transfcrmation of norms aJsurIII.g a contmoous
..volulio n of produ ction pt ic..., lOe hav e the stabiliaatio n of oligopolil tic
rei ntroducedin a new formo
domainl charactena ed by very rigid pr od uction prices of monopo lil tic

compet ition, and by zon.. of d_ruction of fonn"," oIigopohstie 6<>lds.As
the r...wl of a radi cal tr ansformatiOll rn th. COlIWt>onlI of produetion or the
For firms to protect th eml elves individually from the risl:s of

d..valoriution, lh"}' mUl1 boeable te prOOiet ih;scope and I..m po. They can
onIy do Ibis by a stral"lY of d1V'lmticabOll m whieb Ibe fIOOIlomie l<O of
lOrmatlQtl of M"
th.. lIlNns of product1on inv.ested in ...ch.conomic !Ln.. is ada ploo lo lb..

],fe e>:pectane)' On Ihe marl:et of Ih. cornmod'l;es prod uced. JI 's
necesl ary, th erefore, to be able to pla n th e pace of renelOal of these
p~ acroa th.. ellli~ spa.,. o f diversification. lf thU: fundamelllal
con dllion is sallSfioo , th en Ihe gtanl corpor ations can genarale Ih...". 0W1I
lin.anciaI safegllal"ds by manipulalUlg th.. la... of amortu:atwn a nd the tIm....
seale ov..,. whicb Ihe me.lns of prodllct1on are amortI zoo, lOb;eh ean be
pure ly fictitioul . The gener alizoo oblolescenee that follows i. evidently not
com pk>:es of commcdrn es lb Ih.. lOal:e of lb..

develc pment of Ihe social norm o consumption. These zon.. are highly
unstab le. They ate charac terized by price lOatl, and by restructur ation of
capilalist proprietary control, There IS a hnd of tlplo~on 01 tht forrm of
COmpt1" rion th.ol oonsider ably moc!lti"" th.1IIOCial lml: betwM1l cap" als-.
n... further the distance from the r~IOl)' lOrms of tu1I compoetItIon, lb..
mor. lh e structural forml hy lOhich cenlra lized proprielary control
operatel acquire importance, and the more the hidden polOers of finance
risl:s of Ibe mV9l1menl. BUI Iber. ilI Do all!omatic IWrantee of an adequ.ite

UlSlU"an<:>e lb coudttIons of compelttwn, so Ihe lIIOCial COlIStraml IS
2 TH: fACT()Il.S Tkl.T Olf H R( ,"IAH RATES Of PIl.OfIT _ 17 I SI
18 I SI
-'
(1
imposed by any tech nological necessit y . It is th e outco me of th e

int er acti on of financial stra tegies which is th e very prin cipIe of
erosion devalor izes th e mon et ar y rights give n by wages. The result is a
mon opolist ic co mpe tition . The result is a gigantic waste of soc ial resources ,
which is co mpletely disguised in accou nting values, since it doos no!
pr oced ures of monopo listic co mpetition thus actually operate ta pro voke a
dissociation in th e develop ment of the twa departments of prod uction . The
appea r as a loss. The loss " f subsla nce is no! borne by th e firm s involved ,
social co nstraint of th e law of accumulation cannat be lifted , it is simply
bu! by soc iety as a whole , in th e furm of the erosion of money va lue and th e
displaced and deferred in tim e at th e cost of an int ensificati on in
distor tions lhi s pr od uces.

Bu! th er e are limit s to th e 'effectiveness' of th ese pr ivate financial
diseq uilibr ia .
stra tegies. The type of planning descr ibed ab ove is possible only if th e
giant co rpo rations pr ecipitate th e necessit y of a genera l devalorization

which mon et ar y erosion can na longer co ntinue ta absorbo This is th e roo t
restr aint on th e grawth of effective demand fur means ofconsumption . The
Seeking
ta
disengage
th emselves
from
th e
local
devalor ization of capital inh er ent in pr ivate co mmod ity pr od uction , th e
relations of competition are sta blized under th e furm " f stra tified
oligopo ly . If lhi s stability is to be pr od uced right across th e econo my, with
th e exce ption of new zones of diversification in th e pr ocess of furmation , it
develop thi s analysis in Cha pter , with th e aid of a th eory of th e relations
is necessar y fur th e co nditions of capital accumulation in genera l to be
between money and credit, ta un der st and th e divergent trend of th e
favourable .
~'Ihether
th e situation is one of full co mpetition or
of th e pr ocess of inflation and its co ntradictions.
~'Ie
shall need only ta
pr ocess and th e financiallimit th at th e tem po ral deferment of th e mon et ar y
mon opolist ic co mpetition, all th at th e individu al capitals have to share

between th em is th e tot al pro fit resulting from th e exploita tion of social
co nstraint finally encounte rs.
labour-po wer . Compe tition is peaceful only if th e furmation of th e genera l
4 . Administ......d Prlc ..s in th.. Unit..d Stat..s
rate of pro fit is not threat ened by th e uneven develop ment genera te d by
th e incom pati bility between th e evolution of th e macro st ruct ur e of
Administe red pr ices may be unde rstaod from two po ints of view. First of
pr od uction and th e distr ibu tion of tot al incom e . But th e mod aliti es of
all th er e are th ose pr ivate pr actices that emerge in th e co ntent of stra tified
oligopo lies with a relative stability. These can be seen as co ncerted
mon opolist ic co mpetition feed certain furces th at tend to genera te such
pr actices which neither necessaril y nor chiefly involve explicit collusion
un even develop ment .

In order to create in all circ umstances th ose depr eciation allowances
and agre ement. This is particularly true in th e United Sta tes , where a very
th at are th e pr incipal co mpo nent of a rapidly gro wing cash flow, th e giant
elabora te anti-trust legislat ion exists , unde r th e aegis of th e Feder al Tra de
co rpo rations must be able to co unt on an extre mely rapid amortization.

The support fur thi s amo rtization is an age-structure of th e capital in
Commission and th e Department of J ustice , though the operations of th ese

twa agencies are more or less separa te from one another. The co ncerted
ques tion th at is disto rted to give eve r more weight to recent fixed
pr actices a f th e giant co rpo rations are determined by th e logic of
investments. The result is th at th e depr eciation allowances do not stop with
mon opolisti c co mpetition itself. Administered pri ces are alsa matter s of
pu blic ruling in spec ific fields of co mmodity pr oduction . Qur a bjective her e
co mpensation fur losses on past investments; th ey can only become a

regular flow fuelling a gro wing pr ofit if th ey pr ecipitate a tem po of futur e
is not ta make a precise descr iptive investi gati on of th e different pr actices
investment th at is eve r more rapid . The pr oced ures set u nd er way by eac h
co ncretely empla yed. A study of thi s kind should certainly furm part of any
descr iption of th e furms of capitalist regulation . However , it alone would
giant firm so as to pro tect itself from local risks of devalor ization thus
create an eve r stro nger demand fur investments that favour s th e
req uire two co mprehensive treati ses, one on monopol y agreements , th e
develop ment of th e department prod ucing means of pr od uction . Besides,
other on pr ice co ntrol. Hap pily , th er e is a very widespread liter at ur e on
by incorpo rating depr eciation allowances at current sale pr ices, and
th ese ques tions in th e United Sta tes ,' th an ks ta th e pr esence of permanent

agencies charged with enfur cing th e anti-trust laws, and of pu blic
shifting th e effects onta mon et ar y ero sion , th e co rpo rations tend ta

increase th e share of tot al incom e th at th ey appropriate , since mon et ar y
3. NEW M ODA Ll T IES DF DEVALDRIZAT ION: PLA NNED OSSOLE
39 151
regulation .* Basing ourselves on thi s vas t material, a ur task is ta see k th e
40 1 51
---------------~o)---------
-'
.ignifican~
of th&te ..dminiltere<!. pn"". in (he co ntext of the la"5 o f

co mpetition mvesng ated aboye . It i. qu ite indispensab le her e to
d il tinguish betwMn (he co n""rti practi""" o f private firrns and public
tj:u!AtionJ.
T.. ~",
lo , ..
__ ~ "".l
'''-'0><.1 _.,". '"
...-
~ , . ,,~
"" L_ . ~
'R ,~ ffi.
_ .. _ ,
,d
....,~.
".,rt
_Ir
,....1
_
os
..-1
lo
{~
CQ"cv u d p olln 01 ptiu S'/oblllZotlon. Th.. obJ<lct\v" of cone<tnM

pr~ by Ul ohgopoly is .. two-fold stabihzauon: on th.. one Iwnd ..
con~:hd,,1Oll oh h. b.ilmfl'l to <mtTy ..hose 'h",ght' IS dennoo. by th.. gap
botw-Nn Ih price of produet1O:ll und.... monopohstic compent1on (or th..
Jun.1 price) oUld the price of productlon un d..,. full compent1on; on he
other h.ond olll immunw,tio:II of prieoes against short-t""", Ouctu.otlons th.ol
m.oy olT1M m lhe conmtwns of exchmge. Thes<> two obJect>ves ...... dosely
1inked.1ll f.let, .Jlhoogh lhe b.orrien 10 entTy ar e d<>tennm..d by muctur.ol
OOlld!liOM, bey h,,ve lhe cw u cter of .. met astabl e state vss-:'-vu lb ..
forc.N of oompel,tiofl . Contmgent disturb.on""" m lbe lev..l of effectlve

dem.o.nd cn mody lb.dlJtnbll!>Orl uf surplus prcfits amo ng tbe firm.s th.ol
sh.o.f. in 1M oIigopoly , in ruc h Wy th.ol <.'O rl a", o f tbese may be lemple<!
lO r~ by s1Ighlly allennl I~ pl"ice, l.e. fOOng an ",dJ",dual pnc-o th.ol is
s1Ighdy dlifere nl ro m rile pnc. under monopolistic compet:ltion. This
iCIlOn may ece h.ave a ny lastmg infIllen<.'O, and be real:s:lrbecl ...tb tlwI
endml o f the <hsturba~ rhar l ave riH ro it. 811r it may also be th.or tlwI
mamtenance ot rhe barrien ro entry N!qU1n!S tbe ni!lltriliat:lon ot stronl
ccmpen n ve rensions, ...rh rhe tesult rhat contIDg'mt <hsturi>.ln<>es ha ... tbe
efectofdestroyml rhe metastablestate. Aumlat..,.al alt"rat:lonof pnce by
certain firm.s rhen un1easheI a price WM wmch is roJk>w.ed by a
tran#:>rnu11On m lb. condJt1OnS of pro:l.uct:Ion.The b.rrn"ts to entry mell
away . Afler a rransitional period of dtsequilibn um , a new nonn of
pro:l.llClion aOO exchanle is form ed. Tbe Iotl "r may ...lh"r involve a
sil.... ticn offull compoe1ilion, cr il may rorm a furt h"r ohgopoly. Bul al all
""..nlS il is lhe result of a qualitalive br....k wilh lh e IJUtidl st1udtion.
In order 10 avoid a prccess of lh is l:ind, lh e glanl oligopolisl firms have
to operate ccnrrcle cver price cha ng... The priee of produetion of
monopohstie competition certainly dces not have any absolule rigidit y. It
""olv... acco rding te lenerallaws of compelilion, along ..ilh lh e re lalion,
of ..xchang.. in general. BUl lhis change, allhough nol discretionar y, mu, l
4 ADM INISTERED PRICES IN T HE UNITE D STATES -
be conce rted 10 as ro avcid rhe rislt ofde'lroying lhe barrier,lo enlry. An

esse ntialaim of rh"" concerre<! praeri""" is ro make p rices insensiti,.. to
co ntingent disturboncn 01demon d. l he g,anr corporatiollS mus! therefor..
abso rb shcrt-t..rm dllctuarions by varym g the d!!grooof lltilization ofth~r
prodllctio n ca paci ri... and rh~r commodity stocl:s. This is why the y mus!
normally hav.. ar rh~r disporal a ce r!.u n e x""", prodllction c.o.pacity,
which will vary considerably in the course oftb.. bUSlIl!!SS cyele. It is also
why lh"Y must pay gr....t atleot1On to tbe = t manag"m"nt of tbeir
stocb, ch of whoM econorn.;c hnes IS crucially d"pend"nt on tbe ahihty
of th.. sal department te reguter Buctuat:lons m ..ffoct:tv.. d"mand.
As:sumull that marl:et dlSturbances are absorbed by quant:lt:les sold,
how then is the cotICfft&d marl:et price li>:ed? ls 11 n..cessanl.y below tb..
!uIIl1 pnce, or Can It be equal to It? In a st1udt:lon of full com pet:ltlon, w..
hav e Meo that tb. pri ce of produetlon IS cotIcr ..t..ly reahz"d ov..,. t:Im.. as
an aV&fag.. of momentary marl:et prices. In a st1udt:lon of monopolistle
OO1Ilpoe1lb01l,
blow that the barrien to entry can onIy be stabihzed If tb e
w.
COIlcef1&d price falls in tb. band "'PMatmg tb e production pnN! under full
compolllbOll /rom lh.. prodllC1>Oll price under monopolisl>e com pelltion.
!he coocert&d pnc. may be equal to !he Iotler or below il , bulll dces not
nano:! lOir in rile relaltOD ot temporal ....n.able to ,ts avera ge.
Lee UlI rboon collftder an e xample which will ..lueidale tbe collcrele
pr~
o f mooopohsttc COlllpolt:lOOll. Let us assUlII" th.ol tb.. o ligo poly is

eee strallli&d bur homog..neous . 1t is established m a branch wh..re only a
JlIlgle homogell.cus com.modJry is produced .' ~.,.. shaIl also assumII th.ot al!
firm.s '" ttus branch, protected as they are by tb.. b.rrn"ts to ..ntry, hav.
th. s.ame long-term coats of product:lon. In tlus c....., tb.. firms in tb.
ohlopoly al! have a commou mr..,.est m max::u:ll1ZUlg tb.. total surplus profil
by fOOnllhe ccncerted price as Deir as poss1ble to tb.. !uIIlt pne& Wlthoul
lh&l"&by altraetmln_ capltals. Tbey Can do so bocaUS':! the homoz..n....ty
of prcduct and ee.t. means that tb. maXIJIUZoOt:lon oftb.. total surplus profil
is compatible Wllh a d'VlSton of the market m propomon to the stze of tb.
produetiv.. eapitalr . The division of th e mar ket m....ns the dlvision of tb.
surplus profil in such a way th at ....eh firm involved in the ohgopoly
receiv a rat.. of prct &qual to th.. avera ge rate of profil in th e braneh. In
thi, ca , lb.. price of production of monopolistie competition can b&
unambiguoull y achi..ved. Conce rted pr aetiee invo lving lh e division of a
homogen&Oul mar ul il a simple mallero n , IOlidily is dependenl simply
41 I 51
42 I 51
-'
(1
on th a! oft he barriers to entry.

This example will enable us to un der st and a contrario th e difliculties
It is now that th e stra tification of th e mar ket plays a maja r role in
involved in esta blishing sta ble relati on s of mon opolisti o co mpetition .
movin g th e co ncerted pr ice towar ds th e limiting price . ~'Ie have already

see n how thi s stra tification was esse ntial to th e co nstitution of th e
~'Ihen
th e individu al producti on costs fur firms in th e oligopo ly are
oligopo ly as a whole , by co ntributing to th e furmation of an effective
different , th er e can no lon ger be a co ncerted pr oced ure th a! respec!s th e
demand adequate to th e maintenance of its barriers to entry. This
manageri al auto nomy of the firms involved , permitting a maximi zation of

tot al surplus profit while yielding eac h auto nomous capital its due share.
Oligopoly can now only be achieve d by way of rigid cartels with a common
stra tification is equally necessar y to th e stability of relations of

co mpetition within th e oligopo ly . For if this stability is threat ened by too
sales agency and pr od uction quo tas assigned to th e different firm s in
thi s difference can be co mpensated by th e int er penet rat ion of th e giant
accorda nce with th eir costs, ta red istr ibute th e tot al surplus profit of th e
firms over th e sum tot al of pr ecesses of a zone of diversification . This
bra nch. Complex cartels of thi s kind , while furbidd en in th e United Sta tes
int er penet rati on guara ntees an attitude of mutual respo nsibility of eac h
firm towar ds its co mpetitors. An unfavou rable pos ition in one line can be
un der th e Inter st at e Commerce Act of 18 88 and th e Sherman Act of 1890 ,

existe d in Europe in th e early part of thi s century and became th e genera l
rule in heavy indu stry during th e Creat Depression. But such cartels are
incom pati ble with th e transfurm ati on of th e co nditions of pr oduction
great a difference in individu al costs within a particular econo mic line , th en
offset by a favourable pos ition in another. Each firm see ks a range of

pr oducts such th at th er e will still be an equita ble distribu tion of th e pr ofit
inh er ent to int ensive accumulation. They can only surv ive in particular
realized in th e sum tot al of lines. It is th e zone of dive rs ification, th en ,

which co nstitutes th e indu st rial br anch . This pr oduces a co mplex
br anches of indu st ry or in exce ptional situations: fur example, limit at ion s
co mmod ity whose different use-values are varieties issuing from eac h
of nat ur al resou rces or genera l blecking of accumulation, sta bility and
co mpo nent econo mic line oThis illust rat es very well th e th eoreti cal remark
limit ed co mplexity of techn iqu es, imm obility of pr od ucers, small number
of sellers and buy ers linked by lon g-st andin g ties o
made at th e beginning of thi s boo k th at th e co mmodity has a use-value as
Exd udin g th ese extre me cases, or transient respo nses to short-te rm

situations (crisis cartels) , th e existe nce of differences in th e lon g-run
pr od uction costs of existing firms makes it impossible fur any pr actice of
~'Ihat
its support yet is not defined by use-value , but rather by exc hange-va lue.
The develop ment of furms of co mpetition disseciates th ese two aspec ts
co ncretely . The stra tification int o varieties is essential to th e furmation of
pr ices of monopo listic co mpetition . But th e relationships between varieties
th e
are not relationships of different co mmod ities, fur th ey share in th e
situation th en demands is rather a series of emp irical pr actices. The
delimitation of a single bra nch. This co nfirms th at th e co ncept of br anch
determination of th e mon opol y pr ice in th e int er val set by th e structura l

co nditions of co mpetition between capitals is such that th e worst placed
and th e division of th e space of co mmod ities is not a funct ion of
firm in th e oligopo ly realizes at th e very least th e normal pr ofit un der full
Thanks to th ese co mplex relations of mon opolisti c co mpetition,

empirical pr actices fix co ncerted pr ices approximate ly in line with th e
tacit collusion to achieve a maximizati on of tot al surplus pr ofit .
co mpetition . If this is not possible, it means that th e spread of pr oduction

costs between firms is larger th an th e difference between th e ave rage
pr od uction cost fur th e existing firms and th e cost fur firms see king entry.
If th at is th e case , th en th e co nditions of pr od uction will certainly be

refashion ed , and it is impossible fur th e barriers to entry to surv ive. If th e
co ndition descr ibed above is realized , th en th e mon opol y pr ice can vary
within certain limit s, eve n if relatively restr icted ones. The effective fixing
of th e pr ice is th en such th at th e division of th e mar ket is approximate ly
sta ble within th e oligopo ly .
4 . ADM INISTE RED PRICES IN THE UNITE D STATE S -
4 3 I 51
techn ology , but mat ches th e furms ofcompetition .
limit pr ices, by co ntro lling th e develop ment of mar ket shares fur firms in
th e different pr ecesses. One pr actice current in American indu st ry is th at
of pri ce leadersh ip . The pro blem of knowing who leads and who fullows is
not very impo rt ant , since th e latitud e in fixing pr ices is genera lly not very
great: th e aim of th e pr actice is approximate sta bility of mar ket shares in a
restr icted int er val of pr ice fixing, such th at - taking account of th e
spec trum of pr oduction costs within a line and th e distr ibu tion of mar ket
shares in th e overall set of lines - th e co hesion of the oligopo ly is ass ure d.
44 I 51
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(1
It thus see ms logical to adapt a proced ure in which price is fixed within th e
th at th e customers pay fictitious transpo rt costs. Suppliers have an int er est
ava ilable int er val by th a! firm whose cos! of producti on is lowest , al a level
in selling as far as possible from th e base po int so as to maximize th ese
to maximize its Qwn surplus pro fit . The other firm s th en co nfurm to lhi s
fictitiou s transpo rt costs and thus surplus pro fits. The co hesion of th e
oligopo ly leads to a maximum of soc ial waste by pr od ucing cross-cutting
price and accept surplus profit s th a! depend on th e level of th eir

pr od uction costs al a give n share of th e mar ket . In th ose indu st ries where
flows of goods and co mpletely bloc king any advantage that might result
method s of prod uction remain lar gely unchanged , oosts are suflicient1y
inflexi ble fur it to malter littl e which firm seIs th e pr ice . The custom is fur
from changes in plant locat ion . The exo rb ita nt characte r of such pr actices
th e lar gest firm to do so, as in th e well-knaw n case of slee!.
sta te, which may make it compulsory to rede fine and increase th e number
of base po ints as changes occur in th e sites of stee l-works, sources of
The example of sleel enab les us to note a particular type of market
of pr ivate collusion leads in extre me cases to th eir cod ification by th e
stra tification. This is geogra phical stra tification acco rding to lranspo r!
supplies, and means of transpo rt o
costs. In th e stee l indu st ry , fur example, th e techn ical co ncentration of

means of pr od uction is gigantic, with a new wor ks taking yea rs to set up ,
(b) Regulat ed prices. Her e we shall not investi gat e th e co ntrol pr actices of
and remaining in place while th e sources of raw mat eri als, and espec ially of
th e Feder al Tra de Commission. These essentia lly co nfer social valida tion
on pr ivate pr actices of mon opolist ic co mpetition when stable oligopo lies
supplies, change . Fixed costs are enor mou s and absolute ly rigid , with th e
result that th e break-even po int, or th e degree of utilization of pr oduction
capacity th at just co vers th em , is an essential da tum fur th e valorization of
pr oductive capital. Each tonne pr oduced over and above thi s limit yields
additional pr ofit , whatever th e distance to which it has to be delivered ,
since th e direct variable cost of an additional tonne is insignificant . This is
why th e tendency is fur eac h stee l-works to sell at as great a distance as
possible so as to expand its pr oduction capacity . Flows of co mmod ities cut
across one ano ther, with th e co nsumers bea ring th e expense by absorb ing
th e transpo rt costs. There is a co nsequent risk, th er efure , that co mpetition
between firms to expand th eir respective shares in th e mar ket will return
un der th e guise of differentiated costs of pr od uction , with certain firms
being able to absorb a po rtion of transpo rt costs and thus co nduct an
emb ryonic pr ice war . The pr imordial necessity of selling above th e breakeven po int makes th e moti ve behind thi s highly co mprehensible . In such
co nditions, pr ice leader ship is enda ngered, or at all eve nts must be further
spec ified. The solution adopted after ' 9" , once furmal and tot al
cartelization became impossible due to th e new anti-trust law, was th e
sys te m of base-po int pr ices. One or more base po ints are fixed fur different
geogra phical zones. ~'Iithin eac h zone, th e co ncerted pr ice of mon opolisti c
co mpetition is fixed at th e base po int. The customer pays th e base-po int
pr ice supplemented by th e cost of transpo rt between th e base po int and his
own destination, irrespecti ve of th e locati on of th e works from which th e
goods are supplied. The economic abs urdity of thi s sys te m lies in th e fact
4 . ADM INISTE RED PRICES IN THE UNITE D STATES -
45 I 51
are furmed , while seeking to restri ct th e social waste to which th ey lead . In

its ro le, th e Commission is bac ked by a lon g histor y of litigation which has
pr agmatically filled out th e very genera l legal framework of anti-trust
legislat ion . In vestigations made by th e Commission fur its own doss iers
pro vide mat eri al fur a co ncrete analysis of relations of co mpetition , from
which it is possible to develop a th eory of monopo listic co mpetition within
th e genera l laws of co mpetition .
To co mplete our survey of pr ice sys te ms un der monopolisti c
co mpetition , we must mention th e case in which th e pu blic autho rity
int er venes in pr ice furmation. The regulation of pr ices by public agencies
obtains in such sec to rs of th e econo my as land and water transpo rt ,
airlines, gas and electricity supply and telecommunicati ons. In th ese
indu stries, th e co nditions of pr od uction have given rise to a furmidable
co ncentration which has led to irrever sible situations of structura l
mon opol y .
The
decisive
impo rt ance
of exte rnal
econo mles
or
diseconomies in th e functi onin g of th e se sec to rs, and th e advance or

blockage of th e furces of pr od uction th at may ensue , have led histor ically
to a direct public regulation of th e valorization of capital. The giant
co rpo rations th at functi on in th ese fields are often referred to as pu blic
utilities. The creation of regulator y co mmissions was not easy.
Discriminato ry pr actices and devasta ting dislocations genera ted by
mon opolisti c co mpetition in fields with a pervasive influence on th e entire
sys te m of pr od uction and social life unleashed po litical struggles leadin g to
4 6 I 51
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-'
(1
th e creation of th ese co mmissions. Bu! in no way have th e co mmissions

weakened th e mon opol y po wer of th e capitalists who co ntrol th ese giant
firms. On the contrary, the lalter have fuund in the regulator y commissions
th e means fur stre ngthening and giving oflicial sanction to irrever sible
mon opol y structures. This is why al a ne of th e Congressional hearings th a!
has investi gat ed th e actions of th e regulator y co rnmissions without being
able to modify th em in any way, Professor ~.1. Adams oCluId declare: 'The
regulator y co rnmissions do no! pro teo! society against th e po wer and
administra tively guara nteed, seem to have achieved in th e sta te a

substitute far th e law of value. But thi s is only possible by a regulation
dw oted entirely to preserving p ast labour. The de valor ization of capital is

thus bloc ked; th e result is to hold bac k technological pr ogress and
discourage th e replacement of technically outmod ed equipment.
~'Ihat exac tly takes place her e? The fixing of tari ffs is co nducted on th e
bas is of net fixed assets, expr essed at th eir hist oric cost with th e aid of
uni farm rules stipulating th e useful life of plant and eq uipment witho ut
taking int o account technical obsolescence , and a linear amo rtization rule .
mon opol y of th e indu st ries th ey regulate ; th ey proteo! th ese indu stries

against th e co ntractual po wer of society'.
In pr actice , th e tariif is arrived at by applying a give n coe fficient to th e net
The pu blic utilities occupy a curious pos ition in capitalist co mpetition .
fixed capital, valorized as indicat ed above, in such a way th at th e rate of
The rates of pr ofit th at th ey realize are guara nteed by th e gove rn ment, sa

th at th ey seem ta escape th e law of value th at imposes th e social valida tion
appare nt pr ofit , related to th e nominal value of net fixed asse ts, is not
lower th an th e average rate of profit in indu st ry . The co hesion of th e
of privat e labours by th e mediati on of mon et ar y exchange, with th e
collective capital is ensured by pr eventing relations of co mpetition within
possible sanction of devalorization . Yet th ese firms have pro ved very
eac h sec to r of pu blic utilities. But thi s is achieve d at th e price of a

regulation which is tot ally in co nflict with th e genera l logic of intensive
vulnerable to th e accelera tion of inflati on in recent yea rs. They have got far
deeper int o debt th an any others, and th e quo ta tion of th eir shares on th e
stoc k market has sometimes actually fallen below th e value of th eir asse ts.
accumulation. By co ntrast with firms th at have to genera te a cash flow by
The principIe behind th e regulation of th ese pu blic utilities was defined
new investments and to minimize fixed assets, th e public utilities have an
and fixed ne varietur in th e first decade of th e ~ oth century . Ever y

co mmission th at was subsequently created to regulate a new field of pu blic
int er est in increasing th e value of th eir fixed capital as mu ch as possible.
serv ices was organized along th e same lines. This principIe is simple
th e greates t possible amount of surplus pr ofit in th em , and to minimize
enough . It co nsists in fixing th e maximum tari ffs in such a way th at th e rate
amo rtization. The replacement of equipment is heavily discouraged . It is a

lon g while since th e transist or replaced electr omec hanical switchgea r in
of net pr ofit on th e pr od uctive capital invested in plant and equipment

doos not rise above th e average rate of profit current in indu st ry . At first
sight, thi s rule involves an approximate alignment to th e genera l rate of
profit . In reality , however , it gives social sanction to th e maintenance of
existing pr od uction co nditions. ~'Ie have seen, in eifect, th at th e farmation
of th e genera l rate of profit and th e laws of co mpetition based on it proceed
from th e ques t far relative surplus-va lue. This sacial co nstraint is th e
pr oced ur es th at co nstrain th em to lay th e greates t possible emphas is on
The result is to encourage suppliers to inflat e th eir prices by incorpo rating
co mputers and other calculating machines. But according to th e planning

of American Telephone and Telegraph , which has a quas i-monopoly in thi s
sec to r , it will be a further quarter of a century until sys tems of electronic
switc hing sys te ms co mpletely replace older equipment in th e telephon e
serVlce.
definitive dete rminant of th e valorization of capital. But it req uires th e
As lon g as accumulation pro gresses at a regular rate in the econo my as a

who le, th e co ntradiction between pu blic regulation and th e logic of th e law
transfarm ati on of th e co nditions of pr od uction and reva lutionizes th e
of accumulatio n remains lat ent . But when difficulties in accumulation
relations of exc hange. The devalor ization of capital is thus th e necessar y
reinfarce co mpetition and accelera te an inflati on th at mat ches th e
corollary of th e valorization of ind ividual capitals.
~'Ie
have shown th at
un der th e regime of predominantly int ensive accumulation thi s process

ass umes new far ms th rou gh th e planned obsolescence of th e co nditions of
product ion . The public utilities, on th e other hand , with th eir rate of profit
4 . ADM INISTE RED PRICES IN THE UNITE D STATE S -
47 I 51
devalorization
of capital diffused
th rou ghout
the
economy , th e
co ntradiction suddenly bec omes explosive. The rapid rise in th e pri ces of
th eir suppliers has a multiplier eifect o n th e public utilities due to th e
procedure by which th eir fixed assets are valorized. The increases in tariffs
4 8 I 51
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-'
(1
necessar y to maintain th eir rat e of pr ofit bec ome int oler able , while th e
quality of th e serv ices th ey pro vide de te riora tes swiftly. The regulator y
rivals, once all int ernal co mpetition had been eliminated, were th e inland
waterway co mpanies. Since water transpo rt was highly co mpetitive for th e
co mmissions thus have to restr ain inereases in tari !fs and indu ce firms to
transport of heavy goods with a low unit value, th e railway co mpanies set
un dertake eno rmous loans th a! stra in the financial mar ket s. Bu! since th eir
out to eliminate these rivals by obtaining a regulation that reflected in its
profitabilit y is declining despite th e govern ment guara ntees th ey enjoy ,
pr ice structure th e mon opolist ic character of th e organization of rail
pro spe ctive lender s are reticent and th eir debt burd en bec omes heavier .
transpo rt o This str ucture co nsisted in a very high tariff on indu st rial
co mmod ities with a high unit value so as to be able to practise dump ing for
These phenomena clearly reflect th e impasse th a! has resulted from th e
pseudo-social validatio n of the valorization of capital, by a public

regulation designed to safeguard th e stability of th e oligopo lies.
This regulation doos no! eve n pr event th e distor tions that arise from
co mpetition within th e regulated sec to rs. The example of transpo rt is a
case in po int.
goods with a low unit value and th us capture traflic from th e waterways. It
th er eby maximized th e pr ofits of th e railway co mpanies. It was accepted
because of th e support it received at thi s time from major po litical forces.
~'Ie can say th en th at th e tariff regulation was dominated by th e
organized gro up of railway co mpanies, who established th emselves solidly
in th e key pos itio ns within th e Inte rstate Commerce Commission. The next
The regulation of transpo rt places all transport of goods by land and

inland waterways un der th e autho rity of th e Inter st at e Commerce
ste p leadin g to th e pr esent situation carne in th e int er -war period and
Commission.' The Commission's administra tion of tari ffs is designed to
co ntinued after th e Second
achieve th e following goals: to pr event th e formation of individu al surplus

profits when a mon opol y situatio n exists; to subs idize certain types of
th e transpo rt of bulky goods, th e railway co mpanies pr oceeded to raise th e

minimum tari ffs for th ese pr od ucts. The same epoch saw th e development
transpo rt in th e public int er est ; to pr event any ind ividual discrimination
of ro ad tr ansport oDuring th e int er -war period it was all th e eas ier for thi s
favouring certain sellers or buy ers at th e expense of others, and to pr event

pr ice wars from disor ganizing the transpo rt sys tem. In actual fact th ese
new form , still unregulat ed , to encr oach upon th e traflic of th e railway
objectives are not all atta ined to th e same degree, since th ey are not
entire ly co mpatible . The overall effect of th e administra tion of tari ffs is to
suppress all co mpetition within a particular form of transpo rt and maintain
~'Iorld ~Iar .
Havin g captured a major share of
co mpanies, because of th e very costly tari ffs the latter charged on goods
with a high unit value. Now th e inflexi bilit y of th ese tari ffs was co nditioned
by th e monopol y str ucture, with its allocatio n of traflic between th e
a collective monopo ly pro fit by fixing minimum and maximum tari ffs. It
co mpanies. The structura l advantages inh er ent in road transpo rt as

co mpared with rail were pr oved by investi gat ions of costs made at th e tim e
als" int roduces a co mpetition between forms of transpo rt on pr emises th at
on short-dista nce transpo rt (up to
are vitia te d by th e pr eferences th at th e tari ffs gra nt to certain types of

transpo rt within eac h form oThe result is th at th e allocation of pr od uctive
fragile or had a high unit value. The tariff sys te m in force did not permit
traflic to be allocate d in a way th at reflected th e movement of costs. Road
resources between form s of transpo rt canno t be based on th e int rin sic

advantages of eac h in terms of dista nce and th e characteristics of th e goods
transpo rt thus captured a far lar ger share of th e tot al traflic th an its
int rinsic advantages would have autho rized. This eruption of r oad
transpo rt ed .
transpo rt int o a frozen mon opol y structure did not break up thi s structure
In order to de monstr ate th ese pro positions, it is necessar y to lcok

somewhat mor e deeply int o th e logic behind tariff fixing. The regulation of
but unl eashed th e vicio us cird e characteristic of mon opol y situatio ns

when th e nat ur e of th e bra nch in ques tio n doos not make it possible to
transpo rt , sta rting with th e Inte rstate Commerce Act of 1888, carne int "
eliminate th em : a fall in vo lume, a rise in tari ffs to offset it , surplus
being hist orically as a form of collective organization for capital in

railways, where co mpetition between co mpanies was havin g disastrous
pr oduction capacity , stagnatio n in technical pro gress and a de te riora tio n
effects on th e who le econo my. This regulation was bo rn as a defence of the

collective int er ests of th e railway co mpanies in a period in which th eir only
4 9 I 51
~oo
miles) of pr od ucts th at were either
in th e quality of serv ices.

~'Ihen
ro ad transpo rt
was br ought int o th e sys te m of pr ice
administra tion, th e Inte rstate Commerce Commission, now reflecting
50 I 51
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-'
(1
co ntradictory int er ests, oCluId do litt le more after th e Second
~'Iorld ~'Iar
th an freeze th e sta tus qua . The pr ice sys tem thus became more and more
rigid , as its mon opoly structure was exte nded to road transpo rt o This
certainly did no! imp ro ve th e po.ilion of th e railways, th reatened by
surplus capac ity, ossified management and an ever greater burden of deb!.
The tariff sys te m ended by approximately stabi lizing th e share of th e

market held by eac h mod e of transport , independently of th e evolution of
th eir oos!s. Here we can see th e ro le of monopo ly prices, maintained by th e
sanction of th e sta te, as a bra ke on th e pro gre.. of producti ve forces (bo th
in ro ad and rail lranspo r!), and as an agent of distortion in th e allocation of
resources in th e economy as a who le .
s .. P. Sa ff., I1I. p ro du,"o. of C"ommod," osby C"ommod,", e.mo",I , , . 60.
Th. fo, m, " . n . f . ffo," m.n , hu." ,,',", . " ol.m . f ...;, .H. m
n. a H" . " mm ,' " n.m . Ao..n' .. ;, n. a n . " .. fr.m th m'Mn' 01
.m.'" .,
" n", ".n, 'h.u.h

Hnk o. t" ..n "ux . n. "'. n .
.
1
m. ..t. n' O. ... lt hu n. S'.m.n. ', ;' " ' ' 'H. h... m ' . m
Th. " n". t . f m.nH.", " m,," ".n 'n". du" . hm ' ' ''.ud . .., ,ffo" n' fr.m
'h., , u. '.mu H fin O. " f" . n" ,n. a l . qu,Ho,'um 'n . ....." . n ,u" . n "lo"
" m,," ".n. r " 'h" J.tt", ... E. H. eh.mo.d .,n, I1I. I1I.o", of lfo.opoUst" Comp . . .o.,
e.mo" .", ... ..., ' 93 5, . n. J. R.om ..n, I1I. ",o. om' of ' mp. >1<''' Comp . . .o., L.n n,
'95'
.S.. A. e.tt., Los , hoix ' ,o. om'o uos d. l . .... d ""p ,'''', P U" , ' "'0.
S. l.. L,,'n', OU.o p oljd To'h." aI Pro . ...ss, Hu . u . ,
,.k
, Am.n. 'h. " " .. ".m n. 'h. " h.l. fi. l f mm"t.,.. ,.'" " " . uJ.t " '''', ".
m m.n" .n E. "'hu.", , P H a. ds, p. H..n, , . 65; P. W "
, I1I. Chs's of ,h.
R ularo", Comm's,"". s, N. " Y, ,,, , ",o; U.S. S'M t. Suo"mm. tt
n An" " u,' . n.
" . nl fth. e.mm, tt...n 'h. J u. "'u , , A drn,.,,,,,,,..d Pri<os, Compdi.m o. PubU, PoU,y,
88th e.n." .., , n. ...",n, ,. 63,
An ,,.,m, " .n ,. th' .......n o. foun. ' n 'h. m. jo';' fOa n, h.. ' no. l" .'n 'h.
' an<fo,m , " .n . fn. n-lom u, m. " !> 'n'u" m. " !> . n. 'ndu,,, l . n . Th. m. th f
. " du,".n m 'h... oan, h.. . u nl. Httl . ; u. ,"..m " ...1 'nta " . n " ..t..." .n.
h u ' ", ,n" n. 'h. muk. t ".n kn. " n . n. fo, m o m. n numo" .f , u.t.m",.
Th... oan, h.. " n'''tut..., . , " 01HH.. 'n " h.,h th. fm. ' no. l m,'n"'n 01...
mu tuol "J." . n.
R. r .nm.th, I1I. , . ...sta .. Comm. ",. Comm's,""., N. " Y,,,, ' "'0.
51 I 51
- - - - - - - - - - - - - - - - - - - <0 > - - - - - - -
-'
(1
permanent and absolute reference as is, for example, length in Eudidean

space. It depends on th e way in which th e genera l equivalent is formed .
6
Monetary System,
Credit and Crises
The abs tract solutio n th at we gave to this nexus of logical re quire ments
was to int roduce th e co ncept of th e monetary system, at th e beginning of
Cha pter 1.
~'Ie
argued that th e formation of th e genera l equivalent, and
co nsequently also its repr oduction in tim e , has a certain auto no my in

relation to th e sum tot al of co nditions of prod uction and exc hange. It is in
thi s auto no my th at th e sec re t of th e co mmod ity economy resides. This
econo my can only be analysed scientifically on th e bas is of an objective
1. Tite Development of Credit a n d the Org a n i z a ti o n o
the Monetary Sys t e m
measurement , abs tract labou r , th at defines a hom ogeneous social space.

But thi s social space involves th e following real co ntradiction : th e
pr oduction and circ ulation of commod ities are separa te and independent
~'Ie
have insisted th roughout lhi s boo k th a! capitalism is a co mmod ity

econo rny give n spec ific features by th e wage relation . The de pende nce of
econo mic acts, otherwise th er e would not be a commodity econo my ; but

th ese acts still have a certain unity , otherwise th er e would not be a
capitalism on co mmod ity circulation is expr essed in th e equivalence
co mmod ity economy , i.e. a social organization based on co mmod ity

pr oduction which can perp etuate itself in historical tim e . The solutio n to
relationships of exc hange. In defining th e th eoret ical sta tus of pr ices, we

have shown th a! we are dealing with relationships no! of symmetry bu! of
thi s co ntradiction lies in th e auto no my of th e mon et ar y sys te m. The
po larity by which value is 'realized'. This means th a! exchange is a social
formation of th e genera l equivalent makes possible a refraction of th e
act which effectively lla ves commoclities, and th a! lhi s act is no! simply a
homogeneous space of value th at evolves over tim e . This refraction is
technical exte nsion of pr od uction . It doos no! form par! of th e co nditions

of product ion . It is rather a soc ialization of private labours that are
summed up in th e monetary expressi on of the U' orking hour. On th e bas is

of thi s logical solution, we were able to link th e formation and division of
originally independ ent from one another. This socialization is a genera l
tot al incom e to th e fundamental co ncepts th at define value and capitalist
process of met amorphoses of value, whose pivot is mon ey , a co mmod ity

esse ntia lly different from all others. That is why th e realization of
relations of pr od uction .
co mmod ities in exc hange takes th e form of a monetary co nst raint.

A formidable th eoreti cal pr oblem is th er eby posed, to which we have so
~'Ie
have also bee n able to define th e th eoreti cal
sta tus of pri ces and th e co nditions for th e overall realization of value, as
th e formatio n of a genera l ra te of pro fit . The laws of co mpetitio n follow
from thi s.
far given only an abs tract and formal solutio n, th at we must now try to
The ro le of th e mon et ar y sys te m in co mmod ity econo mies, and
make more co ncrete . Since mon ey is the genera l equivalent in exc hange
co nsequently unde r capitalism , which gives co mmod ity relations th eir
relations which are po lar, it doos not itself co nfront any equivalent. It is
greates t exte nsion, is absolute ly dec isive.
impossible , without begging th e ques tio n, to define its value relative to th at

of any other commod ity . Yet in order to ente r int o a relationship of
th er efore , with th e formal solutio n repe ated above, still less so in th at th e

mon et ar y sys te m gives rise to all kinds of 'mo neta rist' illusion s. The
eq uivalence, mon ey must possess th e fundamental character of a
dassical and
co mmod ity , th at of being a sum of abs tract labour . No w if commodities are

sums of this kind in any spec ific sta te of th e co nditions of prod uct ion and
autonomy in terms of a dicho tomy. In thi s co nception th er e exists firstl y a

'real' econo my th at determines a sys tem of relative equilibrium pri ces
exchange , th ey still change incessantly with th ese co nditions. The result is
tot ally independent of mon ey . J uxtaposed to thi s real economy, but
that eve n th ou gh mon ey is th e pivot of eq uivalence relationships, it can in
exte rnal to it , th e mon et ar y sys te m subjec t to th e discr etionary po wer of
no way be invari ant . The mon et ar y co nstraint , accordingly, is not a
th e sta te th en fixes th e quantity of money . The overall exchange equation,
6. MO NETARI' SYSTEM , CREDIT A ND CRISES -
, 1 48
subsequently
~'Ie
canno t rest co ntent ,
neo-d assical traditi on s co nceived
2 I 48
- - - - - - - - - - - - - - - - - - - <0 > - - - - - - -
thi s
-'
(1
according to Fisher , or th e circulation equation of mon ey in relati on to
itself fur th e law of value . Ifthe mon et ar y co nstraint is to be suppressed, it
tot al income , according to th e monet ar y formul a of th e Cambridge schoo l,
is necessar y to abolish th e co mmod ity eco no my.
is see n as determining th e genera l price leve!. The value of money is

identifi ed as th e inver se of th e genera l price leve!. It derives from th e
Something vita l is th er efure at issue in any analysis of th e mon et ar y

sys te m, in other words of how th e genera l equivalent is furmed . It is all th e
quantity " f mon ey . This purely quantita tive co nception of mon ey is th e
more impo rt ant in that th e co mplete dematerialization of mon ey within
necessar y co unterpart of th e subjec tive th eory " f value. It is no! modified

by th ose mod ern th eorists who try to gloss over certain particularly
nat ion sta tes since th e First
extre me features of th e dichotomy between real econo my and mon et ar y
~'Iorld ~'I ar ,
or at least since th e Creat
Depression, has stre ngthened th e illusion of a mon ey co mpletely

manipulated by th e sta te. This has been cultivated by th e amalgamation of
mon ey and credit in th e framework of th e quantita tive th eory , by way of
sys te m by resor l to th e argument th a! th ese are th e effect of real mon ey

stce!:so' This is a subte rfuge because th e dichotomy re-emerges when th e
th e mon et ar y mul tipler . But to un der stand how th e mon et ar y sys te m is
functi on s of mon ey br eak apart.' In th ese co nceptions, mon ey is not
organized , it is esse ntial to see th at mon ey and credit are qualitatively
something th at inter venes in exchange; it is not integrated int o th e

econo my as a flow. The sta nda rd of price is sorne good th at is chosen
different , even th ou gh credit arises out of mon ey . The solution to thi s

myster y lies in th e fact th at mon ey is created as a token ofcredit within th e
simply by co nvention as numraire. The functi on of a means ofexchange is

non -existent or has n o econo mic significance. These axioms are necessar y
banking sys tem, but acq uires its attributes of genera l equivalent outside
thi s sys te m, when th ese tokens of credit are utilized within co mmod ity
to preser ve th e pos tulate of a genera l mar ket equilibrium in real terms

determining relative pr ices. Expelled from th e exchange pr ocess, th e only
pr oduction . This fundamental po int is so fureign to orthod ox mon et ar y

th eory that we int end to argue it in two ste ps. First of all we shall establish
logical way mon ey can inter vene in th e economy is as a stoc k, a reserve
th e relationship between mon ey and credit , when th e nat ur al furm of
holding. It is th er efure a good demanded fur its subjec tive utility , eve n
th ou gh it is not a use-value produced in th e real econo my. The result is th at
mon ey is a material co mmodity , and co nsequently distinct from credit fur

all to see. Then we shall investigate th e way in which thi s relationship is
mon ey can inter vene in th e economy only by way of th e real cash
transfurm ed when mon ey co mes to ass ume its full capitalist attributes, by
balances. Money thus acts on th e sys tem of relative pri ces when th e real
de materializing and seeming to melt int o credit .
stoc k changes. But it is not determined by economic relations. Let us

suppose, in fact , th at th e quantity of mon ey doub les or tripl es, and th at
pr ices are unifurml y mul tiplied by two or thr ee , while real monetary stoc ks
l . The General Attribn t e s of Mone y : the Sign ifican"e of t he

Moneta ry Constrain t
remain un changed , so th at th e real equilibrium is un affect ed . The effect of

th e real stoc k of money thus doos not make it possible to determine th e
~'Ie
have so far spoken of credit particularly in co nnection with th e
Hence th e illusion th at th e mon et ar y authorities co ntrol th e amount of
financing of accumulation and financial centralization . ~'Ie now need to be

far more precise and establish th e th eoret ical relationships between
mon ey and co nsequently th e rate of inflation .
different co ncepts. To thi s end, we must first of all distinguish strictly
quantity of mon ey . This is an exogeno us fact or , fur simple reasons of logic .
The abs ence of a th eory of th e co mmod ity based on objective value
between mon ey as th e genera l equivalent in co mmod ity exchange ; th e
leads to a welter of sophisms. Only such a th eory makes it possible to gras p

th e autonomy of th e mon et ar y sys te m without making th e mon et ar y
mon et ar y token of credit or bank money , as an original act of mon et ar y

creation th at qualita tively distinguishes banks from all other financial
co nstraint disappear . The ro le of th e sta te can th en be co nceived without
institution s; and th e gathering and allocation of mon ey capital. This latter
being idealized . The sta te is th e bea re r of th e monetary co nstraint . It can

displace th e effects of thi s co nstraint in tim e and modi fy th e way in which
operation , analysed in Cha pte r 4, signifies th at mon ey already furmed can
th ey are experienced in th e econo my; but it is not in its po wer to subs titute
l . THE DEVELDPMENT DF CREDIT A ND THE ORGA NIZAT ION O
3 I 48
be de tac hed from th e genera l circ ulation of co mmod ities and bec ome
capital by way of a financial circ ulation involvin g operations ofl ending and
4 I 48
- - - - - - - - - - - - - - - - - - - - - {o - - - - - - - -
o
A THEORY
os OPlTAlIST REGULATION
bo rro ...ing, purchas el and sales 01tilles te propert y .
(a) le stat~. (lfba1lk mc>n'1l ;,. ,he commodillJ eCOllomlJ Lel us ltu t from
S1mp\.e u ch.lng.. C- M- e . n.. mon~MY consttnnt m....ns that each
p.ll'ticIp;mt in ex cha nge h.os lo to!U bis commodlty . in OIber wordlI preve by
obummg =<ty that Ibis p.rrtlC'U1H commodtty vv. Jum d1SpO$oll ovooT ..
fract ion 01 total sociallaoour . Ha...ing satisfiod. lhi. obligation , he di.poI"
of .. social purchasmg po...er cver lhe . um lotal 01eommoditiel lhanks to
..hich he Cllnpurd",Sot uy I1S'!O-value lha! h ch~ within Ih. hmit af the
reLo.uonsh,poI o equiviln<>e, ID o tb-er words <lnY USe-V"Ui! th.I.l NprilSenlS
,In idenl>u1 &.ctloII of fOcial Liobour. If purc~ "lid sales aa reguLorly
llIu,rconn1od., th.m mon")' _015 10 b. a pUN ly l<lChnic.} m....ns of
circulation. !ls role al general equivalent i. expr ...."" abstractly in lhe
pos ting of pric es of commodities . Bu! mona y dces nol ha..... to be pre. en! in
cireuLotiou au. matfl'i.ll commodity. lt can be repu.:.d by .. token of ...alu. ,
w~h equ.illy w~lI ~rlorms tM functKlrr. o f a m~ll.J of ~uorr.. This

token moy b. p;lpef, ce lb.. ex>f""" eondllion thlt Ih."... is no doub t in
.rr.yon.., mmd that it r. pr......nts lh. g..n.".al "'IU'V.lfill valu.. for valu... To
pul il . nolher .... y, lhe x donan sho...n on the nole sl. nd fur x units 01lhe
general equival~nt, the unil being a eert. in qu. ntily 01 lhe specifie
commodtty that gtvfl Ihe g..n.".al "'IwvaI.n1 its physical subs!.nce.
Bul !bere is DO rllaSOn why purcha.ses and sal.... shouId al...ys
inlerconn/OCt. lb.. metamorphoses of value can be hllte<!. by an
irr.lerruptio rr. in b uyirr.g . nd ...lhn g, SorMone ...ho has sold , in lact, and
lhere by . cquired money, is in possession 01 . gener. l . nd perm.nenl
purehasmg p""'er ...hieh dces not r<>quITe him to buy immedi.lely. Money
Can mal:e an ex,t from oornmod,l)' ~tion and .._ as a sto~ o/ o/u'"
Mor eov..r, when C'Oltlm<:><!Jl)' ciTculation hall rea ebed . suilicienl degrM of
eoenttah:atton and perman~, the D10Iley eotllmod 'ty 01' 'IS peper
,.presental ive h.o no need to be pr..... nt in circul.tio n .t lh...ctu.l
momenl 01 exeh. nge. Commodilies . re sold on rre dit, . nd pur ehase
. nticip;lted . lbese . etions tra nsferm the IJOCi,olr..lation bet.../Mn buyer . nd
selle r mto pnvat. debtor<redttor ""I.!ion seal.d by a eontt. ct. This
ttansfunnatiOtl dO'!l llot supprea Ibe nK'8SS1l)' ohbe mOll..l. ry OOIl' ln int,
bUI ,t ,h,fts ,t m time. It 15 abo no Ionger ..xpT"'OO' as an "ff<!cttv,"
equiv. l..nce o f co mmoditieo m money terma, bul rathe r .0 co n"ertibiliry
01 rredit inro mo ney. This converlibilily mar ks lhe hmil 01 priv. le
1 . Ti'iE GEJOERA LATTRl BUTE S OF MOJOE'\' THE SlGJOIFICA JOCE
contraclo. The need for settlement, ho...ever , doos not . l...ayo ari58fur eaeh
p..rlieular eredil . The deve lopmenl 01 eredil eonlraels leads lo their
eoncentr.tion, and .n.obles p..ym..nts to hUonce ..eh oth..r to an ext-enl
,,,,,lf
tha r credtt
t-ends <:onstantly ro "nlu... Chatos o f credJt tr ansactKlnS
mse, m which mOtley ap~ onIy abstractly as money of acooun t. BUI
...hn CNd,ts a nd debts no longer hUone-t, ...hen g. pI m th.. duration of
contracls lend lo inlerrupllhe ehain 01compensalions, lhen il is neceso. ry
te ""l!le eredilo in money , lhe real commodily. For lhis lO be possible,
",,"TVe funds of moNnS of p;lyment mUS! have bMn furmed . lbus ...ben
mon" y be<:omes a mH nsel pe!lmentfot sertl.rng credtts, '15 roI..;as. sto1'.
of valu.. is no longoer an aceidfillal hoardmg, but ralb.". a nec<tSSll)' of
co mmoolty circulattorr.. ~oJh.. n instttutions ar" created fur C'!I\tr.lm ng th~r
eUl lomen' eredils and organizing lhe ir mut ual balancing, lhey . 110 rec..ive
. nd rean.nge the monelary depos ils thal temporarily f. n oul of
~tion.
lbese developlMll!ll '" tbe functioru: e f meney promore gr..t

UpansiOll of commodll)' ciTculallOll. BUI they onIy begm to mili r.,.]
head....y with th.. ....v..rsal of th.. m"t.mo rp hoses of valu.. mto rh.. specifie
. rlieulalion 01eapil. lisl eireul. lion M- C- M' . Thisl.tl"r becomeo a closed
eycl" in ...hieh money is both the origin . nd the doestination. Thio holds fur
....eh indtvidLUl ca.pttal. lb" general ciTculatton of commodtlt... b<tcom... ~
Mfles of inlernonMeted cyeles tltal encornp.ass product>oll. No ~ resull ,
productiOll presupP'l"S ...thoer p,...ltnunary a=ulatIOlI of mOlley 01'
el58 an . et of eredit. Prod uetiorr. e red il il very d,!fer..nt in natur.. from the
formalion 01 eredil in cc mmodit y eireulalion. Bul smee eapil. hll
circu!a tion furms . ...hol.., th_ dffer..nt . eto of credit are unil e<!. tog..ther
mro a credlr syst.. m. This syst.. m mclud... ag<lllCies ab]" te untfy th..
various dlfierent forna of <:redlt , .. lb. banh.
lb.. tabng m of ="y and ~dvanC1ng of ,t fot producttv.. inv<!Slrnfill
meano lhe furmalion . nd loan of . money c. pilal. Thio loan il in no .... y .
eredil on exioling eommodiliel, wilh lhe oimple purpo se of .eeeleraling
th.... circulation and .dvancm g payment in time. 1t is rath r an assignmfilt
o f lb" OWMrship of furur" commodttI.... lb.. industrial <:a.pttabst comnuts
himso>lf to J>TO"'de tbe I""dml ca.p1talist, al a futur.. date stlpulale<l by
eontract, ""th th.. Ulvalent fot th.. =ey irnme<!.......ly apent plus an
. ddition l.kan !rom Ihe profil te be realized , i.e. lhe interesl o n lhe loan.
Thio he e. n do il hil e.pilal funelions in normal condiliono 01 prod uelion,
5 I 48
-'
(1
because th e sale " f his co mmoclities al th e pri ce of pr oduct ion brings in a
in relation to th e banker as debtor to creditor . But th e banker is not th e
normal profit . Bu! th e sca le of ind ustr ial capital formation , its turnover
indu strialist 's creditor by his possession of a co mmod ity , or because he

already is th e depositary of a mon ey capital he is charged with employing
period , th e risks arising from transform ation of th e conditions of

pr od uction and exc hange, al! genera lly pr event th e bread mass " f lender s
frQm personally running th e risks of capitalist producti on . This is why th e
credit sys te m has to centralize th e mon ey th a! exists outside th e sphere of
circulation by making its destination irrespecti ve of th e circumsta nces of
pr oductively . What the banker creat es by his issue ofbank money is a debt
aga inst hims elf. He hands th e indu st rialist a pro mise to pay which he doos
not have to honou r simply to thi s particular indu strialist . The indust rialist
rather makes use of his credit with th e bank just as if thi s really were th e
operations co nducted by spec ialized financial agencies. This stra tificatio n
genera l equivalent, and injects it into th e prod uctive econo my. It is th e

relationships of exc hange equivalence th at determine whether or not th e
by category of risk and tim e of investmen t to a certain exte nt disconnects

th e lender s' req uirements of security from th e needs and risks of capitalist
bank mon ey has acq uired th e attributes of th e genera l equivalent. This

verification is effected according to mod aliti es which we shall scon pr oceed
pr od uction . The result is a relatively stable spread of int er est rates fur
to analyse, and which furm th e co ncrete realization of th e monetary
creditors and debtor s, th e difference between th ese providin g th e profit of
co nstraint .
Let us not e right away that th e banks are not subjec t to thi s co nstraint as
its origin oThis is do ne by th e co nstruction of a stra tified series " f financial
th e financial intermed iaries.

Since th e act of loan which sets pr od uction in mot ion by making it
creditors who will see th eir pr ivate co ntracts valida ted or not according to
possible to purchase th e elements of pr od uctive capital is an assignment of
whether th e debtor s have bee n able to meet their debt und er th e
a future value, it doos not impl y th e pr eliminary accumulation of mon ey
co nditions laid down. The banks are subjec t to th e mon et ar y co nstraint in
capital. The capital advance, de te rmined by the fundamental and

calculable character of capitalist pr od uction , which is to produce surplus-
relation to society as a who le , since th ey are respo nsible fur th e

co nvertibility at any mom ent and without any limit of th eir particular bank
value, can issue from the crea tion ofbank money ex nihilo. It is essential to
moni es int o th e mon ey co mmod ity . This general and p erma nent
not e her e th at thi s creation of bank mon ey is a co mpletely original
com'ertibility at p ar value is the proof that bank money has the attributes
of the general equiv alent . It is only possible if th e banks are dosely
int egrat ed int o a banking sys tem subjec t to a spec ific regulation .
The above exposition enab les us to und erstand why th e banking sys te m
econo mic acto As against circ ulation credit , it is not a pr ivate agreement
between two exchanging parties, co nd uded to remove th e need fur th e
delivery da te of a co mmod ity to coincide with the payment fur it . As
against financial int ermediati on , th e creation of bank mon ey is not th e
assignment of a mon ey capital pr eviously accumulate d by way of sav ings
is th e kernel of th e credit sys tem. Thanks to th eir original role of mon ey
deposits. This creation is ex nihilo because it doos not presuppose th e
to satisfy th e transfurm ati on of th eir mon et ar y tokens int o th e genera l
existe nce of a dispo sable mon et ar y base. As against pape r mon ey in
eq uivalent, th e banks have to spread themselves over a lar ge nu mber of
circulation , it is not an imm ediat e repr esentative of th e genera l equivalent,
cyd es of capitals and circ uits of pr ivate expend itu re s so as to pr ofit from
but a token of credit th at has to give pr cof of its mon et ar y character .

~'Ihat is or iginal in bank mon ey is that while it is an act of credit , with its
th e retu rn of tem po raril y idle money and furm mon ey capitals. They
origin ther efure in a pr ivate relationship , the token th at expresses it
th at of money creation . The latter , moreover , is not co nfined to th e
subsequently acq uires a social character , as distinct from any other pr ivate
opening of pr od uction credit . By th eir discounting of co mmercial bills, th e

banks subs titute their own bank mon ey fur th e credit pr oceed ing from
credit , by circ ulating as a repr esentative of th e genera l equivalent befure

retu rn ing to th e bank and being destroyed. The agre ement between
indu st rialist and banker, th er efure , canno t be analysed as a pr ivate
co ntract between debtor and cre dito r. It is true th at th e indu strialist sta nds
" THE GENERAL ATTRI8UTES OF M ONEY: THE SIGNIFICANCE
7 I 48
creation , th e banks co mbine all th e funct ions of credit . In order to be able
necessaril y co mbine , th er efure , th e funct ion of financial int ermediar y with
co mmod ity circ ulation . To th e extent th at th eir accepta nce co rrespo nds to
th e genera l co nditions these co mmerc ial bills have to respect , and to th e
exte nt th at th ese co nditions can be cod ified , th e banks pr ocure fur th ese
8 I 48
- - - - - - - - - - - - - - - - ---(0 ) - - - - - - -
o
A THEORY
os O
PlTA lI ST RE GULATION
croo.its a far larger . paC1!l of circ ulation Ihan if these bills had la circ ulare
exdusively b4tween private producen reciprocal1y ad:nowledging Iheir
d..hts to en e MlOth.....
b) Th r nprts$io" of rhr mo"tfa~ conft.crint. eredll lends permanendy
la ..nUre the curr<ml hmtts of commod,ty product1On, by anticip.o.tml ti
furt her development . Nith lhe i. sue ofbanltmoney, er""i! Ir_ itselffrom
Iha limito imposed by Ihe gather ing of saving . Bu! eradi! doel not modify
lb. fundam~tal cw r.lct..r of commodi ty prod uction, .. hose soci.Il
MC<lSSIty annot bt tilin fot lfo.nted In "Valle-t. Credlt C.lrr. de f.". tM
lKlCW vahdilion of pnn le Iaboun. bul bOl ~ppr_ l. lb. cr e<bt system
1S a n tmm~ sourot of insIabihty fur lh. rWtz,otlOn of excha nge-value,
becauoe ban\: money maltes credits 1iquid and tendl te unify Ihe spac<l of
circ ulation. Thi. i. why Ihe validat;on of ban k money a. general equivalent ,
i .e. th.. solvency of lh. b.mbng syst ..m, becom.... Ihe l::nol ..h""e all the
co nlr adlct>ollll of ea pitilist KO.lItlulatl<m an tloo. loge th" r . Every <:nSIS iIl
Ih r....IwotlOn of n ch.mge--..alue;osswn .. a glob.il cwact.... and appNTI
U i fin DnciDI ens;s. It iff<!ctS fiMnCli.1 circulatlon U i ..hole, bul ,lS
epicentre is n<!Cessarily the banking system as the site where private
credits are given liquidily.
~.,,, have _n lba l the rwli%.llion oftotl.1 exch.mge-vl.1u" Iu.. pLace vil.
Ihe form.ittCIn o f a l ener.J rate o f profil. The Lalt er IOverns lhe
ALattonshi~ of ",!wv.Jence between th.. dFerenl eal llion....of commodlly
u the founda tion of i sy Jtem o f norms o f productio n and exdlAnge. An
ever greater porlion of individual commo dily exchanges lake place in bank
money as Ihe croo.il oysl..m develo~ relali..e te Ihe exp.onsion of
commodtty productton. It is euy thoen lO falI inlo the iIlusion, ..hen
everythrng iI l omg ...11, lbal Ibe r....Iwotion of t otoll va1ue iI ipsa ta cto
NllSlioo.. But rt is nO! 10 il all. lbe t"<!i.I. exch.mg.. of commodtl,es mIo Ih..
general ",!u ivalenl is simply d isplacood te a specific poinl wh" .... th..
validalion of bank money as general ",!uivalenl is elfecled . This point is the
mQnoy mDrb t , Ihe areM ..here Ihe croo.il syJt em i nd the moneli.ry
syst" m l.I"e connecloo..md ..hoorelina1 seIIMm"nls i.re pude . lbe mannoor in
..hjch th..... 5"ItIements occur iI ct'UCli.lly dependen l 011 the Ili.ture of Ibe
monet.rry syst "m.
Nhen Ihe monetary system is based ultimately o n the production o f a
commodity Ihal is used as money, Ihe mc netary expr eosion of Ihe wor king
1 . Ti'iE GEJOERAL ATT RlBUTE S OF MOJOE'\' lHE SlGJOIFICA JOcr
hour follows dir<!Ctly !rom the social conditions of production o f Ihis

commodity, ..hich " e can lake for the ...ke of example u gold. Cold
production, u i specilic bri nch, forms p.ort of the syJtem of norms of
prod uctwn .md exch.ange. lbe mon<!lary unilis Illially d" finoo. u i certam
.....ghl of l old . On Ihe buis of lJU.lllii.l definttion , 10M lbal is produced ,i11
home Ol" pu r<:hased ahroad 15 COtnoo. in tflPOns<! lO Ihe social d""lAnd for
gold as a meano of settlemenl . This demand depends on Ihe organization of
the credit syotem, ..hich givEll the bana empirical experience of an
averig.. d\lll1i.lld foT ...tt1ements in Ih monetary lokens ..hjch lbey
IM rnsel"ElI issue. ThiI demafld does 00l stand in any q u.antllatlve
conn ectiOll""th th.. volume i nd inlenSlty of commodlty tr ansaettons. lbe
mon"lary co nslraml iI a ....Iationship of "'lu,valence ..hich involvoos a
qualitative pro blem. Nhat is essential is lhat the convertibilily of bank
money inlo lold io rrpu trdl~ pQ";b le al any momenl , and lOan unlimiled
e Xlenl. lb1S is ..hy il " U boold in ' 91h CI!Ury EngLo.nd, ..hen Ihe Bnttsh
financiaI system en;o yed world begemoay , lba t!be loId Jtandat<l ..as lhe
monelary syst ..m ..hich most economued gold. In ..ffecl , 10 long U
co nfidence in the banking ~em was unimp.oirood, no privale economic
agent had any int..rest in th.. sterile possession cf sums of gold with a fixed
nominal value .
lbe problem of SO!V"llcy aff.ets th.. banhng system u a ..hole . 11 is
_ nt1al lbal a threal of insoIvellC')' ..hich aff<!ctS a te- banb should 00l
shili confidence m the con..",",bility mIo gold of banl mOlley U i ..hoIe.
11 was o nly very slowly, and o n the bisis o f the l...sono learned lrom
recurr..nl financial crises, that banking arrangements w..r.. esnblsb..d able
lOlimil the ICOpe of financial crises or al leut a..cid a general dm ruclion
of banl mon"'Y. These i.I"I"iIlgemoents pr<!supP<*' certain structurl.1
condltions Ih.al fonn procedlll"" foT inlegratmg Ibe banb inlo a smgle
mOll"'Y mar",. On top of th.. fornutlon of a d"ns<! networl: of conn<!CltOltS,
this intlli ration has given ri... te a unfral ban k playing lhe pivota l role in
the money mark..l . Und..r the gold standard , th.. central bank may still be
privi le in La... Bul il iI nene Ihe l... chirgoo. wilh a socii.l funct ion lhil seto
It i part . 11 Ul a leadmg banl .. hose mone y Ci.Il ... rv" lO ... ttIe crood.its
betw<>en commercial banl:s. n.e rol.. of lllecentral banl .. Ihetl lo org alUu
lhe process ofconv",",bility of banl money by mant pu1atmg the condttlOns
und..r which il issues ils own money . lhe mas l celebrated exampl.. waS the
uoe of Ihe Bink ofEngland'o rediscounl ral e before 1914
lD I 48
, I 48
-'
(1
The experience of 19th century America, by co ntrast , pro vides
moti on a mon et ar y refurm to create a central bank. The Feder al Reserve
evidence of th e gigantic disturbances enge nde red by a fragmentati on of th e
Act of ' 9' 3 finally esta blished thi s new agency.
banking sys te m.' The liqui dati on of th e colonial pas! and th e strong
hostility of th e frontier po pulations ta war ds th e financial po wers of th e
From our analysis of th e mon et ar y co nstraint , when th e mon et ar y

sys te m refers to a mat eri al furm of th e genera l equivalent, we can draw a
Northeast pr evented any success ful atte mpt to sel up a central bank. The
basic result as to th e relation ship between mon ey and cre dit. All pr ivate
Free Banking Act of 1838 pul th e banks in th e same pos ilio n as any " ther
bank mon ey is subjec t to a sanction of gold equivalence, directly and
commerc ial unde rtaking, removing any spec ific obligations on how banks
co uld be esta blished and managed . The pro liferation of smal! banks was
witho ut limit o This is why p rivate bank money bears the weight 01
commod ity realization crises in th e furm of insolvency when co nfronted
eve n further multiplied by th e striel limit ati on on th e area over which
with demands fur settle ment in gold. But th e relationship between mon ey
br anches co uld be opened . The result was th a! mon ey issued by th ese
and cre dit is not akin to inflat ion . This is not to say th at th er e may not be
period s when th e genera l pr ice level rises. Rises of thi s kind can co me
banks, in particular by banks in th e new and expanding sta tes, was

accepte d only locally , or at best regionally . The credit needs kind led by th e
euphoria of fronti er expansion, moreover , incit ed th e banks to issue
about in two circumstances. Firstl y , th e co nditions of gold pr oduction may

be transfurm ed (the discovery of new mines in which extraction req uires
less labour -time , or th e imp ro vement of pr od uction method s leadin g to th e
mon ey and discount credits on extre mely dubi ous business ventures. The
co nvertibility of bank mon ey was thus co mpletely insecur e . Money from
same result). The fall in th e value of gold, if it is significant, leads to a far-
certain banks was not accepted at face value eve n in tim es of norm al
reaching change in th e soc ial co nditions of pr od uction . But in all cases th e
business. Ever y financial crisis was imm ediat ely transfurm ed int o a panic ,
fall in th e value of gold means a rise in th e exc hange-va lue ofcommod ities,
other things being equal. A price rise of thi s kind may stimulate a new
leadin g to a genera l ru n on pr eciou s met als and th e collapse of a number of

banks. As soo n as th e crisis ended, new banks were set up and pro vid ed fuel
fur th e same disorder . The sta te's need fur credit during th e Civil
~'Iar
finally led to th e National Bank Act, passed by Congress in 1863, which
phase of accumulation. This is what happened with th e discovery of th e

Califurn ian gold min es in 184 8- 49, and th e inception of th e Transvaal
min es in 1896.
defined th e financial basis and co nditions of current management th at
Secondly, credit gives th e movement of pr ices in th e trade cyd e a
banks had to fulfil in order to qualify fur th e sta tus of national banks. A
sys te matic and genera l character . Accumulation is accelera te d by th e
mon et ar y co ntro l serv ice was set up unde r th e Treasury Department to

check th ese co nditions. But th e abse nce of a central bank co ntinued to
anticipations to which credit gives rise . The expansion, imbricat ion and
accelera tion of th e circ ulation of credits leads to a swelling of demand
pr event th e furmation of a unified mon ey market . Financial panics

co ntinued to arise with eve ry crisis in th e realization of exchange-va lue.
which is only effective if credit is give n, and adds to it a pr ecautionary

de mand which increases th e stoc ks of co mmod ities. The pr ice rise has two
Overburdened by financial co mmitments, th e banks would find th emselves

suddenly faced with demands fur payment which co uld only be met with
effects, which int er act dynamically : on th e one hand , a rise in all costs, on
mon et ar y inst ruments th at th ey co uld not th emselves create . The absence
th e other hand , th e accelera tion of demand due to stoc kpiling against a

more rapid rise in pr ices. These two co nnected pr ocesses genera te an
of a central money th at co uld be accepte d in th e settle ment of th eir

recipr ocal co mmitments meant th at th e stra ins th ey experience d were
increasing demand fur bank credit which fuels th e accelera tion in th e pr ice
co mmunicated from one bank to th e next . Any sign of po tential insolvency
co mes adrift from th e mon et ar y co nstraint . But in th e co ntext of a
shoo k th e co nfidence of depositor s, who demand ed co nversion int o gold.

The banks' gold co ver was rapidly lost , and payments th en ceased . This
mon et ar y sys tem gove rned by met allic mon ey , thi s can have only one
result : th e financial crisis which has already bee n discussed . Prod uction
mon et ar y chaos culminated in th e extre mely sev ere financial panic of
anticipations fuelled by advances of cre dit co me up against th e mar ket 's
' 90 7 , which pro voked a po litical reaction th at induced Congress to set in
capacity fur absorption. The indebt ed pr oducers can no lon ger meet th eir
" THE GENERALATTRI8UTES OF MO NEY: THE SIGNIFICANCE
"
1 48
rise , particularly by way of a rise in int er est rates. The credit sys te m thus
' 2 I 48
- - - - - - - - - - - - - - - - ---(0 ) - - - - - - -
-'
(1
payment da tes, al th e very mamen! when costs are al th eir highest . Their
demand fur cre dit gro ws, while receipts from sales decline. This
anticipations of output and sales th at are incom pati ble with th e objective
phenomenon bec Qmes genera l th rough th e int ertwining of exchange
future value th at are issued by th e banks have no chance of being cashed in
relationships. The banks find th emselves in th e presence of an increased
terms of co ncrete value realized . The appare nt transgression of th e
demand fur cre dit, while th er e is no longer any repayrnent of earlier
mon et ar y co nstraint leads to th e bruta l co nfirmation of thi s co nstraint in
credits. Since eve ryone needs liqui dit y , settlement demands flow in from
al! sides. The debt chain breaks al severa l po ints where th e banks are no
th e erup tion of a financial crisis.

Yet th e expression of th e monet ar y co nstraint th at we have bee n
lon ger able la mee! th eir co rnmitments. A financial crisis breaks out and
examining up till now is not th e only one possible. Its form is a
credit co ntraets, while mon ey appea rs in its funct ion as a sto re " f value.
co nfrontation of bank mon ey , and via thi s th e entire pyr amid of cre dit ,
with a universal co mmod ity which by its very nat ur e is not a credit . This is
The sudde n devalor ization of credits gives rise to bankruptc ies and
movem ent of th e norm s of pr oduction and exchange , th e assignments of
why th e weight of financial crises falls necessaril y on th e pr ivate cre dit
destr uction of capital. Market pr ices th en fall at an eve n faster rate th an

th ey pr eviou sly rose. This pr ice movement is co mbined with th e regulation
agencies. It is no less tru e , however , th at in itself th e mon et ar y co nstraint
by unem ploym ent and fluctuat ion s in th e nominal wage which we
is a social relation th at may ass ume differe nt forms. Like all other social
descr ibed in Cha pte r 3 as characte ristic of th e regime of pr edominant1y
relations so far investigated , it evolves th ro ugh th e transform ati on of th e

structura l forms in which it pr esents itself. The mon et ar y sys te m based on
exte nsive accumulation. The mod e ofcohesion of this regime is co mpleted

by th e effects of th e mon et ar y co nstraint th at we shall now investigate .
met als has a hist ory moted in th e original form of mon ey , th e sale
co mpatible with a rud imentary co mmodity circ ulation . Cre dit developed
2 . The Ca p it a list Attribute s o Mone y : the Fonnation o a
slowly over a lon g historical period , modi fying th e relation of th e mon et ar y
Nationai Mone y
sys te m to co mmod ity circ ulation, but witho ut changing th e actual form of
In study ing th e de velop ment of th e funct ion s of mon ey , we showed how it
th e sys te m itself. Its bullion bas is remained un changed in all capitalist

co untries with th e exce ption of short periods of wars or revolutions. But
gave rise to credit and its sys te matic organization . Cre dit takes hold of
th e regime of pr edominant1y intensive accumulation gave rise to a new
co mmod ity circ ulation, which is no longer direct1y subjec t at eac h of its
links to th e mon et ar y co nstraint . But we co nstant1y st ressed th e fact that
structura l form which is now a lyn chpin of its co hesion, dosely linked to
th e law of exc hange eq uivalence was a social law govern ing th e realization
drives met allic mon ey out of the nati on al econo mic space once and for all;
of tot al exc hange-va lue. ~'Iith credit, the po larization inh er ent in the
genera l equivalent between co mmod ity and mon ey is expr essed in th e
it is based on th e iss ue of a central money with enf orced currency.
possibility of th e cre dit sys te m becoming separa te and autonomous from

th e mon et ar y sys tem. This is why mon ey as a co mmod ity co uld be expelled
from exc hange in th e co urse of history, to bec ome simply an objective
reference int o which bank mon ey has to be co nvertible so as to be
exc hangeable and actually satisfy th e law of equivalence. The monet ar y
th e others we have already investigated . This form of th e mon et ar y sys te m
Enforced currency is a coe rc ive pr actice of th e sta te , imposing th e

unrestrict ed social accepta nce of th e mon et ar y tokens issued by th e
central bank. The central bank mon ey replaces th e co mmodity form of the
genera l equivalent within th e nation al econo mic space of th e nation . The
nat ion al mon ey mar ket is no longer an are na where pr ivate mon et ar y
co nstraint, th er efore , as it is exercised on th e mon ey mar ket , is not only
tokens are valida te d by reference to a universal co mmod ity . It bec omes an

are na where all bank mon ey is unified by th e central money . This
not removed by th e existe nce of credit ; it pro ves to be th e unifying
unificati on forms a nation al money . To study how th e mon et ar y co nstraint
pr incipIe of th e cre dit sys tem. Financial crises are a re minde r th at th e

tendency of th e credit sys te m to bec ome self-conta ined is necessaril y
funct ion s, it is necessar y to un der st and how and within what limit s th e
checked in a co mmod ity economy.
~'Ihen
bank cre dit unleashes
2. THE CA PITALl ST ATT RI8UTES OF MONEY: THE FORMATI O
' 3 I 48
nation al mon ey th at pr oceeds from credit can acq uire th e attributes of th e

genera l eq uivalent.
'4 I 4 8
-----------------~o)--------
-'
(1
(a) In tegr ation and disinteg ratio n ofba nk money . It is important to gra sp
th a! in mod ern capitalism bank mo ney is more th an simply th e support fur
~'Ie
relations between exchanging capitalists, but rather in th e auto no mo us

cycle of th e maintenanee of labo ur -po wer . In th e first case , bank money
mus!
has only a po tential pu rchasing po wer, whieh is socially co nfirmed or
th er efore co me bac k to th e overall reproduction " f th e wage relation as
otherwise according to th e ability of th e banking sys te m to have its credit
formally depicted in Diagra m 9 (Chapter 3), taking int o account our

have
tokens valida te d in th e genera l eq uivalent. In th e see ond case , bank mon ey

must olfer a social purchasing po wer as soo n as wages are paid . The
freq uently slressed th a! labou r-po wer is no! a commod ity like any " ther . It
sys tematic advanee of wages in bank mon ey , in th e co ntext of th e
is a co rnmod ity to the exte nt th a! th e capitalists acq uire disposal " f it so as
farmation and development of th e social norm ofconsumption , thus poses

new pro blems far th e articulation of th e credit and mon ey sys tems. A
pr ivate credit and th e unifying fact or of th e cre dit sys tem.
findings so far on th e laws and furms " f social regulation .
~'Ie
to incorpo rat e it int o pr od uctive capital unde r th eir excl usive direction .
Bu! it is no! a realized or realizable exc hange-va lue. It is impossible to
possess labour -po wer so as to sell it on th e mar ket and extraet a mon et ar y
co nsiderable th eoreti cal diflieulty now appea rs. Bank money is created , as
we have pr eviou sly shown, in a private relationship between th e banker
eq uivalent. Labou r-po wer is bought only beeause its use is the creation of
and th e co mmod ity pr odueer . It canno t claim to be nation al mon ey as
value, abs traet labour itself. This is why th e maintenanee cycle of labour -
soon as it is created . All it is, in faet , is a pr ivate mon ey , mon ey x , y or z.
po wer has a certain auto no my in relation to th e cycles of expanded
But it mu st bee ome nati onal money as soo n as it leaves thi s pr ivate
relationship when wages are paid . It must now imm ediat ely aeq uire a social
repr od uetion of capital in th e two departments of pr oduetion . This

autono my is of dee isive th eoreti cal impo rt anee . The free workers,
th emselves co nstrained to purchase th eir own co nditions of existenee as
co mmod ities, have to reeeive payment of their wages in mon ey . For th e
purchases indispensable far th e reeonstitution ofl abo ur-power to be made
regularly in the genera l circ ulation of co mmod ities, money must fun ct ion
fuI/y as general equivalent in the hands 01the U' orkers. This co ndition is all
th e mor e fundamental in th at th e far mation and regular development of th e
social norm of co nsumption , involvin g th e inflexi bilit y of th e nominal
referenee wage , is th e cor e element in th e co hesion of th e regime of
pr edominant1y int ensive aecumulation. Now th er e is no close link between
th e rh ythm at whieh th e wage-earn ers repe at th eir expe nditures, and th e
purchasing po wer. No one can say what this will be quantita tively, if wages
are not spent. But it must exist qualita tively, in sueh a way as to permit th e
maintenanee cycle of social labour-po wer to co ntinue .
The co ntradietion we have just noted will later lead us to define mod ern
inflat ion as a phenomenon spee ific to th e regime of int ensive aecumulation,
whose co nditions of possibility lie in th e transfarm ati on of th e mon et ar y
sys te m peculiar to th e latter . But it is neeessar y first of all to investi gat e th e
met amorph oses un der gon e by bank mon ey in th e genera l circuit of
payments. ~'Ie shall th en exam ine the way in which th e monetary
co nstraint is transfarmed to rende r th ese met amor phoses possible.
The pr od uetion pr ocess gives bank money a social pu rchasing po wer
beeause it is a net creation of value, th e far mation of a new abs traet labour .
turnover tim es of capitals, whieh are th emselves very dilferent from one
another. There is thus a do ub le advance between capitalists and workers:
~'Ihen
on th e one hand , from workers to capitalists in th at workers are paid only
banker, he transfarm s th e pr ivate mon et ar y token int o mon ey ineom e .
after havin g worked far a certain tim e , a tim e th at co rrespo nds to th e
Projeet ed int o social pr od uetion , money integrat es a social purchasing
average renewal of th eir expenditures; on th e other hand , from capitalists

to workers in th at th e mon ey reeeived in paym ent of th eir wages is not
po U' er.' This fallows from th e very meaning of abs traet labou r . The social
purchasing po wer is not aeq uired beeause th e banker's advanee is used to
linked to th e value th at th ese workers create , sinee its pr od uetion and
valorize an individu al capital; thi s may or may not happen according to th e
realization time depend on dilferent labour pr ocesses and mor e or less

favourable exchange co nditions.4
fat e thi s individual capital encounte rs in co mpetition . It is aeq uired

beeause every wage paid in th e co urse of any period whatsoe ver is a
~'Ie
can und erstand th en how bank money must be endo wed with new
charaeteristies when it doos not circulate in th e circuit of capital, by way of
2. THE CAPITALlST ATT RI8UTES OF MONEY: THE FORMATI O
' 5 I 48
a capitalist pays wages on th e bas is of an advanee made by his
fraetion of a hom ogeneous quantity of mon et ar y rights remitted to th e

soc ial labour-po wer th at creates th e new abs traet labour of thi s period o
, 6 I 48
-----------------~o)--------
-'
(1
~'Ihen
it leaves th e sphere " f product ion lhi s abstrae! labour is fragmented ,
havin g lost its social purchasing po wer. It bec omes once more a mer e
since it is incorpo rat ed int o a mass of co rnmoclities th a! have to realize

th eir exchange-values. It is because th e product s of labour are already
token of credit by which th e co mpanies cancel th eir debts towar ds th e
co rnmoclities, i.e. econo mic objects in a hom ogeneou s value "pace, th a! th e
After havin g disintegra ted, bank mon ey is des troyed. It has accomplished
bank mon ey int egrat ed al th e opening of th e act of product ion can continue
to bea r a social pur chasing po wer. It doos no! lose lhi s when it leaves th e
th e full cycle of its circular co urse , mar ked by success ive acts of creation ,
banks by sending bac k th e mon et ar y tokens that th e banks have issued .
hands of th e wage-earn ers as th ey spend th eir incom es. It keeps it in th e
int egrati on , disintegration and des tr uctio n. A new cycle can then get un der
way by a new creation ex nihilo of bank mon ey fullowed by th e furmation of
sum tot al " f acts " f co rnmod ity circ ulation which realize abstrae! labour in
a new mon et ar y incom e .
th e furm of tot al income. This realization is effected according to th e

pattern of th e expanded repr oduction of th e social capital. It is why pro fit
can appea r as an appropriation th at accrues to th e firm as an excess of
receipts over running expenses pr eviously advanced.
Commodity circulation doos not co nsist of th e exchange of a pile of
het erogeneou s objects fur a certain quantity of mon et ar y tokens. ~'Ihen th e
product s of labour ente r th e sphere of circ ulation , th ey already have a
pr ice by virtue of th e fact th at th ey are exchange-va lues. The mon et ar y
tokens acq uire d a social value when th ey were int egrat ed int o producti on
in th e payment of wages. But thi s value is not yet co nfirmed . It must be
co nfirmed by co mmod ity circ ulation , which co mbines th e dissociated
elements of th e exc hange relation . Qualitatively , th e mon et ar y tokens
preser ve th eir purchasing po wer in th e sphere of circulation , even th ou gh
th e expenditure of incom e de tac hes th em from th e initi al integrative act fur
another fract ion of incom e . Quantitatively , however , it is th e overall
realization of exc hange-va lue th at deci des on th e transfurm ati on of the
newly created abs tract labour int o tot al incom e , and co nsequently on th e
magnitude of th e m on et ar y expression of th e working hour .
~'Ihen
th e
abs tract labour has been co mpletely realized , th e tokens of bank mon ey
have f10wed bac k to th e firm and are de tac hed from any element of inco me .
In pro po rt ion to th e expend iture , in fact , th e incom e element th at
occasioned th e expenditure is des troyed in th e course of exchange, since
th e co rrespo nding exchange-value has been socially valida te d and th e
co mmod ity is now going to be used as a use-value . But thi s expenditure
realizes another fract ion of incom e , and th e tokens of bank mon ey are
transfer red to this, occasioning a new expenditure, and so on .
~'Ihen ,
however , th e tot al abs tract labour fur th e whole per iod is realized , th e
entire incom e is spent and th er efure des tr oyed.' The bank money has then
disint egrat ed. It has f10wed bac k entirely int o th e hands of th e capitalists,
2, THE CAPITA Ll ST ATT RI8UTE S OF MO NEY: THE FORMATI O
17 I 4 8
(b) The co nd itions 01p ossibility lo r infl ati on. The distinction between bank
mon ey and mon et ar y incom e , which are linked by a process of integration
and disintegration of th e social purchasing po wer conferred by abs tract
labour , is one of the fundamental capitalist attributes of money . It gives
co ncrete expression to th e transfurm ati on of abs tract labour (VA) int o
incom e (VP), inasmuch as m = VP/ VA. But th e fact th at bank mon ey is th e
bea re r of incom e and is thus radically distinguished from a simple privat e
credit , is an insuflicient condition fur th e furmation of a nat ion al mon ey .
The relationship recalled ab ove can be spelled out only if we can give a
meaning to th e mon et ar y expression of th e working hour , despite th e fact
th at thi s is no longer directly de te rmined by th e social co nditions of
producti on of a co mmod ity taken as genera l equivalent. Bank mon ey must
th er efure be tot ally unified , so th at eac h econo mic agent is permanently
certain of th e fullowing co ndition :
1 dollar from bankX = 1 do llar from bank Y = 1 do llar from bankZ = ", _
ldollar .
Now thi s condition is not imm ediat ely impli ed by th e analysis of th e
int egrati on and disintegration of bank mon ey as incom e . ~'Ihat is needed fur
thi s is a far -reachin g transfurm ati on of th e mon et ar y sys te m, centred on
th e establishment of a central mon ey with enfurced currency .
The unificat ion of bank mon ey bec omes, in effect, th e furm of th e
mon et ar y co nstraint in th e space of th e nat ion . This is so because th e
different bank moni es bec ome th e means fur a co nfrontation between two
different tim e dimensions, a social dimension and a privat e dimension ,
which th e very nature of co mmodity prod ucti on pr events from co inciding.
New abs tract labour is co ntinually create d by product ion . It is possible
th er efure to spea k of th e furmation of incom e fur a certain period which
int egrat es bank mon ey int o soc ial purchasing po wer. But th e expenditure
18 I 4 8
-----------------~o)--------
-'
(1
of income which realizes lhis abstrae ! abour can be extended over a
necessar y to safeguard th e sys te m's solve ncy no matter what th e cost oThis
sharte r oc lon ger int er val , and th e bank mon ey can be annihilated only
can only be achieve d if th e debts among th e banks th emselves are settle d in
after th e incom e is actually spent. Only th en can th e credits original1y

issued by th e bankers be cancelled . Now th ese credits were issued in th e
a co mmon money , that issued by th e central bank. The latter th en acts as
pr ivate relationships between th e bankers and th eir d ients, th e capitalist

pr od ucers. Their issue can in no way take int o account th e social pr ecess of
lender oflast resort. But th e central bank mon ey is itself nothing more th an
a cre dit which thi s bank issues against itself. To be accepte d in all
circumstances as th e means of settlement in th e econo mic space of th e
th e furmation and expenditure of tctal income . Bank money is issued in th e

form of assignments of th e futur e realization of th e particular exchange-
nat ion , particularly in a crisis situation, thi s central mon ey must be ves ted
with a legal po wer, th e enforced currency imposed by th e sta te.
values of th e capitalists in ques tion. These realizations ""eur al th e ma s!
The articulation between th e mon et ar y sys te m and th e credit sys te m
varied int er vals and are subjec t to al! th e hazar ds of co mpetition . Yet only
th en bec omes a new structura l form o In th e Unite d Sta tes thi s emerged
th ese realizations can cancel th e cre dits originally issued .

The incompati biliti es between th e objective pr ocess of int egrat ion and
after th e collapse of th e banking sys te m during th e Creat Depression . In
disintegration of soc ial purchasing po wer by bank money, on th e one hand ,

th e particular advances on th e future values to which different bank moni es
thi s new form , th e central bank manages th e co nstitution of th e genera l

eq uivalent within th e nati onal ter rit ory , whereas pr eviously it simply
organized th e co nfrontation between bank moni es and an objective and
are attac hed, on th e other , are reflected within th e banking sys te m itself.
uni ver sal genera l eq uivalent. This management involves a who le series of
The circulation of pr ivate bank mon ey , in effect , when thi s serves to bea r
pr actices
incom e over th e differe nt phases of social expenditure, gives rise to
guara ntee ing of deposits, th e surveillance of banks in tro uble , and th e
mon et ar y deposits held by bankX in bank Y, and vice versa, without th er e
adjustment of the central mon ey . It bec omes a mon et ar y po licy, since it
being any automatic co mpensation . Let us suppose that bank Y holds a

credit on sight with bank X. This is necessaril y a cre dit in mon ey X. Bank X
canno t be red uced to an organized set of techni ques. In effect, the state
co mprising
th e
regulation
of banking
operations,
th e
becomes the bearer of the monetary co ns tra int, with th e result th at its
management is permanently subjec ted to a po litical sanction which is more
is un able to settle it in mon ey Y, since on our hypo thesis th er e is no

co mpensation and all th at bank X can create ex nihilo is its own mon ey . It
or less ev ide nt according to th e scope of th e co ntradictions th at have to be
may happen , of co urse , th at Y gives credit to X, i.e. defers th e settle ment of
surmounted in order to realize th e unification of th e nat ion al mon ey . On
th e credit on sight untillater . It is th e ro le of th e mon ey mar ket to establish
th e one hand , th e sta te has no part in th e origin of bank money . As issuer of
a spec ific circ ulation of credits between banks, so as to make th ese dates
th e means ofcommo n settle ment to th e banks, and as lender of last resor t ,
overlap . But th eoreti cal analysis cannot sto p her e .

Let us suppose th at th er e is a far-reachin g discr epancy between th e
th e central bankgives a social valida tion to pr ivate advances. On th e other
soc ial pr ocess of th e formation and expenditure of income and pr ivate
hand , th e sta te is guara nto r of th e nati on al mon ey . It canno t afford to

overcome th e division between differe nt bank moni es by destro ying th e
advances, with th e result that certain banks, disposing of large amounts of
social purchasing po wer which th ese all susta in. The central bank must
credits against th eir d ients which cannot be settle d in th e sho rt term ,

canno t meet th eir own co mmitments. Is a financial crisis going to break
th er efore impose an overall mon et ar y co nstraint .' This is why mon et ar y
out , destro ying th e mon et ar y character of th e cre dit tokens issued by th e
co mpro mise is always related to th e greate r or lesser acuity of th e int ernal
banks, as when th e mon et ar y sys tem functi on ed by reference to gold? This

cannot be th e case when th e bank mon ey is th e bea re r of incom e and
co ntradictions of th e law of accumulation. Since th e monet ar y co nstraint
particularly of th e fund for wages, th e regularity of whose formation and
gove rn th e pro portions to be respe cted in th e co mposition of bank assets,
expenditure is th e central co ndition for th e co hesion of th e mod e of

accumulation. A crisis of thi s kind would jeop ard ize capitalism itself. It is
th e obligatory reserves to be deposited with th e central bank, and th e
2. THE CA PITALl ST ATT RI8UTES OF MONEY: THE FORMATI O
' 9 I 48
po licy is always a co mpro mise . The ease or difliculty of realizing thi s
makes itself felt by way of pr actices of quantita tive management th at
greate r or lesser purchases and sales th at th e central bank makes of
20 I 4 8
-----------------~o)--------
-'
(1
govern ment bonds on th e mon ey market , it is possible to have th e illusion
Despite th e creation of th e structura l forms we have ide ntified , and th eir
th a! th e central bank actually dete rmines th e amo unt of mon ey . Since in
capacity for pro gressive transform ati on , th e antagonism of th e wage
period s of crisis th e task of safeguarding th e solve ncy of th e banking sys te m
relation pr events capitalism from achieving th e mechanisms for a

harmonious regulation . There exist hist orical phases in which th e
forces th e central bank to settle gov ern ment deb ts on a more massive sca le
and to play its ro le ofl ender a f Ias! resor l as a priorit y , it can seem th a! its
mon et ar y laxity is th e cause of th e crisis.
Bu! th e real re latio nship between th e credit and monetary sys te ms has
nothing ta do with any quantity th eory of money . The furm ass umed by th e
co nditions for expand ed repr oduction of th e capitalist relations of

pr oduction are not fulfilled . The balance of forces which makes th e law of
capital accumulation a genera l movement of value exp ansion is th en
bro ken . The co hesion of th e structura l forms whose overall operation
suflicient co ndition fur inflat ion . In effect, by ensuring th a! banks mee!
canalizes and fragments th e dass struggle, displacing th e po ints at which

tensions arise in such a way as to reduce th em by financial flows, is
th eir co mmitments eve n th ough th er e is no effective sett1ement by
un dermined . Such a situation is a crisis. It is d ear th at a crisis of thi s type is
disintegration of bank moni es and cancellation of credits, th e central bank
always social in character , in th e sense th at it is bo rn out of th e relation s of

dass society. But it can have differing effects on th e forms in which th ese
mon et ar y co nstraint , in th e obligation to accept th e central mon ey , is a
operates a pseu do-social validation 01private labours.' The co nvertibility

of pr ivate bank moni es int o central mon ey with an enforced currency is
guara ntee d pri or to t he co nversion of co mmod ities int o mon ey . In a crisis
situation, it may still be guara ntee d eve n th ough th e assignments of future
values which th e bank mon ey anticipates will never mat eri alize . ~'Ie may
say th at co mmod ity circulation is weakened by a relaxation of th e
mon et ar y co nstraint . The genera l equivalent is reconstituted by th e
permanent unification of different bank moni es. In thi s way a mon et ar y
expression is formed for th e wor king hou r , at any po int in tim e . But th e
pseud o-social valida tion of a fraction of co mmod ity prod uction is
relation s existo Such a crisis always has a more or less sharp effect on
econo mic relations, but it doos not necessarily change po litical relations.
The co nfrontation between dasses doos not explicit1y challenge the sta te
po wer of capitalist society, in other wor ds threat en th e ability of th e
capitalist dass to manage society from its unified vantage po int in th e sta te.
A crisis of thi s sort, which has occurred in th e past , is now again unde r way
in th e United Sta tes. The genera l ideological principIes th at legitimi ze
capitalism in th e po pular co nsciousness, pr incipIes which exp loit th e
expressed in a perp etu al slippage in thi s quantity, an erosion of th e
peculiar feat ures of American nat ion al hist ory and are diffused in a variety
of forms by an extr emely de nse net work of cultural and religiou s
nati on al mon ey . This erosion is expressed sta tistically as a rise in th e
instituti ons, are suflicient1y po werful to perp etu ate th e hegemony of th e
genera l leve l of pr ices. In th e regular co urse of accumulation, th er e is a

creeping inflat ion which reflects an irrever sible weakening of th e mon et ar y
capitalist dass. The American bourgeoisie had and still has th e necessar y
room for manoeuvre to abso rb new social transform ati ons and yet
sanction for co mmod ities within th e nati onal circ ulation space. In period s
safeguard what is essential to it : disposal of th e forces of pr od uction by
of financial crisis, when th e credit sys tem tends to cut loo se from th e
means of the wage relation .
mon et ar y co nstraint , th e latter no longer finds bruta l expression in th e
In th e co urse of thi s boo k we have expound ed th e th eoreti cal elements
form of a demo netization of th e credit tokens issued by th e banks . On th e

co ntrary , th e pseud ovalidation of th e different bank monies as central
th at make th e economic aspec ts of social crises int elligible . The roo t of

th ese crises is always th e upsurge of dass struggle in pr oduction , which
mon ey exte nds, and th e erosion of th e nati on al mon ey is accelera te d.
jeop ard izes th e expanded creation of surplus-va lue on the bas is of th e
Cre eping inflati on is transform ed int o galloping inflati on . The financial
pr evailing organization of th e labou r pr ocess. This is why th e outco me of
crisis bec omes a pro tr acted mon et ar y crisis.
social crises can only be a major transform ati on of th e labour pr ocess and
th e co nditions of existence of th e wage-earn ing dass which are indissolu bly
Ir. Fin a n ci al Crtses as Necessary Aspec ts of Capita lis t
linked to it , to permit th e emerge nce of new social co nditions of pr od uction

and exchange . But th e very nature of co mmod ity pr od uction imposes th e
Regu lation
11 . FINA NCIAL CRISES AS NECESSA RI' A SPECTS OF CAPITA LlS
21 1 48
22 1 4 8
-----------------~Of-------
-'
(1
ubiquity of mon et ar y quantities and th e fragmentat ion of capitals, whose

relations are expressed in th e laws of co mpetition . The overall character of
met ast able balance of forces. The dynamic of th e evolution, break-up and
reconstitu tion of met ast able sta tes has nothing in co mmon with th e
th e soc ial crisis is revealed by mon et ar y f1ows, because capitalist
dynamic of so-cal!ed balanced gro wth. A financial crisis repr esents a
circulation encompasses pr od uction . On la p of lhi s, th e capitalist respo nse

to th e frs! sympto ms of a crisis is always lo act on th ese flows in an atte mpt
ru ptu re in th e pro cess of accumulation. The co ncept of the over-
to defuse th e rise of tension s in pr od uction , by mani pulating th e exclusive

co ntrol tha! th e capitalist dass wields over th e cre dit sys tem, with its
ability lo displace th e mon et ar y co nstraint . This is why th e visible eruption
of th e crisis always takes th e form of a financial crisis. Havin g already
investi gat ed th e und erlying de te rminants of th ese crises and th eir formal
expr ession in terms of th e int er acti on between cre dit sys tem and monetary
sys te m, we can now go on to examine th e phenom enon of financial crisis
accumulation of capital is th e key to unde rstand ing financial crisis.'

(a) Defin ition olo ver-accumulatio n 01capital. In seeking to give a rigorous
definition of thi s co ncept , we can elucida te a co ntro versy th at is very long-
sta nding but still of current impo rt ance . This is th e question of th e

tendential fal! in th e rate of pro fit . This co ntroversy should not real!y exist
at al!, since it lacks either a logical or a n empirical subs ta nce. It simply
refiects th e lack of und erstand ing among economists of th e mat eri alist
dialectic , eve n th at displayed by a good number of th ose who pr ofess it .
itself.
~'Ihat
are th e terms of thi s co ntro versy? Marx dedare d th at th e tendency of

th e rate of pro fit to fal! was th e most bas ic econo mic law of capitalist
l . T h e Ov e r _Accu m u la t io ll of Ca p it a l
seciety. Two objections are customarily made to thi s. The first , empirical
The term 'over-ac cumulation' of capital may see m paradoxica1. Since
objection , co mes from th ose who define an ave rage rate of pro fit , work out
accumulation is th e alpha and omega of capitalist secieties, how can capital
a chro no logical series for thi s ave rage over a century or so, plot thi s on a
be over-accumulated? Is not any accumulation beneficial, eve n if its
curve , and without bothering th emselves with any more detailed analysis,
co nditions have deterior ated and th e rates of pro fit to be realized are
lowered? From th e sta ndpoint of th e individu al capitalist , which th e
co nd ude th at thi s curve doos not display any significant ded ine. The
majorit y of economists ado pt and extrapolate to seciety as a whole , th e

crisis can co me in man y guises: inability to sel! goods, abs ence of pro spe cts
sec ond, th eoreti cal objection , accepts th at co ntrary infiuences act on th e

rate of pro fit , but maintains th at when sorne tend to bec ome pr epo nd erant ,
co unter-balancing mechanisms reinfor ce others, in such a way th at th e rate
for new investment , lack of financial resou rces to operationalize

investment plans. Since th ese differe nt situations may either fol!ow on from
of pro fit can remain permanently stable. The co mbination of th e empirical
one ano ther or exist simulta neo usly according to th e econo mic sec to r
co ncern ed , extrapolations from microeconomi c indicati ons to macro-
a simple expansion of th e econo my with al! pro portions co nstant , is in fact
economic evolution can only lead to co nfusion . The financial crisis re veals
in a negative way th e organic unity of the capitalist moo e of pr oouction . It
th ese pro portion s. At bes t, th ese trends form part of th eories of cyd es
rend ers directly visible th e fact th at mar ket adjustments are moo aliti es of
regulation sub ordinate to th e law of accumulation. This secial law involv es
and th e th eoreti cal objection leads to th e co nd usion th at balance d gro wth,

th e rule ; no impo rt ance is attac hed to th e hist orical pattern of variations in
resting on th e most het erodite hypo theses. In any case , such th eories are
independent of th e theory of balanced gro wth, which is supposed to be a
such a
unitar y pr ecess and is co nceived as th e perp etu ation of an equilibrium

over tim e on an expanding sca le. This is th e neo-d assical pos ition.
disequilibr ium arises, no market mechanism can get rid of it . The financial
crisis is a pr ecess of pu rgation of th e disequilibr ium th ro ugh which entire ly
The co ntro versy is not a genuine one , because th e noti on of balanced

gro wth belongs to th e th eoreti cal universe of genera l equilibrium which is
new co nditions of accumulation are created . To pu t it another way , th e law
tot al!y foreign to th e law of capitalist accumulation. So far as th e empirical
of accumulation can in no way autho rize th e definition of a co nfiguration of
objection is co ncern ed , it already sows co nfusion inasmuch as it gives a

false idea of th e transiti on from th e abs tract to th e co ncrete . For as we have
an antago nism th at makes global disequilibr ium possible.
~'Ihen
stable equilibrium. The most it can do is establish th e co ndition of a
" THE OVER-ACCUM ULAT ION OF CA PITA L -
23 I 4 8
24 I 4 8
- - - - - - - - - - - - - - - - - ---<o . - - - - -
-'
(1
norm ati ve option fur equilibrium.

Yet th e pro blem still remains. How sho uld th e tendency of th e rate of
01 capital when the constraint 01 the fu I! realization 01 the value new ly

creat ed by soci ety can no longer be effe cted by w ay 01 the orga nic
exchanges between the two depar tments 01p roduction. The po larization
of furces pro moting th e uneven develop ment of th e two departments can
pro fit to fal! be int er preted? Le! us recal! her e certain of " ur earlier
no lon ger be neutralized by expanding th e space of eo mmod ity prod uction
findin gs. ~'Ihen we studied th e co nditions fur th e formation of th e genera l
th ro ugh accumulation. This un even development th en ass umes a

qualita tively new guise. A macro -econ omi e imbalance is created, rupturing
shown th roughout e ur sludy, th is lransili on mus! pr oceed from co noep! to
concept , and no! by juxtaposing ad hoc empirical observations with a
rate of pro fit in Chapler S. and maintained th a! th ey co uld be inter pret ed as

equilibrium. For th e lalter , in effect, forces such as supply and demand are
th e social unity of capitalist pr od uction and cire ulation . The pr ocess

regulating th e exte rnal relations between individu al capitals breaks do wn,
supposed to depend on exogeno us parameters th a! are mutually
giving way to a violent struggle amo ng th em to pr eserve th eir
independent . The forces do no! int er act in th eir actual furmation . This is
why a pr ocess of adjustment th at is exte rnal to th e parameters on which
independence .
The law of th e tendency fur th e rate of pro fit to fall thus has th e fullowing
th ey depend can modi fy th eir valency until th ey balance one another. An

equilibrium of thi s kind may be stable o r unstable , but it is in any case
meaning. It asserts th at a phase of appare ntly regular accumulation doos

not co ntain self-correcting mechanisms th at can perpetuate it indefinitely .
mechanical. The furces involved in th e furmation of th e genera l rate of
The tendency to uneven development is a macro -econ om ie feat ur e of th e
pr ofit are co mpletely different in kind . They are polarized by one and the
law of aceumulation. It imposes itself on relations of mar ket co mpetition ,
sa me social p rocess." This process is th e prod uction of relative surplusvalue. It involves a transfurm ation of th e co nditions of pr od uction th at
radically alte rs th e relations of exc hange between th e two de partments of
pr od uction but can nevertheless lead to a rise in th e rate of surplus-va lue
only if striet pro portion s are respected in th e macro -econ omi e exchanges
between th em . This is why we have said th at th e genera l rate of pro fit is
associated with th e realization of tot al income by th e social expenditure
deriving from organic exc hanges between th e two departments of
and can only be neutralized by social transfurm ati on s th at de pend on th e

evolution of th e dass struggle. This is why it is legitim ate to spea k of a
a balance of forces, we did no! th er eby rejoin tradition al co nceptions of
pr oduction .
~'Ie
expressed thi s as th e co mpatibility between th e
macro struct ur e of pr od uction and th e distribution of tot al incom e . In as far

as thi s co ndition is met , th e unity of th e social pr ocess of pr oduction and
circulation is maintained . But thi s co mpatibility is maintained only by
accumulation. Any idea of a sta tie eq uilibrium is quite inconceivable . The
wage relation can only be repr od uced if th e mechani zation of labour is
pu rsued eve r further , with an eve r greate r sav ing on livin g labour . But fur
th e department pr oducing means of pr od u ction not to bloc k th e realization
of th e tot al prod uct by its own expansion, th e wage relation has to spread
at a sufliciently rapid rate o
Since th e existe nce of th e genera l rate of pro fit canno t be taken fur
gra nted, but rather pos es a pro blem , th e co ncept of over-accumulation of
capital fullows directly from thi s pro blem . There is an over-accumulation
25 I 4 8
met ast able eq uilibrium in characterizing th e co nstraint of th e full

realization of value. The over-accumulation of capital mar ks th e rupture of
thi s equilibrium. It opens a phase of major disturbances in th e furm of a
financial crisis. The new social co nditions of pr od uction th at arise from thi s
crisis canno t be th eoreti cally added on to th e old co nditions by a simple
shift in th e equilibrium. In a financial crisis, th e articulation of st ructura l
furms th at gives th e regime of accumulation its co hesion is dislocated. The
global morph ology of econo mic furms must be rearranged . The law of th e
tendential fall in th e rate of pro fit is thus very far from indicati ng th e
peaceful evolution, up war ds and do wnwards, of a ra te of pr ofit whose
furmation is unp ro blematie and whose pu rely quantita tive movement
governs displacements of an equilibrium.
(b) The dw elopment 01 the fi nancial crisis. It is very dear that in thi s
rearrangement qualita tive phenomena do minate quantita tive trends, since
th er e is no longer a co ntinuity in th e re production of re lations capable of
giving th em direction.
All financial crises have certain co mmon features. Yet th e fundamental
changes in th e mon et ar y sys te m th at arose from th e Creat Depression have
26 I 4 8
- - - - - - - - - - - - - - - - - ---<o . - - - - -
-'
(1
decisively modified th e relations between mon ey and credit . This is why we
behind th e bac ks of th e individu al capitalists. The latter , encourage d by th e
int end frs! to examine th e development of financial erises when th e
results of th e earlier valorization th at were so eas ily obtained , anticipate
mon et ar y constraint is exercised in gold terms - which conferred common
better results in th e future , and speed up th eir investment pro grammes all
features on th e great American financial erises of 187 3, 1894, ' 90 7 and
th e more , since th ey now dispose of substa ntial mon et ar y reserves. They
' 929. ~'Ie shall th en deal with th e essential differences between th ese old-
are able to do so because th ey da not imm ediat ely feel th e mon et ar y
sty le erises and th e contemporary crisis th a! takes th e form " f th e inflat ion
precess. In th e genera l spirit of lhi s work, we shall no! be able to ga int o
co nstraint .
detailed descr iption . ~'Ie shall simply see k to cierna nstra te th e essential
dete rminants th a! follow from th e concepts we have int roduced earlier and
th e mon et ar y co nstraint in so far as credit permits th e pursuit and eve n
~'Ihen
it becomes impossible to realize th e social pr od uct in
mon ey , thi s still re mains possible on credit . The cre dit sys tem thus escapes
to co mplete e ur genera l th eory of capitalist accumulation.
accelera tion of social expend iture in thi s phase of business eupho ria, even
th ou gh th e pro portions between th e two departments of pr od uction th at
The necessar y sta rting po int is a pro per characterization of th e onset of

th e crisis. This is what th e co ncept of over-accumulation of capital permits
are needed to make final settle ments no longer existo Hence th e habitual
signs of degeneration towards a spec ulative boo m.
us oThe crisis begins with a transgression of th e require ment th at newly
In th e economic movement th at led to th e Creat Depression, th e overall

imbalance resulting from th e un even development of th e twa de partments
created value should be fully realized .
~'Ihen
th e genera l equivalent is
' 9 ~ os .
furmed by bank money expr essed in gold, th en th e mon et ar y expression of

th e wor king hour remains defined by th e social co nditions of gold
of product ion existed below th e surface from th e mid
product ion . But we know th at th e realization of co mmod ities in mon ey
wage-earn ers. Between
terms doos not mean th at exchange actually takes place in th e mon ey
furm of pro fit , int er est and rent increased by 45%, wage incom es only by
co mmod ity . It doos so th rough th e cre dit sys tem th at is articulated to bank
13%." The increase in th e rate of surplus-va lue th at made possible thi s
mon ey . The co ndition of full realization of th e prod uct signifies th at final
distor tion of incom e distr ibution fuelled th e un even development of th e
settlements within th e banking sys tem, needed to guara ntee th e mon et ar y
two de partments of prod uction . From
character of th e credit tokens issued by th e banks, are made witho ut

dangero us stra ins. This absence of stra ins is attested by th e stability of th e
goods increased at something like double th e pace of indu st rial pr od uction

as a who le . But th e ever greater inequ alit y of incom es led to th e mar ket fur
rate of int er est th at gove rns th e mon ey mar ket . Transgression of th e full
co nsumer dur ables pea king in
mon et ar y realization of th e social product , on th e other hand , is initi ally
sudden upsurge in business activity of
expressed by stra ins in th e credit sys te m.

Her e we tou ch on a decisive po int fur un der st andin g financial crises.
19~6- ~7,
circ ulation of a great mass of mon ey capital in th e hands of American
Transgression of th e req uirement of full realization doos not result from a
capitalists, augmented by a massive influx of capital fleein g from th e
failure of th e capitalists to inn ovat e , as Schumpeter would have it , or from

a gra dual decline in th e 'marginal efficiency of capital', fullowing Keyn es,
increasing mon et ar y inst ability in Europe .
th at stifles opportunities fur investment . It results rather from an un even

development th at genera tes a macro- econ om ic imbalance which imposes
means of product ion , and
int ermediat e goods of circ ulating capital, abso rbs excess pr od uction
itself on th e individu al capitalists. In its initi al phase , thi s overall imbalance
capacity . Relati ve prices fur th ese product s rise , and delivery date s are
is expressed not in a lack of investment oppo rtunities but on th e co ntrary
pushed back. These co nditions of exc hange pr ecipitate stra ins on th ese
in an accelera te d development of th e department producing means of
mar ket s, since all capitalists, fearing a lack of supplies, create an additional
pr od uction . The fi nancial crisis begins with a business euph oria." The
demand by see king to build up stoc ks. These stoc ks have to be financed on
imbalance in th e schema of th e expanded repr od uction of capital sets in
credit , since th ey ga beyond current fla ws and th e receipts th at th ese bring
27 I
48
Thro ughout
thi s decade , income distr ibution shifted rapidly to th e de triment of th e

'9~a
and
'9~9,
19~6.
in fact , incom es received in th e
'9~3
to
19~6
th e output of producer
Und er th ese structura l co nditions, th e

19~8-~9,
after th e tem po rar y dip in
co uld be no more th an an artificial eupho ria bound up with th e
The accelera ting credit demand addressed to th e de partment pr od ucing

particularly to th e sec to r
producing
28 I 4 8
- - - - - - - - - - - - - - - - - ---<o . - - - - -
-'
(1
in . Debt th er efor e iner eases and bec omes ever sharter in term oIt swells al!
spec ulators seeking capital gains of 10 0% or more . By attracting all
th e faster in th a! th e renewal " f stoc ks has to be financed al rapidly rising
economic agents holdin g mon et ar y reserves to thi s form of credit , th e rise

in inter est rate s led to th e build-up of an int ernati on al tower of debts in th e
prices. This again inflates de mand , by adding spe culative purchases, on th e

expec ta tio n of a further rise in pr ices, to pr ecautionary purchases to guard
against a lack of supplies. Commodity spec ulation spreads across th e whole
co urse of ' 9 ~ 9 .
mon ey market , with dealers see king to gel sho rt-te rm co mmercial credits
brought abo ut a genera l imbalance on all markets. Debt instabilit y was at
discounted or guara nteed in bank mon ey . Sho rt-term inter est rates rapidly
its height . The initi al imbalance was imm ensely augmented , and became a
rise , pr eceded by th e red iscount rate of th e central bank, which atte mpts to
genera l tension felt acute ly by all capitalists. The banking sys te m

supported a pyr amid of deb ts repr esenting commitments which it had
restr ain bank refinancing. Al th e same tim e un even indu strial de velopment
creates artificial differe nces in th e appare n t financial results of firms, which
are realized only on credit . These differences favour spec ulative gains on
th e financial mar ket . One sec tion of disposable mon et ar y resour ces is
distr acted frem producti ve employment and fuels spec ulation in stoc ks.
At th e peak of th e spec ulative boo m , th e runaway mom entum of credit
bec ome impossible to settle. The turn from spec ulative boo m to financial
panic was th er efore necessaril y bruta l. It was pr ecipitated by th e genera l
sca rc ity of liqui dit y , give n th e requirements of settling on-sight credits,
which th e banks were un able to exte nd further forward as th e impossibilit y
own , and pr oves ever more attractive to mon ey capital, which only
of co nverting credits int o mon ey crystallized over bank mon ey . The final
weeks of th e spec ulative boo m th at pr eceded th e financial panic had
increases the lack ofmon ey for th e financing of prod uction . The movement
of stoc k prices e n th e financial mar ket loses any ce ntact with th e
something unr eal about th em . It had already pr oved diflicult to sell

cemmod ities. In vestments had come to a halt and stocks were rising. All
valorizatio n of pr oductive capital. It gives rise to pur ely spec ulative gains
mon ey reserves had bee n dra wn on , so th at th e bank vaults were empty.
and losses, according to th e way th e financial int ermediari es mount
Curre nt receipts only managed to susta in th e co ntinuity of pr od uction

cyd es than ks to a sec tion of debts being deferre d in tim e . The final weeks of
Financial circ ulation begins to exhibit an auto no mo us movement of its
operations of mer ger or set up fict itiou s companies.

This spec ulative process was particularly dear in th e develop ment of
th e financial markets after
' 9 ~S .
th e spec ulative boo m were thus mar ked by a plateau in econo mic activity.
Savings and investment co mpanies were
But debtors , feeling themselves caught in a trap , tried in eve ry way to get
created and prolifer ated at an extraordinary speed. The nominal value o f
th eir credits to circulate and obtain nominal gains on th e financial market .
'9~9.
Spec ulation thus reached its pea k. In thi s situation , any chance eve nt , eve n
th eir asse ts rose from 10 0 million do llars in ' 9q to 180 0 million in
The pr omote rs of th ese co mpanies launched int o all kinds of mani pulation
an alarmist rumou r , co uld pr ovoke a financial panic .
of th e sav ings entrusted to th em , setting up pyr amids of ho lding companies
Such a panic expresses the violent eruptio n of th e mon et ar y co nstraint

in th e form of a liquidity co nstra int that dislocates th e who le tower of
to be able to display artificial financial pr ofits by th e exchange of shares

contro lled by 'insiders' ." This method of accelera ting the turnover of share
credit . If th e initi al expression of an over-accumulation of capital is
po rtfolios was supplemented by ever more rapid mer ger s between
business eupho ria , financial panic is th e initial expression of a massive
indu st rial firm s. Financial circ ulation acq uired a dy namic all of its own ,
losing any relationship with th e valorization of pr od uctive capital. The Dow
devalorization. All creditors try to obtain imm ediate payment of
Jones index for shares quoted on th e New York Stoc k Exchange doub led
and bank insolvency spreads in a chain reaction . Even if th e sta te decr ees
between th e beginning of
'9~7
and th e beginning of
'9~9,
outstanding debts. The first bank failures cast suspicion on all bank mon ey ,
rising by a
th e pr ovisional suspension of gold payment , it is too late for th e central
further 50 % again in th e first eight months of th at yea r. Bank loans in
bank to exert its funct ion oflender oflast resor t on th e sca le required , all
support of share dealings rose from

7.8 billion in Octo ber
'9~9.
~.S
'9~7
to
th e more so since th e mod e of articulation of th e credit sys tem and th e
This very short-te rm debt was the bas is of a
mon et ar y sys te m rend er it impossible . Financial panic , th er efore , as th e
rise in int er est rates from 5%to
~o%
billion do llars in January
- rates which co uld only be paid by
29 I 48
initial phase of a depr ession , unleashes a destruction of one section of
30 I 4 8
- - - - - - - - - - - - - - - - - ---<o . - - - - -
-'
(1
credits, a callapse of stoc k quo ta tio ns, more or less widespread bankruptcy
mon ey at th e worst possible mom ent , which in th e mon et ar y sys tem of th e
of financial institutions, the ruin of a significant num ber of spec ulato rs and
th e bruta l co ntraction of incom es de rived from sav ings. The subs equent
result is a decline in eifective demand on th e consumer mar kets, on la p of a
financial situatio n th a! has already very mu ch de teriora ted fur th e firms
involved . This fal! in demand seIs un der way a chain reaction of
cancellations of a rders and atte mpts to dispose of stocks which spreads
tim e co uld not be co mpensated by an issue of central bank mon ey with
upst ream , amplifying as it goes. The a ne co ncern of firms is now to avoid
enfur ced currency .

These disruptive furces unl eashed a spira l movement , with falling levels
of stocks chasing th e red uction in effective de mand , and un employm ent
rising sharply. This spira l co ntinued so lon g as firms fuund no th reshold of
resistance . This threshold was a level of pr od uction where by co mpression
bankruptcy, to spin out settle ment of debts as lon g as possible, and if
of costs and red uction of activ ity firms co uld achieve a co mbination of
expend iture flows and current receipts capable of genera ting a gross cash
feasible to co nsolidate th em and recr eate reserves.
flow again, making it possible to red uce sho rt-te rm debt.
The financial panic th at inaugur at ed th e Great Depression bega n in th e

United Sta tes on Octo ber
~~nd, ' 9 ~ 9 . ~'Iithin
th ree weeks, the Dow Jones
In th e co urse of th e Great Depression, thi s phenom enon was

exce ptio nally pro nounced , since new waves of massive devalor ization of
index had fallen from 3~7 to ' 99. Shares in financial co ncern s became
unsaleable . More th an half th ese co mpanies disappear ed within a few
credits and insolvency of financial institution s showed success ive levels of
weeks, with sav ers losing sorne 90% of the nominal value of their supposed
asse ts. The financial crisis had fuur imm ediat e co nsequences whose chain
inst ance , co uld not sta nd up to th e incon vertibilit y of sterling, which was
effects played a major ro le in propagating th e econo mic depression:

(1) A savage red uction in co nsumer expenditure fullowing from th e
losses experienced by th e higher incom e categories. Out of a disposable
incom e of
8~.S
billion do llars, th e financial collapse alone meant a fall of 4
pro visional resistance to be unst able . The th reshold reached in ' 93', fur
itself a respo nse to th e int ensificat ion of th e int ernati on al financial crisis
th at fullowed th e bankruptcy of th e major credit institution of Centra l
Euro pe . The financial crisis in th e United Sta tes increased in severity to a
po int where th e most solid banks in th e major financial centres were
th reat ened by th e massive withdrawal of th e reserves deposited with them
by th e weaker banks. The situatio n deteriora te d so dangero usly from
billion in expend iture .

( ~)
A pr ecipitous fall in indu strial investment due to the collapse of

effective de mand and fur financial reasons. Gross capital furmation (gro ss
December ' 9 3 ~ onwards that on 6th Marc h, ' 933, th e pr esident of th e

Unite d Sta tes ordered all banks to dose. Emer gency measures were hastily
investment and variation in stocks ) decreased from 16 billion dollars in
taken by th e Congress, autho rizing th e central bank to advance funds to
'9~9
th ose banks th at furmed part of th e Feder al Reser ve sys tem in exc hange fur
a vas t spec tr um of stocks. The banks were authorized to open th eir
to 10 billion in ' 930 , 7 billion in ' 93', to fall below 1 billion in
'93~
and ' 933.

(3) A drastic co ntraction of credit and th e collapse of bank asse ts, as
credits became irrecover able at th e mom ent when deposito rs str uggled to
co unters again after th eir assets had been scrutinized. In J une ' 933, public
withdraw th eir assets in mon ey . Since th e banks were very greatly indebt ed
co nfidence in the ba nking sys te m bega n to build up again, once all banks
who were mem ber s of th e Feder al Reser ve sys tem had th eir deposits
to one another, th e result was severa l waves of bankruptcy which reacted
co mpulsorily insured .
imm ediat ely on privat e co nsumption and investment expenditures.

(4) Losses and flight s of fureign capital which led to a de te riora tion in
th e balance of payments. American insolvency vis-a-vis fureign creditors
genera ted in return a co ntraction of American exports and dislocate d th e
int ernati on al payments sys tem. On top of thi s, th e red uction in fureign
asse ts th at fullowed th e de te riora tion in th e balance of payments and the
settlement of sho rt-term debts pro voked a co ntraction in th e quantity of
1 , THE OVER-ACCUM ULAT ION OF CAPITAL -
31 1 4 8
The deepening of th e financial crisis had a disastro us effect on

pr oduction and exc hange. In this phase , the devalorizatio n of capital too k
th e furm of th e definitive failure to sell one po rtia n of product ion , which
was physically des troyed, and th e sale of th e remainde r at red uced pr ices,
often below th e long-te rm costs of pr od uction obtaining befure th e crisis.
Ever ything happened as if firms had to buy th eir own pr od ucts in order to
pay th e expend itures involved in th eir product ion . These product s were
32 I 4 8
- - - - - - - - - - - - - - - - - ---<o . - - - - -
-'
(1
refurm of the mon et ar y sys tem and finan cial int ermediari es. The two major
no! socially va lida ted and firms had to absorb th eir pri vat e oosts, leadin g
to operating losses. One way in which th ese losses were finan ced was by
legislati ve charters of th e latter were th e Securities Exch an ge Act of ' 934,
suspending th e renewal of plant and equipment, which spread th e
which regulated finan cial circ ulation , and th e Banking Act of ' 935, which
devalor ization to fixed capital.

~'Ie have already not ed th e virtual disappeara nce of gross investment , in
" ther words th e suspe nsion of any renewal of th e means of pr od uction . In
three co nsecutive yea rs net pro fits gave way to losses fur th e indu st rial
increased th e po wers of th e Feder al Reserve Board, after the establishme nt
1~.8%
of enfur ced currency , and gave it th e inst ruments needed to co nduct

mon et ar y poli cy .
But th ese qualita tive changes were only th e bas ic co nditions fur
in ' 929 to 7.2 %in
canalizing the dass s tr uggle int o furms capable of creating a new regime of
' 930 , th en to 3.5%and 1.3%in th e two fullowing yea rs. Cash flow was only
resumed al a level of activ ity co mpatible with the maintenance of th e
regular accumulation. They were not as suc h pr oofs th at suc h a regime was
already established. In fact , th e depr ession had pr ofuu nd ly alte red th e
exchange-value of th e capital stoc k at ne w pr ices de pr essed by fuur yea rs
distribu tion of tot al incom e to th e detriment of th e capitalist dass, and th e
of de d ine and after th e de finitive des truc tion of one sec tio n of th e mean s of
pr od uction . The co rrespo nding flow of gross investment was so low th at
upsurge of th e labour movement had co nsolidated thi s shift. Between ' 933
sec to r as a whole . The gross rate of pro fit fel! from
firms bega n to build up liqui diti es reflected in rates of self-fina ncing of

3~ 0 %
in ' 9 3 ~ , sorne ~3 0 % in ' 933 and 160 % in ' 934. The adjustment in
nomin al pr ices and wages was co mpatible with the table give n at th e end of
Cha pter 3. A fan in prices at an annual rate of 6% be tween ' 9 ~ 9 and ' 9 3 ~
was accompa nied by a fan in nomin al wages at a so me wha t slower rate ,
and ' 937 th e bas ic nominal wage ro se by 41%, with th e result th at tot al net
pro fits after tax es were still 43 %lower in ' 937 th an in ' 9 ~ 9 . New str uc tura l
furms had to be instituted to regularize th e expansion of a new long-te rm
social de ma nd which would support new relation s of exc ha nge in place of
th ose th at th e Creat Depression had dislodged. Now suc h an expa nsion was
pe r yea r. But th e
not possible so long as th e capitalist dass had not managed to redress th e

division be tween wages and pro fits , by ac hiev ing a significant increase in
dedine in th e tot al wages as a result of th e fan in working hour s and
th e rate of surplus-va lue. This is why th e sec ond half of the ' 930S was a
massive red und an cies led to an oflicial rate of une mployme nt of ~S % of th e
pe riod of tran sfurm at ion in th e organization ofl abo ur far more th an one of
ac tive po pulation in ' 933.
an expa nsion in pr oductive capacity . In ' 937 , fur inst an ce , appa re nt
with th e result th at real hou rly wages increased at
~%
It is impo rt ant to grasp th at a resolution of th e finan cial crisis is
insuflicient by itself to create a new co mpatibility be tween the

macro st ructure of pr od uction and th e distr ibu tion of tot al incom e capable
of launchin g a new cyd e of accumulation. This resolution repr esents a
mom ent in th e soc ial crisis at which dass co nfrontations can no longer be
labour pr od uctivity was 15%ab ove th at of ' 9 ~ 9 , ev en though th e volume

of non-durable goods co nsumed was only 10% higher , while th e
co nsumption of durable goods was still 6% below th e
'9~9
figur e , hou sin g
co nstruction 40 %below and fact ory co nstruction 50 %below. The peak of

recove ry in ' 937 still saw 7.5 million une mployed , and in 1938- 39 a new
recession set in . It would be a va in task to speculate by what paths th e
canalized by th e pr eviou s struc tura l furms, and give rise to a pr oc ess of

soc ial creation which may be pro mpted by shifts in po litical furces, as with
regime of int en sive accumulation might have been established if th e
th e New Dea!' Suc h dass str uggles can th en gene ra te, in a po litical and
Second
ideological d ima te th at doos not th reat en capitalism itself, those major

tran sfurm ati ons in th e soc ial organization of labour which alone can
th at th er e is no auto ma tic mech ani sm of escape from a genera l crisis of th e
~'Iorld ~'Iar
had not intervened . ~'Ihat is impo rt ant is to und erstand
regime of accumulation.
pro vide th e bas is fur th e co nditions of a new and lasting accumulatio n.

In the United Sta tes, th e two major tran sfurmat ion s involved th e
creation of new struc tura l fur ms fur regulating th e nominal refere nce wage
2 . The Pro"..ss o In fl atio n
on th e one han d , and th e mon et ar y expression of th e working hour on the

other . These were th e establishment of co nective wage ba rga ining and th e
The proc ess of inflat ion is th e fur m taken by th e finan cial crisis under th e
regime of pr ed ominant1y int en sive accumulation established after th e New
" THE OVER-ACCUM ULAT IO N OF CA PITA L -
33 I 48
34 I 4 8
- - - - - - - - - - - - - - - - - ---<o . - - - - -
-,
A THEOR'f OF CAPITALlST REGUlATION
0...1. _ hen lb.. mOlletuy constuint ;. u pr8SS4d .os Ibe form.otion of ..

n.>liorW molley Wilh .... en~ CiJl'NnCY. Th.. theoretical foun d.otion. of
infLluon He thus th.. SoUD<l u those o 1in.o.nci.ll cns;,s. Th.. proc<!SS of
<nfLo.non \S ,Jso .an <!Xpr<!SSlOU of lh. ovl"..lCCU.lIluLation o uptt.u.
s.qUll<'<lS o th-e 'dassiui' fiD.llCW CIlSIS c,w bo d..tocti!d In ,l. 'i<lt Ir
d..JpLoys C<!rtaln ongm.al charKtfllSllCS. IklI: th-e lNst o f th-. \S th.it tb.
criN iI ..t e ne<! fa- less no\ent y&t m lKh ll>Ofe protractecl In tlme: Ir
mOllopohs! ic compehlion respollJible for mflalion. " 11 is lrue that

IIlOIlopohsttc compelllion de/inel certarn ",L111onS betw""n ..ulonolJ101U
C..pil.als thal M e indtspenso.ble for Ihe ccheecn o !he regtrne o mleIlSlve
accumulatton. Bul!hese ~L111onS Me rhellU'"lv,"" det"rminood by !he mode
of i.n'..r<lclton betw;o.en !h.. two departmenrs of productton, which
rom !h.. format>cn ollld d.....lopment o f ..
IlOrm
.ms<oI
o f soci.al consumption
embodied in !he colldlt>olll o prodUc!>Oll. Th.. roou o f cr eepmg mflatton

!herefore only be foun d by rtudymg !he fonn.o.lKm o!he ge" .....al r..te ot
.~ lo becom.. endemic " lb fecurrfllll
Colll
~l .... tion
of price nses, .lId .lJl

lnOlley. Tb__ ongmal dur..etmstlcs .-ndently reble lo th .. specic
profil _hen !he orgolIllC exchang.. betw..." Ih.. ,,"o departmenl' are
determmed by !he proodOlDlll.lnl Importolllce of ",L1l1ve surpius-v.alu....nd ..
cob<lSion o th e regtDle of llccumulu10ll
.AS
concottUlollll pe'l"'lIu1 tr ..nsfor1n.atton of lhe mocie of COllSUIIIptton.
of 1M coh_on that th.. schoom.ll of

e >o:p.o.nd..d repro<iuct:lon of Clptt.l1 in .tI noTIlU1 opor.. on, that comp.otlble
wjlh lh.. format:lo n e f .. gen..u.1 nI.. o pro fil , involv"",, CI'OOpmg m llation.
Tb. fact tlLat it is possibl.. to spea k of inl\.ltio n in .. Latent or .. ndernic .tale,
aS a c haracteri. tic o f lh.. r"1ulatio n ;Ite lf, i. d ue to the relation.hips
bet....... lhe crOOi! ..nd monetary 'y"teml lhrough which lhe gener al
er.opmg mflallon expi.uns Ihe ngtd.ly of pnces und"r monopo1lS1ic
&quivalenl is formed in lh e nalional space define<! by lhe legal sanclion
creale d ex nihilo by th e banl:s creo ting Ocredit on th emselves which th ey
which enforces lhe currency of lhe central mon ey. The arliculalion of lhi s
permissive co ndilion wilh slructural ccnditions is whal pr od uces cre eping
pr oject into prod uction by adv ances rhey make to the capitalist pr oducers .
This mon ey is inte grat ed into po tential pur chas ing po..er as soo n as ..ages
inl1ali on. The laller is lh e resulta nt of lh e functi oning of lh e ..hole series of
are paid . This purchasing pcwe r is co nfirme<! by th e ex penditure into
struclural forms lhal regulate the reg ime of pre<!ominant!y int ensive
which Ihe integrate<! mon ey succenively circ ulat... the di/feren l fracti on s
accumulalion .
Conlrary lo Ihe customarily accepred opinion, il is nol lhe process of
of soci al inco me . ~'hen aHIhis income;' spent, Ih.. purcha sing JlO""er of lhe
cumulaliv.. inllalion Ihal lS hard lO un<i.orstand, bul ralher Ihe permanenl
_ how !h.. ove r-.a=ulal1OU of c"p1'~ ubs !h.. lOrm o .an mflation.ary
finns Colll Ihen cancel lhelT cr ed'll by returning lhe lokens of banl: IDon")',
now d..pn ved of purchasing power, 10 Ihe so.m" poIllI al _hich Ihese were
isfued. Th.. g"n"r~ "'{Ulv.o.lenl ;' rhereror. consIItuted m a lempor~ CU'I:'II11
of form.o.tton and t'i!<1hu1Km of socW rncom". Tbis =cuil is!he unity of
p~.
C<lpiulist production o.nd arcuJ..tton, throllgh _hich !h" labour spont in
phnes of d"""ler..tion lid

irr.,;. llbJ,. erD5Ion of l b.. ""tioul
fOT<hsm. FOl .1 IS
Ih.ol . "
h.ove ,..,f.,.".oed lO
m th .. ILlture
cr e;,prng mflal10U U .In OfIanic chal".lcleristic oflhe regi.m.. of

pr.oodommantly mleIlSlve accumulallOn. 0nCcn lS m.uufest ed III
olll ....demic ns<! III pnces despit... m.arl:ed growth in !he "pPMelIl
prodUCllVlty o L1bour. Bul IhlS 11M;' nellher ge" er .al nor cumulall".
Tolbn by !hemselves, howev'" , If\lch ObMrv"lions Colll onIy bemisl...dmg.
U mflatton IS identtfiood ..,Ih lIS IUlIsllc.al '""r"<ISSl.OII, ollld ..lIenllOll IS
focuDod 011 !he infleXlbihly of in<hvu:hul priC<Is or ..ver..ges of priceI for

d,/f..r..nl <>llegon es o commoci'MI, rh. in"V1toble I'S'SUlI IS lo m.al:e
2. THE P ~OCESS
os INFl ATION
_ 35 I 48
coml"'ttllon. Bul!hese pric<ol do tlOI explain cr...pmg mflallon.

N.. have d" tinoo. lllflalion U rhe loss of v~u.. o!h" g"n"r~ "'{ui"..I..nr
produc.odby o weakening o f cornrnooiry ci rc uL1lion. It i.s nOO!>SSary nOW ro
exploin lhis c rucial po lllr
1Il
mOre detail. Unde r mooern c apitalism obanl:
money bears lhe sum tot al of the soc iol inco me . Ne rnow that mon ey is
mon")' iu bolishe<!. 11 ISIhen disllllegu led wilh il. relurn lo Ihe firms. The
producl>on is soci.ally va1Klated . Thll vWd.o.tion i.s integral, and the socW
p<lT'Chnrng JlO""er o!he mOlle)' ;. pr _rve<! _ben !h.. flow e f meney tb.it ;.
inlegr<lted ;os !he bearer of newl)' crNIe<! incom" ,,:uctly purchases _hal in
ocnuno<bty crr=lation eorrespolldl lO lbe v.al"" <ldde<! by !he new socW
L1bour. In tlus case Ibe reL1lwnllllP 111 = W /VA IS ...tis:6e<! ..,lbouI <lD)'
~"'"'"ttc
incr.....,.. m 111.
Sborr-Ierm fluctuallons milY MtH from I..mpor~ gaps in !he oeffecIIve
rNliulion of !h" v~ues anlicip.lred by rhe <>lpil.alms, whil,,!he banb llave
J6 I 4 8
-'
(1
daily to mee! th e condition of "onvertibility of th eir monies. An exte nsion

of th e monetar y circ uit, which is made up of th e intertwining of a multit ude
contradiction is dear enough: th e adapta tion is made by raising th e

mon et ar y expression of th e abs trac t wor king hour , i.e. by lowering th e
of cirauils created separa tely, may delay th e disintegra tion of th e money
value of money . This adapta tion is only poss ible owing to th e unificati on of
and oblige th e banks to receive a temporar y and supplementa ry injecti on
th e different bank monies int o a single nat ion al mon ey which th e central
of central money . Bu! if th e full realization of tot al income is no!
money estab lishes on th e money mar ket .
threat ened , th ese fluctuat ions will balance out and have no implicat ions fur
th e value of mon ey . They are expressed in th e oscillations of th e genera l
pr lee level over th e "ourse of th e yea r th a! can always be not ed . In th e
same way , if a paliey of discontinuous revision of th e nominal wage is
pr actised (fur example ste p by ste p rises in th e legal minimum wage), a
~'Ie
have now given th e logical solution to th e pro blem of creeping

inflat ion . The ques tion which is th en immediat ely raised is whether , under
th e regime of int ensive accumulation, th er e exists a characteristic of th e
schema of expanded repr od uction of capital th at genera tes thi s addition of
sudden change eccurs in th e mon et ar y f10w int egrat ed int o income , while
mon ey in th e course of th e circuit of income. The answer to thi s is pos itive,

and we have alrea dy pro vided it in estab lishing th e structura l conditions of
th e social labour th at th e soc iety spends remains unchanged . The
inflat ion . ~'Ie sho wed th at relative surplus-va lue depends on an int egrati on
mon et ar y expression of th e working hour rises discr etely , and after sorne
f1uctuati on it stab ilizes at a new level.
of th e two departments of prod uction which sprea ds th e transfurm ati ons in
The pro blem of creeping inflati on can now be defined in th e fullowing

way . How is it poss ible fur th er e to be a sys te matic erosion in th e value of
th e furces of prod uction of Department I in such a way as to develop th e

socia l norm of mass consumption. This lin1:age between th e two
money while th e requirement of a full realization of newly crea ted value is
departments involves a permanent devalor ization of fixed capital, which is

incorporat ed in th e furmation of new capital. This is realized by th e
still satisfied? Let us not e th at th e furmation of tot al income and its
creation of a deprec iation allowance, obviously adva nce d on credit since it
realization by social expenditure are contained in th e schema of th e

expanded repr oduction of capital. The value newly created can only be
is incorporat ed into current expenditure, which doos not correspond to
realized if th e sum tot al of pr oduction conditions is renewed by organic
constant capital are devalorized by obsolescence. But thi s depreciation

allowance ente rs th e circ uit of income to purchase newly created means of
exchanges between th e two departments of pr od uction. Now th ese latter

also involve th e realization of constant capital, which obviously takes place
th rough mon et ar y exchange, or more pr ecisely th rough exchange on
credit mon etized by th e banking sys te m. The question raised above can
now admit of only one logical response. The full realization of th e value
th e realization of any past labour , since th e cor responding elements of
pr oduction .
In nati on al accounting, matter s can be pr esented in th e fullowing way .
The money int egrat ed into social purchasing power by th e furmation of
newly created can be compatible with a sys te matic and permanent erosion
income is such th at m = VP / VA. But thi s social purcha sing power must be
confirmed by expenditure. Now a f10w of deprec iation allowances F is
of th e nat ion al mon ey only if one sec tion of th e monet ar y f10w which
added on fur purchasing th e pr oduct of the same living labour VA. The
should be devoted to th e realization of constant capital goes instead to
expenditure of income thus involves a ded ine in th e value of mon ey
sustain th e expenditure of tot al income. The money that buys the products
defined by m' = VP + F/ VA > m . But th e inflexibilit y of th e nominal

reference wage is essential fur th e continuous develop ment of th e norm of
ofsociety's new labour is thus p erp etually gre ater than that integrat ed in
the fo rmation of income. Since th e f10w of int egrat ed money must
social consumption. The new cyd e of income furmation consequently

includes a wage payment th at int egrat es th e new quantity m' . The pr ecess
necessaril y equal th e reflux of disintegra ted money , given that both derive
from th e same bank cre dit which must be cancelled after th e income is
is repe ated on thi s bas is, leading to m" > m' and so on. The slippage in th e
realized , th e addition in th e course of th e circ uit of income of a mon et ar y

f10w derived from th e realization of constant capital bea rs on th e same
value of th e national money can be continuo us, since th e furmation of th e

Vla a
nominal reference wage int egrat es th e magnitudes m, m', m"
pr oduct of labour and has to realize th e same value. The solution to this
pr ecedure of temporal lags, as we showed in Chapte r 3. All th e structura l
2. THE PROCESS OF INFLATI ON -
37 I 4 8
38 I 4 8
- - - - - - - - - - - - - - - - - - - - - - <0 ) - - - - - - -
-'
(1
forms are thus involved in creeping inflat ion as an ongomg pr ecess:

collective bargaining which plans th e development of th e nominal
more hazar dou s, th e central bank effects a pseud o-social valida tion of
incom e . This is why th e cumulative debt tot al th at develops in thi s phase of
refer ence wage ; th e centralization of capital in indu stry and finance ,

permitting th e formation of depreciation allowances as th e co unterpart of
financial crisis, gro wing far mor e rapid ly th an th e exchange-value of th e
an antic ipated obsolescence ; th e artic ulatio n of th e credit and mon et ar y

sys te ms th a! autho rizes a tot al demate rialization of mon ey within th e
accelera ted loss of value of th e nat ion al mon ey .
nati on al ter rit ory . The clase depende nce of th e accelera te d erosion of
mon ey on th e accelera te d devalorization of capital, not ed earlier in th e
co mbination of a rise in th e genera l price level and an inerease of
amo rtization pro vision s within cash flow, follows directly from th e
tot al pr od uct and bec oming eve r mor e unst able , is expressed in an
The co ncept of an unstable debt stru cture is central to th e inflat ion ar y
precess. It is impo rt ant to un der st and how thi s arises. Contra ry to th e
situation in th e ' 9 ~ os , the first sympto ms of th e new organic crisis of
capitalism were not th e re sult of a limit on th e expansion of co nsumer
mar ket s. They showed th emselves in th e furm of a lon g-term falt ering in th e
pr eced ing analysis. The rate of mon et ar y erosion accelera tes or

decelerates according to whether th e ratio Fj VP rises or declines - th e
rate of gro wth of appare nt labour producti vit y , and a halt in th e fall in real
social wage costs. As our investi gati on of th e structura l co nditions of
latter depend ing on th e pace at which real social wage costs decline, in
inflat ion has shown , th ese indicat ors were th e sympto ms of a crisis of
other wor ds th e relative ease of pr od uction of relative surplus-va lue.
For dism - whereas th e outcome of th e Creat Depression was pr ecisely th e
(b) Cumulative infl ation and its limits . The transiti on from creeping to
expansion of For dism . In th e crisis that opened in 1966- 67, th e
cumulative inflat ion doos not present any th eoreti cal difliculty after our
inflexi bilit y of th e no rm of co nsumption furms part of th e stability of th e

co nditions of product ion . It is guara nteed by th e structura l furm in which
analysis of th e sequences of a financial crisis. It is suflicient to apply th e

results obtained from th e co ncept of over-accumulation of capital to th e
th e wage relation is repr od uced . This furm imposes both th e relatively
structura l co nditions of th e regime of int ensive accumulation.
~'Ie
do not
int end her e to give a detailed descr iption of th e pr ocess of inflati on . ~'Ie
shall simply not e th e differences between thi s type of financial crisis and
th e 'classical' financial crisis presented above, by co mparing th e
characteristic features of th e Creat Depression and th e co ntempo rary crisis
in th e Unite d Sta tes.
The financial crisis opens in th e same way , with a phase of business
eupho ria exte nded int o a spec ulative boo m when un even development
eccurs in th e exc hanges between th e two de partments of production , to th e
po int of making th e effective realization of th e tot al pr oduct no lon ger
possible. This realization takes place on credit . But in th e case we are
co ncern ed with her e , th e precess of inflat ion is more advance d and more
pro longed because bank mon ey never breaks free from th e mon et ar y
co nstraint to be transfurm ed int o mer e credits which will later be bruta lly
demonetized . On th e co ntrary, it is th e mon et ar y co nstraint th at weakens,
because th e central bank can in all circ umstances ensure th e unity of th e
bank mo nies by issuing its own mon ey . By do ing so in a situation in which
bank mon ey is th e bea re r of assignments of future values th at are eve r
39 I 4 8
regular advance of nominal wages and a collective reaction against th e

exte nsion of un em ploym ent as soo n as it sta rts to jeop ard ize the sta nda rd
mod e of famil y co nsumption . Thus , co ntrary to th e
'9~S- ~9
period , th e
second half of th e 1960s was characterized by a movement in th e division

between pro fits and wages to th e detriment of th e capitalist class. This
development is illust rat ed by Diagra ms 10 and
1~ .
The red uction of profit mar gins and net rates of profit , in a situation in
which any bruta l co ntractio n of the wage bill is ruled out, tends to pro long
th e initi al phase of th e crisis, th at of business eupho ria , because th e
capitalist reaction to th e situation involves th e furmation of new capital as
th e decisive inst rument of co mpetition in th e regime of int ensive
accumulation. The furmation of new capital see ks to re-establish th e rate of
surplus-va lue by genera ting changes in th e co nditions of pr od uction of
which one essential co mpo nent is th e int ensificat ion of technological
obsolescence . This means th at th e furmation of new capital must involve a
co nsiderable transfer of one po rtio n of tot al pro fit th rough th e mod aliti es
of co mpetition . This transfer is all th e more diflicult to effect inasmuch as
th e increase in tot al pro fit is sharply restr ained by th e crisis of pr od uctivity
in th ose sec to rs which were pr eviou sly th e mot or s of gro wth. In th ese
40 I 4 8
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-'
(1
secto rs the valorization of th e capital invested , altho ugh de c1ining, is still

susta ined by th e rigidit y of social demand to a po int where it obstructs th e
repr esents an attempt to sa lve th e conflict mention ed above between th e

two tim e dimensions. This solution, however , is the source of cre eping
th e new organization " f labour . The inert mass " f pas! labour to be
inflat ion . ~'Ie have seen, moreover , how th e share of th ese depr eciation
allowances in cash flow increases at tim es when th e conflict is exacerbated.
valorized represen!s an obstacle to th e co nquest " f new domains of
Even if th e fall in th e rate of cash flow can be restr ained in thi s way , th e
valorizatio n by an evolutio n of th e division " f labour . This is th e

fundamental meaning of over-accumulation of capital. It expr esses th e fae!
furmation of th ese mon et ar y resour ces in the firm is still conditioned by

past investments. The gro wth in depr eciation allowances, setting aside th e
th a! th e spec ific rhythm of th e capitalist relation of pr od uction associate d

with th e recovery of th e capital invested co mes int o violen! conflict with
discontinuities permitted by changes in legislat ion , is subjec t to an inertia
centralization of th e mon ey capitals need ed fur th e investm ents th a! bea r
th e living labou r-tim e " f th e society, which crea tes th e new conditions of
due to th e age composition of fixed capital. It can be accelera ted by faster

renewal only to th e exte nt th at such renewal increases th e weight of recent
th e future. As th e econo mic furms of capitalist social relations indu ce a
investm ents. But thi s increases the demand fur th e furmation of new
transfurm ati on of th e constraints imposed on th e space of value in th e field
capital, a flow relation , far more rapidly th an it modifies th e temporal

composition of th e invested capital stock on which th e increase in
of mon et ar y magnitudes, th e conflict o f th ese two tim e dimensions is

expressed in a dysfunctioning of th e financial markets. A per sistent
sca rc ity of th e financial resources ava ilable fur new capital furmation
amortizatio n pro visions depends. This is why th e more amortization
reflects th e incom pati bilit y between th e requirements fur th e financing of
mon et ar y cost of futur e investments to be realized . An eve r grea te r share
accumulation and th e reaction of financial circ ulation to th e over-
of the financing of capital furmation has to abso rb price rises fur plant and
accumulation of capital.
~'Ie have seen how inflat ion is defined as a decline in th e monet ar y
equipment, and thi s share must be cover ed by credit . The gro wth in cash
flow on th e bas is of th e devalor ization of capital thus genera tes a
expression of th e abs trac t working hour which is engendere d by the
cumulative increase in debt, th e central fulcrum of th e financial conditions

of inflati on .
The increase in debt is more rapid th an that of cash flow. For eac h dollar
furmation of circulating mon et ar y funds th at do not furm part of th e

int egrat ion of mon ey in tot al net income b ut are added on to thi s incom e to
purchase th e net product newly created by social labour . The
pro visions increase , th e more th ey pr ecipitate a rapid increase in th e
of cash flow, firms' net annual deb t carne to 0 .65 dollars in 1965. In 1969,
dysfunctioning of the financial markets leads to a rapid gro wth in th ese
under the first push of cumulative inflat ion , it rose to 0 .95 dollars. After
funds relative to th e increase in tot al net incom e. The consequence is an
falling to 0 .7 5 in th e recession of ' 97 0 - 7' , th e ratio adva nce d to 1.60 in
accelera ted loss of mon ey value, as the furmal expression of cumulative
' 97 4. These stee p increases, as soo n as new capital furmation is on the rise ,
inflation .
The anarc hic pr oliferation of monet ar y funds which are not th e result of
expr ess th e end uring lack of ava ilable mon ey capital fur investm ent , given
future uncertainties. An eifect of th e discr epancy between th e
th e realization of incom e - but which still finance th e furmation of new
macrostructure of pr od uction and th e distr ibution of tot al income , th e
capital, pr ess on th e pr od uction of pr od uc er goods, inflate th e capital to be

valorized and thus increase its nominal value - is th e result of severa l
sca rc ity of ava ilable funds fur th e transfurm at ion of th e conditions of
pr ocesses. The first of th ese , which we have alrea dy investigated , is the

genera tion of reserve funds th rou gh a gro wth in amortization allowances
eno rmo us mass of capital alrea dy invested . This sca rcity seriously alte rs
and a reduction in th e appare nt economic life of plant and equipment. The

financing of new investm ent in thi s way is not th e result of an accumulation
pr oduction is aggravated by th e inert constraint of th e valorization of th e

th e alloca tive funct ion of th e financial markets, by increasing th e threat of
financial crisis - in other words a risk whose scope and pro bability of
occ urrence can by its very nature not be estimated. The reaction of the big
of pr ofit but rather of an incor porat ion int o the costs of current
financial int ermediari es th at agglomera te sav ings is to resor t to
exploitation of th e devalor ization of capital previously invested . It thus
quantita tive rationing and to compensate fur th e rise in risks by an increase
41 1 4 8
42 I 4 8
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-'
(1
relationship between tot al incom e and tot al expend itu re . The more acute
in pro fit mar gins. The result is a distor tion of th e range of int er est rates
away from th e hierar ch y of real return s th a! guara ntees a balance d gro wth
th e co nflict between th e change in th e division ofl abo ur needed fur pr esent
of asse ls, and a great inst abilit y of return s th a! upset s th e calculations of
expend itu re of abs tract labour to yield a gro wing rate of surplus-va lue, and
savers in relation to their liquidit y pr eference and the individual risks they
agree to run o This distor tion and inst abilit y leads to contradictory
movements of pr ecaution ary and spec ulative behav iour which sweep
th e co mpetitive need to safeguard spaces of valorization fur capitals
th rough financial circ ulation and aggravate every imbalance . On th e a rre
banking sys tem.

An unstable debt structure now furms in th e relationship between banks
hand , th e mass of savers see th eir asse ls devalued, th e captives of fixed

nominal rate s of interes t which do no! respo nd to th e pro gre.. of inflat ion .
On th e " ther hand , th ose dea lers who have co ncentrated large amo unts of
capital at th eir disposal turn away from pr od uctive investments to engage
in operations that genera te rapid nomin al gains. A stoc k market fever
results, analogo us in pr incipIe to th e eupho ria of th e late ' 9 ~ os , but less
damaging owing to th e regulation now in furce . This is what led to the wave
of co nglomerate mer ger s of 1967 - 68 and th e spec ulative co nstruction
rapid ly gro wing in mon et ar y value, th e more int ense th e need fur bank
mon ey . The credit pyr amid th en rests eve r mor e on th e indebt edn ess of the
and indu st rial firms. Shifting furward int o th e future th e co nflict between
th e valorization of past labou r and th e creation of new pr oductive furces by
society 's livin g labour , credit reinfur ces thi s co nflict by modi fying th e
co mposition of asse ts held by pr ivate agents. Cre dit renewed on a rapidly
gro wing sca le and susta ined ever more by th e issue of bank mon ey
co nstrains balance -shee ts eve r mor e severe ly. Between 1964 and ' 974 , th e
non -financial co mpanies as a whole saw th eir ratios of fixed capital to debts
boom of ' 9 7' - 7 ~ .

The insufliciency of cash f10w and th e sho rtc omings of th e stoc k mar ket s
fall by half, with a similar development of liquid asse ts in re lation to short-
give th e banking sys te m a pivotal ro le in th e financing of accumulation and
order to top up reserves th at were stre tc hed by th e expansion of credit .
make mon et ar y creation th e obligatory inst rument fur ensuring th e
This indebt edn ess of th e banks on th e mon ey mar ket has increased far
co ntinuity of pr od uctive pr ocesses. As soo n as the pr ocess of cumulative
more rap idly than th eir asse ts, th e ratio gro wing from
inflati on gets un der way , th e de mand fur bank credit is necessaril y met ,
13.3% in ' 974 . In th ese co nditions, th e furmation of an unst able debt
because it is advantageous fur all th e parties involved . It is so fur th ose

firms fur who m new capital furmation is a weapo n of co mpetition and th e
structure is not th e result of an abs tract nor m th at repr esents th e exte rnal
pr incipal means to reverse th e unfavourable develop ment of the
anticipating its futur e increase when bank mon ey is int egrat ed int o th e
debt structure is a thresh old effe ct generated by the outsta nding

assetliability structure . It plays a pivotal ro le by setting off a ehange of
phase in th e pr ocess of inflat ion . It is at th e origin of th e outbreak of
cumulative inflati on .
For non -financial co mpanies, th e unstable debt structure finds
expre ssion in th e pr ior ity given to th e struggle against deteriora ting
liqui dit y ratios, as th e risk of insolveney pu ts th ese co mpanies at th e merey
of an untowar d hiatus in th e int er eonnect ion of payments and mon et ar y
receipts. Liqu idity sho rtage in turn derives from the overwhelming
pr edominance th at short-te rm debt ass umed in th e co urse of th e
sequential re productio n of th e incom e circ uit oOn th e other hand it doses
inflat ion ar y pr ocess. During thi s pr ocess, th e co ntinuity of pr oduction in a
th e incom e circ uit by an adjustment in its nominal level to resolve th e

antago nism between th e distribution of incom e and the allocation of social
co njuncture of strong de mand leads to deferment of delivery da tes and
distr ibu tion of incom e in a situation of strong de mand oIt is also so fur th e
banks, who see th e opening up of a field of loans favoured by th e
dysfunctioning of th e stoc k mar ket s. The stra ins on th ese mar ket s lead
th em to anticipate a future rise in sho rt-te rm int er est rates, indu cing th em
to offer sho rt-term cr edits th at will rapid ly be repaid . Bank credit fuels th e
inflati on pr ocess in th e two ways we isolated th eoret ically . On th e one
hand , it ratifies th e pr evious dedine in th e mon et ar y expr ession of th e
working hour , by taking into account th e nomin al gro wth in income and
term deb t. The banks now needed to bo rro w ever more liquid funds in
~.3 %
in 1967 to
limit to th e develop ment of debts. It is entirely end ogenous. The unstable
labour between th e two departments of pr oduction th at is expre ssed in th e
antic ipation of pr ice rises in th e elements of cire ulating capital: firms

respo nd with pr ecautionary stoc k-piling. This type of demand incr eases
2. THE PROCESS OF INFLATI ON - 43 I 48
44 I 48
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-'
(1
very rapidly as turnover of capital is accelera te d. The deb t structure

pro ves unst able once th e sho rt-te rm credit needed fur th e antic ipate d
need , th e banks have to borrow bac k th e mon ey draining from th em at very
financing of stoc k co mes cumulatively to surpass th e rate of gro wth in

curren! receipts deriving from th e co nversion of th e stoc k already furmed
bank cre dit, th e banks suffer losses on th e mar ginal reserves which th ey
borrow. They must necessarily then co ntract their creation of money .
int o effective de mand o This phenomenon emerged in th e middle of ' 97 3.
It is thus clea r why th e pr ocess of inflati on doos not just subs titute a
~'Ihile
pr od uction sta rted to stagnate un der th e co mbined eifect " f th e
high rates of int er est .
~'Ihen
these rates are higher than th e base rate fur
regular rate of inflati on fur financial crisis. It leads to financial crisis by its
~'Ihen
decline in household de mand due to th e erosion " f real wages, th e
cumulative character , via th e furmation of unstable debt structures.
pr ecautionary inerease in th e money reserves of firms, and th e bottlenec ks

in certain upstream sec to rs because of th e strong de mand fur int ermediat e
goods, co mpany demand ass umed a clea rly spec ulative as pecto At th e
beginning of ' 97 4, th e ratio of stoc ks to GNP was far higher th an at any
time since th e war , while fixed capital furmation declined with the
disappearance of cash f10w and th e tot al lack of long-te rm funds fur
th ese structures are genera lized to involve th e economy as a who le , th e
impo rt ant to note her e is th at th e entire structure of mod ern capitalism

funct ion s in such a way as to avoid thi s phase degenerating int o financial
bo rro wing, and th e expansion of sho rt-te rm credit bro ught int er est rates
panic . This canno t hap pen witho ut an int erruption of th e deflation pr ocess
on th e mon ey mar ket to a hist oric maximum . In such co nditions th er e is no
of th e debt pyr amid . The econo my thus finds a threshold of resistance at

th e po int at which stocks are exhauste d and short-te rm debt sta rts to be
lon ger any room fur expansionist anticipations. The increase in credit and
mon et ar y f10ws can now only absorb th e gro wing cost of th ose co mmod ity
exc hanges necessar y fur th e co ntinuance of pr od uction cycles. Emer gent
liqui d asse ts are already abso rbed by th e renewal of pr eviou s
co mmitments, which places th e who le econo my in a po te ntial liqui dit y
c n Sl S .
mon et ar y co nstraint asserts itself bruta lly in th e furm of a co nstraint on

liqui dit y . The next phase is one of a deflation in short-te rm debt, similar to
th at desc ribed earlier in connection with th e Great Depression.
~'Ihat
is
co nsolidated ; fur th e banking arra ngements autho rized by co ntempo rary

financial centralization, whose co hesion is guara nteed by th e central bank,
make it possible to avoid a genera l destabilization of th e financial sys tem
which would lead to massive des tructions of fixed capital. In th e severe
recession of ' 97 4- 75 , indu st rial pr od uction fell by 9% in real terms, while
th e pu rchasing po wer of tot al wages fell by 11%. There was indeed a
For th e banks, th e unstable de bt structure now leads to a decline in th eir

pr ofits fullowing har d on th e heels of lar ge inflati on ar y gains, as well as a
deflation of certain indu st rial pri ces which had taken off in th e spec ulative
rapid increase in irrecover able credits. This unfavourable develop ment
boo m , but no genera l deflation. The genera l price level , which had bee n
results from a co mbination of assets, with a certain pro portion imposed by
rising at an annual rate of ' 4%, stabilized after a few oscillations at a new
th e past of credits with a fixed rate of retu rn and repayment da te, and
liabiliti es, now bu rdened with th e need to borrow from day to day gro wing
rate of cre eping inflat ion of th e order of 5.5 to 6% .
liqui d sums on the money market if their credit is to be susta ined. ~'Ihen the
banks have de velop ed th eir activities to a po int where assets with a fixed
pattern of success ive phases of rapid expansion and cumulative inflati on
rate of retu rn can no longer be entire ly financed by low int er est deposits,
th ey begin to finance assets th at are less sensitive to mon ey mar ket
co nditions by resources which are highly sensitive. In th ese co nditions
The operation of th e structura l furms exp lains th e co ntempo rary

on th e one hand , and phases of cre eping inflat ion accompanied by a
stagnation in investment on th e other , and th e lin1:age of th e two by th e
furmation of unst able debt structures succee ded by a deflation of sho rtter m debt. The organic crisis of capitalism co ntinues with th e recu rrence of
th ey can no longer co ntrol th eir pr ofits, which begin to f1uctuat e with
thi s co njunctural patte rn . But between eac h cy cle and th e next th er e is a
int er est rates on th e money market , and are vulnerable to a possible crisis
rise in th e ave rage level of unemp loyment from its low po int in 1969, and
an accelera tion in th e average rate of pr ice increases. The central bank's
of co nfidence . At th e peak of th e spec ulative boo m, th e rise in int er est rates

on th e mon ey market leads large depositors to withdraw th eir deposits and
place th ese in sho rt-term stoc ks. To draw in th e liquid assets which th ey
ro le oflender oflast resor t is decisive in thi s dy namic , as it organizes th e

settlement of bank debts in its own mon ey . The pro blem which remains is
2. THE PROCESS OF INFLATI ON - 45 I 48
46 I 48
- - - - - - - - - - - - - - - - - - - - - {o ) - - - - -
-'
(1
whether lh is recurren! econo mic crisis will genera te new social co nditions
fur ano ther epoch of enduring accumulatio n, or whether , as in th e ' 930S,
th e inter acti on be tween internal imbalan ces and internat ion al disturb an ces
th.t " n.Utu t. th ...d . l ..H U. n . f . "h,U. n , th . 'n"m. , . th .n

... . n . ' tu" u . t" . fo,mf ..lu . " h ',h u . "bt t. th. . .m
t" . In " mn
tu " l" . u , . n . u .
" no."'. 'ntn n . th " 'n " m. l.t. "" '" fo, th "n" . l fo.u ,..l. n " . Th. mulU. H"
, . n " ...u n u l t. un,t . T1" th . " n " u . , . t. m... ' M l ,f ..lu" h,U. n
pro vQked by th e disapp earance of a universal means of sett1ement will end
'm",' ln . t. " " .t th.t 'n"m...n . un' . . ... . n . ' tu". w h.t th. , ,u , t.f 'n"m n
by pr ecipitating a catastro phic ciepression. The phases " f sta bilizatio n in a
... . n . ' tu " 'n.,..t.. , . n.t . mulU. H" Out th . mn Hu fth . m.n. tu . ... ",. ' . n . ft h.
regime " f cre eping inflation certainly shift th e divi. ion be tween wages and
""km. h.u,.
Thu . H , . ' ' ' 'u " th m ' n ,., U.. m.n. tu . " n.tm n t th . t m.n. tu H, . , . 'n
pr ofits to th e advantage of th e capitalist dass. The restor ation of pro fit
",h ' n . Hu U. n. " '''' , u ... It , . n.t . ",''' ' u m.n. tu H, fin u ," , f th .
see ms co nsolidated with eac h succeSSlve cn SlS, thus reversing the
."n.m" t.m th.t " ..t.. th . m.n. tu . " n.tm n t. If m u U,ulu ..t . f , ,u m.h nm
dete rior ation of th e late 1960s. Bu! lhi s re-establishment of co nditions

more favourable to capital has not ye t been suflicient to restore its
pr eviou s po rtfulio pos itions. Debt already incur red co nstantly co ntributes
to maintaining th e sca rci ty of capital fur th e futur e ; hen ee the great
sensitiv ity of th e inflati on ar y pr oc ess to any renewal of capital furmation .
This vicio us cird e can be broken only if co mpanies enjoya stabilized
econo mic enviro nme nt to develop lon g-term plans. To obtain thi s
exte nsion of tem po ral horizon and reduction of gene ra lized uncertainty in
th h t. ,. . .l. t. m , fy th . 'nt. n<H fth . m. n . tu. " n<tm n t, H . u ll . .., n.t . u " '. H,
Out . ' m.l h ,ft. H ' n Um. , ...tn'n. t...m. fu tu " t. , u m n t .,,'l.m. ' n th . , ..HuU. n
. f .. lu .
s .. s. D. B,un h . ff . n O. Cu t.H" , 'Un HM1. .. m u ...t I\ n fl. U. n ', C1Iron',u. ", , 'al.
d. fum,", n 4, " 74 .
Th. " n".t . f ,,-. um ubU. n . f ... , hl h.. ' ..n 1n H t. th tu f

" ,... " P. Boo.. u , ","d. . sur l. , ap'laU"". m on op oUsr. d '!:ta', SO" ,,,, o< "'n 'ssu', PU" ,
" 74
, Thm ,. . . . ." l,..l .,ffo" n " t" ..n . n )u ,tm.nt 'n t" . fo, m fin ,'" t. th
)u ,tm.nt .""h " , . n ' .'.'.n t" m,n m n h n,.t" 1.. th.t " n<Utu tn n .
th . ..m. "bU. n . In th . fi nt ...., H ,.....' . 1. t. " n",. . .f h tf' mm. ' , Ht. ; ' n th .
a soc iety of dass struggle, capitalism has once again to impo se its own
",.n . th "
co neeption of time : th e dom ination of th e tim e of th e va lorization of things
. ,ffo"n" 'n th 1 .
t. n " . f th . "bU. n . h ' . ",u lt . fr . m th . 'nu Ht n u HhU
" A.F. Bu m n . W.C. M' t,h.ll ,...asu ..... Busin. " CjoI. s; J. Lm u", Los "',,,S n. ...I..
over that of th e enhanceme nt of human capacities.
o< p. ,.;"dt,uosd. su'l'rodu,"'on, Pu,. , ' 938.

f" o,,"m ., 'Ch .
G, ..t D",
, U.S. S'M t. C.m m ' tt

C"mp.n'.., ,6th C.n." .., 3'
n . n . ' '" C.n... u.nm ', F. ' , u , . -Mu,h , ' . " .

n B. nkinn . Cu m n,. , ! n,'u'",. n' Irusts . nd ! n,'u'",. n'
n , ' ... .
,. S.. ' n . u U, u lu J. L. D. lbmn . , L'lnfIa"'on , .p"aUsr. , Pu,. , '9'"
D. p.Unkm, Mon. y , ! n.."'st an d P""'" N. " Y,,,, , . 65,

S.. B. S,h m Ht, "onna'., sa la'",s o< p rofits, Pu'. , , . 66; M. Pu .u" , 'l.'.Ml. ..
m ' ' ' '' "n.m'.u 1. m.nM,,', E, onom', a, ' . " .
M. Fm .m.n . n . A. J. S,h"u t" A Mono<a", Hu"'", of,h. U.S. , C. m'" . '' ' M...., , . 63;
std f. ft h. Fu l R...n . B.u., Banlin. S .. dt.., ' ..o.
Th' u l , h u." " . ft h . " " n tu " h.. ' ..n " h."l " th . "'. n.. n " hool.
s .. m . u U, u lu M. "'d"k' , I1I. o", of E, on om ' , Dy na m'<s, L.n n , , . 65, Bu t ' ' '' u " H l., ..
n . " n n"U. n " , th th ", fth" h, U. n . f ..lU" th ", ' M l , . h n . t. t'" 'nt. " "u n t
th ,,'l. m ..... "
th . unH fth , ff" . nt fun ,U.nf m.n 'n th . , . 01f m.n. tu .
m "m. It . n . , u . ' n Ufym. "'., t . n . m.n.

Th. n . U.n . ft h. 'ntu U. n . f" n k m.n 'nt. th " h, U.. . " n.m. "
B. S,h m Ht,"onna'., sa la'",s o< profit s, . d t. Bu t fo, b ,k . f . n . " f" . n" t
1 "
tu " " ,u"
s,h m , tt h n . t. t'" mt. " "u n t th... " n . , U. nf " m m , t. .., h.n th.t ' no . l
m.n. tu . " n<tm n t. Th" , . " h . h. " n,,'
" n k m.n
nt.noou<1. un,fi , . n
n . t ' no ..Ut. th . " 'n " h ',h th , . ' . ' . n . f . , ff" . n t " n k m.n" . ,....,..m .
N. h .H..U. n ..n .." t 'n th . "bU.n<h ,t" ..n t. h l 'n"m n . t. h l ... . n . 'tu".
M. n , . m tu tn l. t. th
... . n . ' tu". Th'. b tt" . ",
t. n t th.t H , ..H", th. n . " l. ",.t. . . .d . l l" . u , m

'n thh." ,un fr .m " mn b n . , "",. m. t. th
,'nd . lf . ffo, u m.n . w h.n th . m. n h.. fi Mn" . th. m ' ...f .u h.....n . ..1..
47 I 4 8
48 I 48
- - - - - - - - - - - - - - - - - ----{o ) - - - - -
(1
Q.
Neither have we used lhe tetm 'monopoly', e"""pt in th e rigor ou o sen... of

re lahons of monopohstic competition defineci in Chapter S. These
omisJionJ Were intennc nal, due al On"" lo lhe logic o f o ur e,,>OSition and
General Conclusion
to r..uonJ o f a fund.1menlal lheo~hClI ord" r . If th" ""pression 'state

monopoly ca pila lmn' hu any m.....mng, il ... the conoept of .. structure<!
socia\ lOlalily , denoting a mod.. of Mt:icuLotion of N!Lotions which are

IMllIHlves complex. Thit concepl Un lheN!foN! oniy be produced. at th..
To ecnclude this bool: I Jhould h~ 10 sum up v~ bri..Hy th.. most Nsic
lindmgs of lb. Ihlry' of Cilplt .wst ~tton d-ov"lop<>d ..hove. Th..
conmbunon I h.ilv.. IKl\l gb t to mUe to such .. th<.ory, ..hieh by IR very
n.atua mllSl ,]w"YS ti. Ul prccess of doov..lopm..nt , has dr. wn on .. htstonool
.on.olym of Clpl t.w.t .ilCC'Wlluliot1O:ll Ul lb.. UDlted SI.'.... 11 ...... necessny lo
ident)' lb. m.l jOl' .acW tr .ilJlSfotm.ltlODS l!ut Iu..e so 1M tu "" pLo<'e m lb ..
z ot b century . 0Il lbe b.uu of lbe ...,."..01 theory of capltalism founded by
Monl . I hov.. rned 10 "Liobo"" e lhe CODC'epII of th.. htstoncally detennm.l18
fOCi,o] r.wt>ora tb.lt Ill.ilU .1 poJSIbl .. l O con"",ve tbese transform.1tllms .
FmolIy , in .. mov~ent from Ibe .bstract lo lb e concr ete, "e h.ove
!rom 011. OOII~ lO lbe lIext ..,th lbe = of organinng them

mIo .. theory of I'CICW reoguLt>on under the 00="" of lbe bulc
reLo.tionship wllicb defillell ea plt.lism: tM ...se r etallon.
This e:q>UMnt,] p~ur.. has l..d us to
o n <>ertl1n
cee r..mporuy .~lMnt. iD tb. cntiq u.. of pohl1oil ec:onomy. But ;1 has upt
p~ed
<ir...
..nd of
anaIytic procedure ..hich h.1s ehate<! the g"n"ral Lo... of
Clpl1ah.! reguLo.1lOn ..ud lbe tnanner m ..hich th""" Lo... d""..lop

historiCl11y.
Th.. d<lll1anCh of 1ogJc.,] cohereDe.. mmClte the rallonal.. of
out
Ib"OT<l1lCl1 ..h.tention . SI..", mODopoly upllahsm ClII m no ..ay b<t definood

StIIlp1y
0Il
1M hms of
~1I1lons
of eompellllOD.
~'ie
h.ove shown lhal th..
11... of eom P"!,tion M.. determine<! by lhe 11.. of Clpll" accumula1lOn, .."d
nO' vice VI!I"N . Tb.. propet" con cep1ual ord"" moreov"" ,. no m",..
inl"Uec1Ilol1..m... JI it very importanl lhal no1 aU concepto Me of th.. sam..
I",,", but <lIlIM inlo .. oompIu PJ"OC'!'S'I of produc1lon of collCTete
blowl.dg... f or ,t it ttus lhal ena blEs U! lo iden 1lfy th OSi! aspectlI of the
inh<tr..nllOcioll COIltndlCttOlUlotcapltahsm lhat Me prmap.ai , i.e. unlvers.ol
and permanent,and tboM lhat Me HCODdary,i.e. tr ansfo rmable , even if in
eotrum conjUllC1\lres tM 1Itt er u n becom.. th.. most acu te .
It it leog1lmatt to spe.alto fSIal.. lIIOnopolyClpltahsm if the o rganic unity
us U .. ~ !rom rb.. lILljor d..bat"" which ..x",te lb.. df.....nt

r..nd~ of MMx1st thougb.t. N.. h.I..9 don.. no tDOI'I! th.an m.ale d1scrMt
o f th.. condlrionJ o f expanded r""roduction of th....age relatlon mo<L1ies
.Ihmons te rhflll bere.OO lb....... Ir is ~i!Ilt i!IlOUgh. ho..",nt. tb..ot th..

\<ts:sons of th.. inl<lrK1K>tl ~ histoncal anaIyslS .and conc<>p1ual
d"""lopm<tnl m ltus WOTIt M" U01 ...lhoul a b<!.rnng on th""" deNl"". Our
his10ricaUy n_ phencmena. lb.. mlJOT chang"" mMbng the tIurty yun;

b<tlW..n 1915 and 1945 " <Ir.. C<ertamly of tlus bnd. lbe ne" mcxi.. of
condomon, lh<lrfloT", must M1 oul 1M pohncal collS"lquences of Out

lh"OT<l1tcal inv-"g.o1lOn. ~.,.. Ih.IIl pullh""", furw.ard und"r 1wo rubncs: lb..
lh.oory of capiu list r~uLuion U 1M NSlS fur lhe concepl of sW..
monopoly capiu lmn, and lh .. problem of lhe g,m..ral conmllons for a
th<t ""pression of tb.. 1Iws of U pluhst regula1lOnto the pomt of producin
coheeon of C" p1lah.! r..1I1lOtlS of productwn made possIble a pgu ne

upsure m accumuleuce ..n<lr tM Second ~'iOTId ~'iar. lbe basts fur this
upsure wu the long-ru n fill m tM social cost ofreproduct:l.on of Lobour_
~ , wbicb ""","..ted .. rowin
capaa !y fur accumuLollon.."d produC<ld
capilalist r,,",lul ion of th.. crisis in lhe Unile<! SI..l"".
a 1""1 UpalUiOll of th e ....g"""""m m! cLoss. C. pltdhst r..1I1l0 llS of

produetioll w..r. funber ene",li:ed by tb.. mt euction of two determinallts
l . TI". T I". o ry o f Ca pil.oIis t ,",gul"tion u a B.1sis for t he
th.ol tr ..nsformed the condilions of n isten"" of the wdge-wrlling cLoss. On

tbe OM b..nd the 1OCi..1or ..niution ofl..bour developed dnd deepene<! tb..
Co n c.. pt 01 S ta l.. Mollopoly C"p it"li s m
principl.. of m'lCh..niulion. On the other hdlld dn intrinsicdlly cdpitdlist

mod.. of consumplion w... forme<! dnd otructured by the mdSS producti on
So far w.. hav.. refr aine<! from uomg th.. te rm 'ot..te monopoly c..pit..liom'.
of at..nd..rdize<! ccmmcdities . Tbe interdcti on betwee n these two forc,," w...
G E ~ E AA L CO ~C L US I O ~
t i 7
,,,
-'
(1
th e pri ncipIe gove rn ing th e co rrespo ndence of value relations between th e

two de partments of producti on .
~'Ie
None of th ese structura l forms can play its ro le in th e miti gati on of

social co ntradictions without th e simulta neo us operation of a11 th e others.
used th e term 'For dism' to refer to th e regime of pr edominant1y
But thi s simulta nous operation is in no way something inh er ent in th e logic
int ensive accumulatio n base d on these historical transform ations. Fordism

necessaril y influenced th e stra tificatio n of social dasses and th e mooalities
of th eir struggle. It accentuated th ose tendencies lat en! in th e unificat ion of
th e wage-earn ing dass and th e centralization of capital. These tendencies
of accumulation. On th e co ntrary , th e structura l forms are separa te from

one another and eac h co ver a spec ific field within th e overa11 space of
pro fuun dly alte re d relations of co mpetition by genera ting an organized

workers' movement within th e sys te m of economic relations and by
capitalist soc ial re lations. The co ntradictions of accumulation affect th em

a11, and th e dys functioning of one tends to des tabilize th e others as we11.
They can only form a co mplex structured whole , able to repr od uce itself
multiplyin g co mplex relationships of mutual influence between separa te
and evolve in an orderly manner , by th eir hybri d lceation , both within

econo mic relations and outside th ese relations - in other words within th e
capitals, which have modified th e exerc ise of proprietary co ntrol. The
sta te. It is in th e sta te, and th er e alone, th at th e co hesion of th ese structura l
capitalist dass cannot maintain its pos ition in th e relations of pr oduction
forms can be ass ured, permanently jeop ard ized and as permanently
and direct th e social pr ceess of accumulation unless it can institution alize

th e dass struggle in th e econo mic sphere and create new divisions within
repr oduced by th e fluctuati ng co mpro mises of economic po licy. Sta te
th e wage-earn ing dass, while at th e same tim e miti gating th e des tructive
engende red by Fordism .
int ernal struggles caused by th e centralization of capital. ~'Ie have sho wn

how transform ati on s in th e forms of dass struggle can be int er pret ed with
2 . T h e Ge n ..ra l Co n ditio ns for a Capitalist R<'solution of the
th e co ncept of structura l form oThis co ncept refers to th e organic unity of a
Cri s is in the United States .
mon opol y capitalism is th e mod e of articulation of th e structura l forms
co mplex of forces in a space structured by relations subjec t to th e

pr incipIes of qualita tive difference and unequal influence . Structura l forms
enab le us to und erstand how th e field of capitalist social re lations is neither
The genera l co nditions for a capitalist resolution of th e crisis of Fordism

can be un der st ood in th e co ntext of th e laws of capitalist regulation
a nebulous space of funct ion al int er dependencies nor a space of

indet erminat e re lations of forces. It is a co mplex who le structured by th e
because th ey satisfy th e pr incipIe of invari ance which is th e co mmon bas is

of th ese laws - th at is, th e repr od uction of th e wage relation . The crisis
domination of th e wage relation and perp etu ating it .
whose beginnings can be see n in th e mid 1960s is an organic crisis of
Each of th e pr incipal structura l forms acts on th e law of accumulation in

a dec isive area. The pr ceed ure of co11ective wage barga ining guara ntees th e
inflexi bility of th e nominal wage th at is needed for th e regular develop ment
of th e mod e of co nsumption , while th e sys te m of social sec urity is designed
to maintain workers deprived of th eir jobs in th eir pos ition as co nsumers.
The giant co rpo ration and th e financial gro up are forms of centralized
capital ada pted to th e pu rsuit of that cQmpetition for investments which
capitalism because its roo ts lie in a th reat to th e found ations of Fordism . It

can be summarily defined as a reversal of th e long-run tendency of a fa11ing
social cost of repr od uction of labour-po wer . On th e one hand , th e
development of work organization in th e direction of an eve r more
int ensive application of th e pr incipIe of mechanization tends to exhaust its
pr oductive po te ntialities and renews th e dass struggle in pr oduction . On
th e other hand , th e stability of th e mod e of co nsumption based on th e mass
co nsumption of pr ivate goods and th e stra tification of th e wage-earn ing
hast ens th e obsolescence of th e co nditions of pr od uction , while

transfer rin g th e ensuing losses onto society as a who le . The mon et ar y
dass is ever more dependent on co11ective goods and disturbed by th e fact
sys te m unifies bank moni es int o a single nati on al mon ey un der th e

guara ntee of enforced currency , and socia11y valida tes th e waste of
th at Fordism drives th e pr oduction of th ese co11ective goods to th e margins

of capitalist accumulation. Their cost increases dramatica11y with a rise in
resources, to th e de triment of soc iety as a whole , by a permanent ero sion

of th e social purchasing po wer of money .
social demand o The operation of th e str uctura l forms of sta te monopol y

capitalism pr events a tot al breakdown in th e co hesion of th e regime of
GENERA L CO NCLUSION -
3I 7
- - - - - - - - - - - - - - - - - - ---(0 ) - - - -
-'
(1
int ensive accumulatio n. Bu! lhi s is al th e casI of asevere disturbance in th e
transfurm ati on s in th e co urse of thi s investi gati on . A major advance in
prin cipIes " f th eir articulation in economic paliey, determining a genera l

weakening of th e mon et ar y co nstraint which is expressed in th e pr ecess of
socialization cannot but restructu re th e mod e of co nsumption profuund ly ,
over! inflation .
The erises of capitalism furm par! of th e laws of its regulation , as
mom ents " f a genera l transform at ion of th e co nditions of pr oduction and
exchange th a! are necessar y fur th e law of accumulation to perpetuate
by focuss ing it on collective means of co nsumption . The cost of th e latter

will have to be massively red uced by a decisive transfurm ati on in th eir
co nditions of pr oduction , to enab le co mmod ity relations to flouri sh in thi s
new field . This transfurm ati on is only possible by th e genera lization of a
new mod e of work organization in which th e pr incipIe of mechanization is
itself. Bu! sta te mon opol y capitalism is a mod e of articulatio n of th e

structura l furms which pro longs the socia l crisis in time. The crisis is still a
sub ord ina ted to th e pr incipIe of infurm ati on , with fragmented work giving
develop ing pr ecess. The dee p recession of ' 97 4- 75 gives an indicati on of

its maturing, by revealing th e limit s of th e precess of inflati on as a
directives to th e overall co nstraint of pr od uction itself.

The co ming massive socialization of th e co nditions of life will destro y
pr eced ure fur delaying sett1ements. The inflati on ar y pr ecess makes it

possible to dissociate two tem po ral rhythms, whose telescopin g together
free enterprise as th e pillar of liber al ideology . Its develop ment unde r th e

do mination of th e wage relation will certainly change th e structura l furms
was th e reason fur th e bruta l character of earlier crises: on th e one hand

th e rhythm of major transfurm at ion s in work organization and th e
inh erited from Fordism . It is already possible to indicat e certain lines of

develop ment here . The two most fundamental are a co ntraction of pu blic
co nditions of existe nce of th e wage-earn ing dass; on th e other hand th e
initi ati ve in th e prod uction of collective goods and serv ices and a
renewal of th e schema of expanded repr od uction of capital, which requires

th e pr eservation of a co mpatibility between th e macro st ruct ur e of
co rrelative red uction in th e ro le of budgeta ry expe nditure as a direct

inst rument fur ass uring due pro portionality between th e two de partments
pr od uction and th e distr ibu tion of tot al incom e . This is why th e financial
of pr od uction . The ded ine of so-called Keyn esian budgeta ry po licies is th e
aspec ts of th e social crisis ass ume a different guise tod ay . The traditi on al
crises exhibited a sequence of over-accumulation fullowed by a massive
necessar y co nsequence of a far -reaching restr ucturation of th e norm of

social co nsumption in which so-called collective resou rces no longer
devalor ization of capital. The co ntempo rary crisis of sta te mon opol y
simply pro vide th e framework fur th e
capitalism incorpo rat es th ese devalorizations int o th e inflati on pr ecess and
co mmod ities but bec ome a major field in th eir own right fur th e expansion
staggers th em in tim e . It takes th e furm of a success ion of phases of

cumulative inflat ion fullowed by phases of eve r more severe over-
of co mmod ity
way to th e semi-autonomous wor k gro up and th e preced ure of hierar chical
upsurge of sta nda rdized
relations in th e department pr od ucing means
of
pr od uction , which however only slow down th e pr ecess of inflation witho ut
co nsumption . The scope of th e changes in th e co nditions of existe nce of th e

wage-earn ing dass th at are necessar y fur creating a new co herence in th e
giving rise to deflation. Each phase of over-production is th e eccasion fur
regime of accumulation implies a new de ployment of sta te influence within
an advance of new co nditions of pr od uction th at is suflicient1y partial to
th e structura l furms. The ever more co mplete articulation of social
avoid a dislecation of th e relationships of exchange between th e two
relations within th e sta te is, in effect , th e only respo nse co mpatible with
safeguarding th e wage relation when th e socialization of th e co nditions of
departments of pr od uction .
Capita lism can escape from its co ntempo rary organic crisis only by
genera ting a new co hesion, a Neo-Fordism. This co hesion must be
life co mes int o co nflict with th e mod es of stra tification by which th e
co mpatible with th e wage relation , th e pr incipIe of invari ance of th e
whether th e develop ment of th e mod alities of regulation is such that we
capitalist mod e of pr od uction . Such co mpatibility is possible only if

spec ific transfurm ati on s of th e infrast ructure give rise to a new and
may spea k of a transfurm ati on of sta te mon opol y capitalism int o sta te
pro tr acted fall in th e cost of th e social repr od uction oflabo ur-power, th e

bas is fur int ensive accumulation.
~'Ie
have sought to identify th ese
GENERA L CO NC LUSION -
division of th e pro letariat was pr eviou sly ensured . The future will tell
capitalism o But if thi s latter term has any meaning, it canno t denote a
withering away of co mmod itity relations, but on th e co ntrary th eir greates t
possible exte nsion , obtained at th e cost of a new pro gress in th e unification
5I 7
- - - - - - - - - - - - - - - - - - - - - - <0 > - - - -
-'
(1
of the wage-earn ing dass.

This overall organization of society within th e sta te, by which moo ern
capitalism atte mpts a solutio n al th e po litica l risk of uni ver salizing its
soc ial co nflicts, evidently gives rise ta a strong tot alit ari an tendency un der
the ideological cover ofl iberalism. The socialization of the conditions ofl ife
can be a support fur accumulation only if th e leadin g fract ion of th e
capitalist dass succee ds in imposing an overall management of labourpo wer by binding th e co nditions of its repr od uction in a tight net wor k of
social co ntrols. One impo rt ant element of th ese co ntro l. would be th e
recasting of th e various institution al sys te ms of insurance and soc ial
sec urity in th e direction of a guara ntee d minimum incom e with uniform
applieation to all social situations. A further essentia l element would be a
coordinated expansion of both collective and private means of
co nsumption ; th e social dimensions inh er ent in th e former will necessitate
a sys te m of minimal norm s - both quantita tive and qualita tive - in th eir
proouct ion . Finally , th e direct influence of th e sca le, duration and
collective risks involved in th e financing of individu alized investments on
th e sta bility of th e moo e of co nsumption , will call int o being sta te
guara ntees and a reinfor eed financial centralization with tighter co ntro ls
on th e stoc k market.
The tendeneies summarized above will give th e structura l forms a welldefined direction of development . Collective barga ining, even if it keeps its
legal autonomy, will be eve r more subjec t to an overall wages po licy
imposed by sta te autho rity. The development of auto matic sys te ms of
pr oo uction and management co ntrol is th e decisive weapo n of finance
capital in centralizing propriet ar y co ntro l at a level and in forms th at
permit it to co nfront th e tendeney towar ds a unification of th e wageearn ers. The co nsiderable gro wth in mon et ar y flows at th e free disposition
of th e pr ivate economy th at will result from th e red uction of transfer
payments in favour of a guara ntee d minimum incom e and from th e decline
in bud getary expenditure will give sta te managem ent of th e mon ey supply
an eve r greate r impo rt ance . The predominance of mon et ar y over fiscal
po liey, whieh can already be discern ed in bro ad outline , will be definitively
esta blished. This predominance expresses th e domination of th e sta te by
finance capital. It will bec ome more th an eve r befor e th e dec isive
instrument in th e articulation of th e structura l forms.
GENERA L CO NCLUSION -
7 I 7
-------------------~o)----
-'
(1
The neo-d assical th eory inspired by liber alism , which amounts to a

repr esentation of th e sys te m as a pure econo my in a natural sta te of
Postface t o the New Editon'

Cap italism at the Turn of the
Century: Regulatcn Thecry and
the Challenge of Social Change
eq uilibrium, stre tc hes th e pos tulate of hom ogeneit y to its very limit s. Not
only dces th e axiom of rationality assign th e same identity to all
individu als in pursuit of th eir goals by defining an econo mic behav iour
pattern th at can be applied to any do main of social pr actice , but th e
characterization of th e who le sys tem as an eq uilibrium created by perfect
co mpetition implies th at eac h player is tot ally aware of th e web of th eir
relations with all other players, and th at thi s web presents itself to th e
A Theory ofCapitalist Reg ulatio n was written mor e th an twenty yea rs ago.
individu al in th e form of co nstraints on th e use of th eir resour ces.
The new edition perha ps testifies to th e lon gevit y of th e ideas it SQught to

co mmunicate . These two decade s, however , have no! been kind to anyone
Marxism , as an econo mic th eory , is built upon a rad ical separa tion
which explains capitalism by rejecting th e pos tulate of hom ogeneit y . Not
tryin g to make sense of th e erra tic and sometimes disconcerting
only is mar ket exchange no longer per ceived as a symmetrical relation
development of co ntempo rary societies. Her e , I sho uld like to say how th e
between co ntraeting parties; th e labour force is also put on one side of a

bas ic soc ial division which sets one dass of individu als against th e other .
ideas co ntained in th e boo k have stood lhi s test , and how th ey can be
modified oc exte nded so th a! we can try to un der st and th e dramas we are
witnessing and th e hapes of renewal we cherish as lhi s twentieth century
Neve rtheless, th e Marxist view of th e eeono my remains strongly

hom ogeneou s beeause capitalism is supposed to move in aecorda nee with
draws to its dose.
genera l laws which lead to its overthrow , whatever th e nature of th e
A Theory ofCapitalist Regulatio n has been th e source of an approach to

th e analysis of econo mic phenom ena which has gained widespread
soc iety in whieh it develops. Furthermore , th e overthrow of capitalism
accepta nce, in th e sense th at a wide range of studies and analyses have
planning.
seized upon its ideas and have developed th em in man y differe nt
her alds th e co ming of a transparent and hom ogeneou s sys te m of perfeet

The debate th at raged in th e ' 930S on th e relative merits of a market
has
eeono my and a planned eeono my culminated in th e de monstr ation by
gained accepta nce is not a body of fully refined co ncepts, but a research
Oskar Lange th at perfeet co mpetition and perfeet planning were ide ntical.
pr ogramme .
If th e eeono mic sys tem is hom ogeneou s, th er e can be no real
~'Ihen
th e th eoret ical pos itions defend ed in A Theory of Capitalist

Regulation were elabora te d, amb itious syno ptic studies were ideologically
deeentr alization . A genera l eeono mic eq uilibrium is a co mpletely
appea ling as int erpret at ion s of th e econo mic sys tem. They were
th e min ds of all individu als, who aet like a single repr esentative individu al
- th e hypothesis of rati on al expectations - or beeause th e coordination of
directions. ~'Ie must spea k of an approach rather th an a th eory .
~'Ihat
int ellectually seductive because of th eir capacity to gras p th e econo mic

sys tem as a who le . On th e bas is of so-called first prin cipIes, th ey developed
co nsistent co ncepts reconciling micro- econ omi cs and macro- econ omi cs,
micro scopic and macro scop ic phenom ena . Yet thi s co uld not take place
witho ut a pos tulate of hom ogeneit y th at gave th ese th eories, however
centralized sys tem, either beeause th e charaeteristies of th e sys tem are in
individu al plans is guided by an explieit or implicit planner -
th e
omniseient invisible hand in Lon ~'Ialras's genera l equilibrium mod el.

The Enigma o the Ec onomic Qu a n t a
mutually antago nistic, a pec uliar episte mological co ngruity .

Advanees in economic th ou ght have bee n made against th e pos tulate of
hom ogeneit y , but th ey run int o a formidable diflieulty . ~'Ihere
het ero geneou s features are taken int o aecount in th e behav iour of micro-
In Sea rch o Homogeneity
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econo mic playe rs, th e co herence " f th e enlire sys te m becomes a pu zzle
micro -econ omi cs and macro -econ omi cs become estra nged because it is no
longer possible to pos tulate a unifurm sys te m " f coordination . This sta te of
alfairs is no! uni qu e to econo mics. In th e ph ysical sciences and life
sciences, it is known tha! micro scopie and macro scopie phenomena canno t
be descr ibed with th e same for mal tool s. Macro scopie regularities have
th eir Qwn auto no my. However , it is in economics th a! th e philosophy of
un dermined th e dich otomy be tween pu blic and pr ivate gaads, have

emphasized th e role of co llective ac tion in th e ac hiev ement of econo mic
efliciency, and have made a co nsiderable co ntribution ta
un der st an din g of th e pracess of grawth.
be tte r
In a world in which infurm ati on is an issue and in which exte rnalities are
laden with significance, th er e is na suc h thing as a genera l equilibrium of
perfect co mpetition . Nor is th er e any reason why maximum co mpetition
methoclological individu alism is fuund al its ma s! virulento The de. ire to

found macro -economi cs on micro -econ om ic pr incip Ies is suc h th a! th e
sho uld be th e bes t possible furm of relationship be tween econo mic agents,
pr evailing inclin ati on is to overloo k suc h obstacles and hen ce ta
stra teg ies, th e effects of which co uld be sacially and ev en individu ally
disad vantageou s. This is th e env iranme nt in which th e prablems of
pe rpetua te th e pos tulate a f homa geneity against all empirical ev ide nce.
Thus, th e macra-ecanom y is na more th an a micra-econ om y enlarged ta
fur co mpetition in th ese co ntexts enta ils th e ado ption of be havioura l
regulation arise. Regulati on th eory is co ncern ed with het ero gen eous
full size by mean s of th e hypo thesis of th e representative agent. Anothe r

appraach is simply ta deny th at macra-econ omi cs is in any way relevant . It
econo mic pr acesses in which necessity and co ntingency , th e co nstraint of

th e past and th e creation of th e new are int ertwined . It deals with pr acesses
is ev ide nt th at this type of fundam entalism has seria us co nsequences fur
th at eme rge, are repr aJuced , th en wither away un der th e effects of th e
economic po licy. ~'Ie have expe rienced th e parad ox of ideological

a ssification at th e ve ry tim e when th eoreti cal pr ogress has revealed th e
un equal development inh er ent in capitalism o
co mplexity of relations be tween th e levels at which econo mic phenome na
Ac cumulation and Co h esio n
are perceived . But thi s progress has furever tainted th e pu rity of th e great
A maJe of regulati on is a set of mediat ion s which ensure th at th e
parad igms.
In fact , fur a qua rte r of a century , explora tion of thi s co mplexity has
pr aJuced a splinte re d image of econo mic science. A key dime nsion of th e
heterageneity of econo mic phenomena relates ta infurm ati on . Costly,
distortion s created by th e accumulation of capital are kep t within limit s

which are co mpatible with sacial co hesion within eac h nat ion . This
co mpatibility is always observable in specific co ntexts at specific historical
incom plet e , un balan ced and organized int a struc tures th at are far from
mom ents. The salient test fur any ana lysis of th e changes th at capitalism
being exd usive ly market s, infurm ati on creates asy mme tries in terms of
has und ergone is to describe thi s cahesion in its lacal manifest at ions. It
alsa involves understand ing why suc h co hesion lS a sho rt-lived
influen ce , glvmg sorne econo m1C operators po wer a ver others.

Infurmation is pracessed by int ermediari es situa ted be tween th e micraeconomic and th e macra-econ omi c levels, organizations which are not
phenomenon in th e life of nati ons , why th e effective ness of a maJe of

regulation always wanes. And it requires grasping th e pr acesses th at accur
relationships which help ta create co nsistencies within th e 'global'
at times of crisis , co nfusion and changing be haviour pattern s. Lastly , it

involves tryin g to pe rceive th e seeds of a new maJe of regulation in th e
econo my.
ve ry midst of th e crisis affiicting th e old one .
th em selves aggregations of micra-economic agents but sets of non-market
Ano ther dime nsion of thi s co mplexity is th e discov ery of th e exte nt of
Here I sha ll begin by return ing to certain fundam ental co ncepts used in
th e rale played in econo mics by exte rnalities, in other word , of any type of
A Theory 01 Cap italist Regulation with a view to exa mining th em in th e
int er dependen ce th at is not incorpo rat ed int a pr ices. The greate r th e role
played by exte rnalities, th at is, th e less mar ket s th em selves are th e sole ca ordinators, th e more amb iguo us and fallible will be th e use of a mar ket
eq uilibrium ta repr esent th e sys te m in its entire ty. Externaliti es have
3 I 61
light of th e dev elopments in econo mic th eory th at have accurred over th e

past twenty yea rs. I sha ll th en pr esent a summa ry of th e furces be hind th e
great pos t-war boo m, in which I sha ll indude both th e America n
expe rience and that
of~'lestern
Euro pe . The reafter I sha ll study th e de mise
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of th e mod e of regulat ion known as Fordism and th e pro fuun d social

changes of th e las! twenty yea rs. Final1y , I shall address th e open question
of the emergence of a new mod e of regulation , th e pro mise of a new age of
financial obligations. The inevit abilit y of deb t also binds th em inexorably

together in co nflict o That relation is pr eor dained by th e po wer
relationships which de rive from thi s financial bond -
asy mmetric
th e wage society. '
infurm at ion , as it is termed nowaday s in th e sanitized language of

econo mists. Keyn es shows th at econo mic develop ment depends on which
The o ret ic ai Problems
is the do minant furce , th e entre pre neur or th e financier oHowever , which

has th e upper hand itself depends on th e pr evailing situation.
If we reject th e parad igm of th e pure econo my, as established by th e

ralional expec ta tions scheol, lhi s raises th e pro blem of th e social fabrico
Econ omi c relations cannot exis! outside a social framewor k. It is quite
dear tha! in democratic societies individuals can pursue their Qwn
objectives within mar ket s, subjec t to a wider range of co nstraints th an just
Thus, in a seciety in which individu alism reigns, individual goals take on

econo mic furm by asserting th emselves in th e pu rsuit of int er ests. These do
not necessarily emb ody collective aims when th ey are furmulated and
revised . But th ese int er ests co me int o contact with eac h other . They may
be mutually antago nistic or mutu ally reinfur cing, de pending on th e natu re
sca ree resources. These co nstraints include lack " f knowledge , moral
of th e social links which th ey are helpin g to change . Those links, however ,
co nsiderations and institut ion al or organizational restr ictions. Even such a
funct ion pr imarily as vehides fur th e furmulation and pu rsuit of individual
genera l furmulation is already far remove d from th e pu re economy. ~'Ihat

is being hinted at her e is an evolutionary th eory of micro -econ omi cs with
int er ests, because th e success ful pu rsuit of th ese int er ests depends on
society 's accepta nce or rejection of the result of the actions to which th ey
imperfect infurm ati on , a sys te m in which pr ecesses of learn ing and

ada pta tion are of the essence. The question th at th en arises is what kind of
macro -econ om ics goes with it -
a co nception of th e global sys te m
give rise . The social fabric appea rs first and fure most as a pro blem of
collective belonging, in th e furm of a sys te m or sys te ms in which individu al
int er ests are valida ted by th e results th ey pr od uce .
co mpatible with a repr esentation of individu al behav iour th at goes beyond

ass uming th e individu al's des ire and capacity to achieve th e bes t possible
The Division o Labour, Mone y and Debt
deal und er an exogeno us set of co nstraints.

Individualism , in fact , has littl e to do with th e logic of utilitarianism .
The regulation approach assigns an important ro le to mon ey , which, since
Contra ry to th e daims of an inst rumentalist perspective , goals are not
th e original publication of A Theory 01 Cap italist Regulation, has
exogenously give n, mer ely furming part of th e social background to
co nstantly bee n reaflirmed . Money is th e pr imordial social link in ma rket
economic re lations. The goals th emselves, and not only th e means used in
econo mies .'
th eir pursuit , help to furm economic relationships and are influenced by
Let us unde rline th e impo rt ance of thi s hypo thesis. It means th at ,
such relationships. Sorne outstanding econo mists of th e past have give n a

great dea l of th ou ght to th e way in which individu al behav iour influences
logically and hist orically , mon ey pr ecedes exc hange. There can be no
sta rker sta tement of th e co ntrast between thi s hypo thesis and th at of th e
th e econo mic d imate and vice versa. Joseph Schumpete r po rtrays
pure econo my , in which mon ey is regard ed as a development of barter . In
individu alism in th e figur e of th e entre pre neur. Entrep ren eurs are far from
being pr ofit-maximizing auto mata. They are inn ovat or s. By venturing int o
th e pu re econo my , mon ey is a particular means of exchange which springs
th e unknown , th ey enab le society to red uce its de pende nce on existing

structures. But th ey do not do so without causing soc ial da mage; th ey are
destro yers as well as creator s. Keyn es de picts th e infernal int ertwinin g of
from th e sponta neo us coordination amo ng rational individu als. In th e

social-link mod el , mon ey is th e collective pivotal po int in th e relationship
between th e individu al and society. A relationship between two individu als
may be termed 'co mmerc ial' because it is co nducted th rough th e
th e indu st rialist and th e financier . They do not have th e same perception of
instituti on of mon ey . Ind ividuals do not have to make th eir mutual
tim e or th e same eva luation of profit , yet th ey are linked by a web of
int er ests co mpatible via th e pr ice mechanism befure actually exchanging
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co mmod ities. They may express th eir int er ests independent1y and perhaps
th ese int er ests will co nflict , fur th e individu als' actio ns mus! respeot ,m e
social co nstraint , namely th e need to settle th eir pri or deb ts in mon ey .
jud gement passed by th e mar ket society - all other individu als - on th e
economic act of eac h individu al. This jud gement is ratified by th e sys te m of
paym ents. It is th e furm in which societies with auto no mous econo mies
reward th e co ntribution of eac h ind ividual to th e reconstitution of th e
Money is thus th e key to mem ber ship of th e mar ket society of individu als
who are free to pursue th eir own ends without havin g to coordinate th eir
division of labour . Money , as th e operator of value, is th e regulator y
actio ns th rough th e de te rminatio n of equilibrium pr ices. The un derl yin g
institution par exce llence, because payment is pr escr iptive . Money
rationale th a! gives co herence to th e sys tem of mar ket exchanges is th e
logically precedes exchanges, because it is th e unit in which prices are
settling of deb ts, no! th e determination of prices.
defined. As a bas ic social norm , it pr oceeds from sovere ignty. It is th e
If mon ey is th e basic social link in mar ket economies, and if it means

th a! ind ividual actio ns are valida ted by th e obligation to settle de bts, we
still need to know why such great importance is attac hed to debt . This is
temple of th e co mmon faith of individu als in th e mar ket s, because it is

th rough mon ey th at th ey belong to th e market economy. The economy,
because debt is th e type of relationship between th e individu al and a
extra neous fact or .
th en , is not pure , because its very fuund ation , th e mon et ar y sta nda rd, is an
society which rests on th e division of labour . In dividu als pursuing th eir

own ends are no less a part of society, fur th ey are necessaril y incorpo rat ed
Ca p it a li s m and the Working Cla ss e s
int o th e division of labour . The division of labour creates recipr ocal

indebt edn ess between eac h individu al and society in genera l. To translat e
How do mon ey and debt relate to capital and th e labour furce? There is no
th eir goals int o an auto nomous activity, econo mic agents mu st invest , in
do ub t th at capitalism , in th e eyes of bo th Marx and Keyn es, is a mon et ar y

econo mic sys te m. If wages create social division , establishing th e po wer of
other words, take resour ces from society. They are thus indebt ed to th e
co mmunity and respo nsible fur th e resources borrowed. But society, fur its
part , owes a debt to individu als insofar as th e use th ey make of th ese
resources helps to reconstitute th e division ofl abo ur .
~'Ihat
is bette r un der st ood is how mon ey serves as th e fundamental
institution in any mar ket econo my. ~'Ihen individu als pay off th eir debt ,
th ey are pro ving th at th ey have helped to renew th e division ofl abo ur . But
th ey can only do thi s because of th e incom e earned th rough th eir activity.
By transfer rin g mon ey th rough someo ne buying th e fruit s of a particular
individu al's labour , society has given th e individu al what it believes he or
one social dass over another, th at po wer is th e po wer of money . To be

more precise , it is th e po wer of th ose who have th e initi ati ve to create
mon ey in order to transfurm it into a means of fundin g; it is th eir po wer
over th ose whose only access to mon ey is th e sale of th eir capacity to wor k.
This po wer is exe rc ised with a view to accumulation. Transfur ming mon ey
int o capital means sharpening th e co ntras t between th e goods proouced by
individu als' activity and mon ey itself. As Marx himself said, 'If ordinary
items of merchandise are co nsidered , mon ey presents itself as th e only
adequate incarnat ion of their value.' But th e money that is accumulated as
she has give n it . But th e appare nt recipr oci ty of thi s relationship is illusory ,
since individu als' valuation of th eir input will not necessaril y mat ch
capital is mon ey th at is not extinguished in th e settlement of debts.
society 's valuation when it pays th em . This disparity is reflected in unpaid
necessaril y th e development of indebt edn ess.

Try ing to accumulate mon ey fur its own sake as th e aim of economic
debts, th e deferment of which can cause pro blems. Society may th er efure
Accumulation of capital is one side of th e equation, but th e other side is
exist in a sta te of financial disequilibrium. The sta te of individu al accounts
activity means seeking po wer over others, because mon ey is th e bas is of
and of th e obligations th ey entail un der th e pr evailing financial rules is

what creates th e po te ntial fur co nflict between ind ividual goals and social
th e social fabric oThe accumulation of po wer, however , is a limitl ess des ire.
This is what makes capitalism a furce th at cuts across soc iety, a dy namic
co nstraints.
th at takes co ntro l of th e division of labour to co ntinually transfurm it . But
As th e pr imordial institution
of market
exchange,
mon ey 1S
co nsubstantial with value. In deed , econo mic value is th e ano ny mous
- 7 I 61
capitalists are part of th e division oflabo ur , too . They cannot accumulate

th e po wer of mon ey witho ut an input and hence witho ut incurrin g debt and
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submitting to th e judgement of society. That is why th e employer-
accumulation of capital: th e mobility of th e emp loyees th emselves which is
empla yee relationship is an int ensificat ion " f th e link between th e

individu al and society, th e illusory recipr oci ty of which we emphasized
a source of unemployment , and th e mobility of th eir co nsumption habit s.
above. Marx made mu ch of th e antagonistic aspec t of lhis relationship ,

placing it in th e context of an unrelenting dass struggle th a! would re sult in
mar ket to hon our th eir financial obligations and realize th eir mon et ar y
th e demise of capitalism itself Neve rtheless, it is th eoreti cally possible to

alter lhi s illusory recipr oci ty within capitalism o It can be altere d if th e
enrich ment is pr ivate , in th e sense th at th e deb ts incur red by capitalists are

wagers on th e future which are not mutually co mpatible , fur reason s
dynamism of capital also impro ves th e living conditions Qf the labour force
dearly identifi ed by Schumpete r. To accumulate capital, eac h capitalist
and de velop s a wage society. This is th e th eoreti cal " ption th a! th e

regulation approach has pu rsued and th a! lhi s boo k has explore d in order
tries to free himself from th e co nstraints of th e existing division ofl abo ur .

That is what makes capitalism a dy namic furce fur techni cal change which
to int er pret th e develop ment of American soc iety as a mod el fur th e
drastically alte rs th e division ofl abour . As it takes sorne tim e fur society to
~'Iestern
valida te or invalidat e th ese wagers, th e eva luation of capital at any give n
societies of th e twentiet h century . This involves a dear definition

of th e relationship between employ ers and employee s.
Collectively, th e capitalists depe nd on employees' co nsumption in th e

pro fit . Individually , th ey are co mpeting to accumulate capital. Capita list
mom ent ind udes a spec ific pr ocess of bu ying and selling de bts and rights
to capitalist property . The capital owned by individu al capitalists is
eva luate d in financial mar ket s. This eva luation itself amounts to
spec ulation on th e future . It co mprises wagers placed by th e financial
W ageri ng on t h e Fu tu ro
The employer-employee relationship is th e separa tion which rend ers a

body of free individu als incapable of bec oming private pr od ucers within
co mmunity , in other wor ds by other capitalists, on th e success or failure of
th e market econo my. The withdrawal of resou rces from society by th e
th e gambles taken by eac h individu al capitalist . The financial eva luation of

capital int roduces th e amb ivalent solida rity between indu st rialists and
agents in th e mar ket economy turns th ese resources int o th e means of

pr oducing goods autonomously. Employees are also individu als who are
financier s to which Keyn es refers. The incoh er ence of th e capitalists'
free to pursue th eir own ends, bu t thi s pu rsuit is subjec t to th e co nstraint of

th e pr ivation of property . Their access to mon ey is obtained th ro ugh an
employ ment co ntract whereby th ey sell a number of hours' work in retu rn
wagers on th e future division of labo ur is illust rat ed by th e solve ncy

problems affecting th eir deb ts. Doubts about solvency pro voke drastic
revision s in th ese eva luations of capital, which trigger financial crises.
fur a wage or salary. Subordination to th e capitalists occurs in th e realm of
These crises are th e expression of th e mon et ar y co nstraint th at reveals th e

incoh er ence of individu al interests whenever th ese int er ests take th e furm
pr od uction , which is not a place of exchange. The fact is th at th e labour

co ntract entitles capitalists to have th eir employees work unde r th eir
of capital accumulation.
co ntrol. Enter pri ses are th er efure spec ific kinds of organizations, since
hierarchical po wer is exercised th er e to pr oduce goods with a view to
The Importance o Mediation
accumulating mon ey .
It fullows that th e dichotomy of th e individu al and society is not see n in
th e same way by employees and capitalists. Collectively, employees have a
The essential idea of A Theory 01 Cap italist Regulation is th at th e

dy namism of capital repr esents an eno rmo us pr od uctive po te ntial bu t th at
it is also a blind furce . It doos not co ntain a self-limiting mechanism of its
co mmo n sta tus; th e key to th eir subsiste nce is work unde r th e autho rity of
th ose who own th e means of production.
own , nor is it guided in a direction th at would enab le it to fulfil th e
Individually , employees are free to hire out th eir labou r to any
capitalism has th e inh er ent ability to mobilize hum an energy and transfurm
capitalist . They are also free to spend th eir pay as th ey see fit. There is
th er efure a twofuld mobility that can act as a regulator on th e
it int o gro wth, but it doos not have th e capacity to co nvert th e dash of
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capitalists' dream of perp etu al accumulation. To put it another way ,
individu al interests int o a co herent global sys te m.
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The abstrae! furm of th e link between th e individual and society
th e orthodoxy that presents capitalism as a sponta neous development, and
represen ted by th e buye r-seller relat ion ship itself depends on th e bas ic
pro gress as th e direct and co ntinuous effect of techni cal development . It
social institution of mon ey . Bu! a virtual economy comprising only b uye r-
aflirms th e belief that mar ket mechanisms must be supplemente d or
seller relation ships would be regulated exclusively by th e sys te m of
payments, th a! is, by a coherent sel of monet ar y rules and by an institution
supplante d by collective action. This action is expressed in soc ial

mediati on . But th e regulation approach is distinct from two mutually
which is th e guara nto r and exec uto r " f th a! sys tem. The same no lon ger
co ntradictory co nceptions: first , th e idea th at rules and institution s are
applies to capitalism o ~'Ie have just see n th a! th e eva luatio n of capital
product s of th e co nvergence of pr ivate decisions; sec ond, that any non -
already presupposes an enlire financial sys te m. Moreover , th e employer-
mar ket force th at has a global effect on th e development of capitalist
employee relationship is fundamentally hier ar chical within th e ente rprise,
econo mies must proceed from th e sta te.
even th ou gh it ass umes th e guise of an exchange th at is formalized by th e
Mediation mechanisms, in th e regulation approach, are genuinely

int ermediar y structures th at modi fy th e relationships in which tension
employ ment co ntract o Since it is spurred on by th e limitless desire to

accumulate mon ey , capitalist management of th e producti on pr ocess can
degenerate into a po wer capable of destro ying th e labour force it has
between individu als and society plays a part oMed iation mechanisms are
subjugate d, as th e tragic history of prolet ar ianization de monstr ates.
decide to invest on th e bas is of th e financial co mmunity's opinions, th e
pr esent in th e co ntext of pr ivate actions. For inst ance , an indu st rialist will
To manage an ordered pr od uctive force , namely one th at is capable of
credit lines his banker is prepar ed to open and any tax incentives ava ilable.
preser vin g th e working po tential at its disposal, capitalism must be

hemmed in by co nstraining structures. Such structures are not th e fruit of
But th er e are other matter s for co nsideration : th e imp act of th e investm ent
on th e social hierar ch y in th e co mpany and of th e changes which new
capitalist reasoning or th e spo nta neo us result of competition , but rather
technology - if involved - might have on th e pay sca le, on th e sta tus of
emanate from th e creation of social institution s, legitimi zed by collective

values from which soc ieties draw th eir co hesion . This co hesion is th e
categories of worker and on pr omotion oppo rtunities. This co ntext is
pr od uct of social interactions th at take a variety of forms: co nflicts, sorne
socially co nstructed by an intermingling of mediati on mechanisms. They
of which may be violent, debates th at find th eir way int o th e po litical are na,
have th eir own inertia , th ey perp etuate behav ioura l routines, but th ey also
develop at different rates - th e mar kets' opinion of the value of th e capital
associations th at lend collective stre ngth to groups of employees and
being affected by th e int ention s of an indu st rialist and develop ing more
legislat ive provision s th at institute and enshrine social rights.
rapidly and in a more volatile manner th an th e change in th e organization
~'Iithin
its own ranks , capitalism un leashes co nflicts which obstruct its

own development . But it also summo ns up forces opposed to its desire for
ofl abo ur necessit ated by th e realization of th ese int ention s.
accumulation, forces which find a way to channel thi s opposition int o
The overall co ntext , however , doos change along with th e collective

int er ests th at are activa ted by th e int er acti on of th e various wills within
soc ial mediation . In a historical co ntext , it is thi s mediation th at makes
th ese mediating mechanisms.
actual th e not ion of th e wage society. Thanks to thi s mediat ion , pr ocesses
of capital accumulation can also imp rove employees' livin g co nditions.
Tech nical progress can be co nverted into social pr ogress . That is no more ,
of co urse , th an a possibility; every thing depends on th e creation of
mediat ory mechanisms and th eir effective ness as regulator s.'
From another po int of view, thi s mediat ion creates global pr ocesses th at
are types of macro-econ omi c sequences. A Theory 01 Cap italist
Regulation, for example, pr ovides ample de monstr ation of th e ways in

which collective bargaining alte rs th e develop ment of pay structures and
how th e advent of th e large ente rprise transform ed th e pr ice sys te m. In
sho rt, thi s whole mediat ory structure helps to sha pe a mod e of regulation .
The life expec ta ncy of a mod e of regulation is th at of th e co mpatibility of
Again s t t he Primac y o St a te o r Market
th e mediati on mechanisms th at lend it co herence . This approach leads us

The regulation approach is ther efore related to numerous critical views of
11 1 61
to reflect on th e role of mediati on mechanisms in regulation th eory
12 1 61
- - - - - - - - - - - - - - - - - - - - - - - - - <0 .....-- -
-'
(1
co mpared with th e mor e genera l approach " f institution al econo mics.
behav iour patte rn s, co nd ude agre ements and combine individu al
The question of mediat ion mechanisms is th a! of th e passage from th e

micro -econ orny to th e macro -econ orny in a situation in which th e
objectives int o co11ective aims. The institution s th er efore perform
economic players and th eir behav iour pattern s are het ero geneou s. The
But in its burgeoning development , mod ern institutional economlCS ,
unsati sfact ory nature " f th e conoep! " f utility maximizati on as th e sole
uni ver sal goal within th e framework of limit ed resources makes it
with its strongly evolutionary tendency , doos not salve th e problem of

macro-econ om lC co herence . The pr oblem essentia11y consists in th e
impossible to imagine th e macro -econ om y as a proj ection based on a
per ception th at institution s are th e product s of behav ioura l int er act ion s
repr esentative individu al. Even if lhi s view per sists in macro -econ omi cs
amo ng micro-econ om ic agents. ' Acco rding to thi s definition , however ,
and daims to repr esen! th e sys te m on th e basis of prim ar y micro economic pr incipIes, it is incompati ble with th e new micro -econ orny .
traflic light s, product labels, th e rules of etiquette , social sec urity a nd

central banks can a11 be ca11ed instituti ons ~ The ways in which th e
Institutionali sm a s Pragmatist Minimali sm
institution s are linked , doveta iled , hier ar chica11y organized , and so forth ,
to form subsyste ms are not dea lt with sys te matica11y. This institution al
mediat ory funct ion s
approach doos shed sorne very impo rt ant light on th e co11ective fact ors
In th e face of thi s insurmountable obstad e in th e present sta te of
th at co ndition th e behav iour of individu al economic players and , by
knowled ge in th e social sciences, and particular ly within econo mics, th e

pragmati c pos ition consists in taking not e of th e separa tion between
exte nsion , on th e environmental changes produced by th e int er act ion of
microscopic and macroscopic phenomena . The investi gat ion s and
players tryin g to loo sen co nstraints. But it cannot explain th e existe nce ,
co herence or incoh er ence of macro-econ omi c patte rns by thi s method .
th eoreti cal pro positi on s applicab le to individu al players are not regard ed
as relevant to th e study of economic sys te ms. ~'Ie should sta te th at thi s
approach is very familiar to experimenta l scientists. Ever yon e knows th at
The o ry o Co n v e n t io n s
sorne physicallaws possess only sta tistical validity since it is impossible to
The th eory of conventions explicit1y admits th e existe nce of co11ective
account for observed pattern s on th e bas is of a complete explanation of th e

int er acti on between elementa ry physical units Similarly , without see king
entities th at are not th e results of th e behav iour of individu als un der
to ente r th e philosophical debate between holism and individu alism in th e
bounded rationality . The co11ective entities have an existe nce of th eir own ,
th e analysis of which is roo ted in th e cognitive sciences. The th eory of
study of what a society is, we can recognize regular macro-econ omi c
conventions th er efore olfers a wide variet y of mod els in which institution al
pattern s. There is th er efore a field of macro-econ omi c study th at is dosely
forms are studied. ' But th e transit ion to th e macro-econ om y is almos t
linked to economic po licy. It co nsists in examining th e relationships
tot a11y abs ent. It is this transiti on that regulation th eory seeks to establish
between th e global fact ors involved in th ese pattern s, in identifying th e

co nditions un der which th ey will remain stable , in making projecti on s and
by linking th e mediati on mechanisms to th e fundamental relationships of
in study ing th e global elfects of budgetary or mon et ar y respo nses.
capitalism , namely mon ey and employer-employee relations, as defined
In stitution al economics is critical of thi s minimalist approach. It
above. There is, however , sorne co mmon gro und between regulation and
convention th eories which reconciles th ese viewpoints with regard to
acknowledges th e existe nce of a multitude of rules, agre ements , customs
evolutionary neo-d assical econo mlCS. The latter regard s institution s
and norm s. It studies th eir appea ra nce , th eir elfect on th e elementa ry

economic agents and th eir defects. Compared with th e micro -econ omi cs of
mer ely as co ntracts between econo mic players. Conve ntion th eory and
th e rational individu al restr icted by sca rc ity , institution al economics

emphas izes a variety of relationships. These create more or less exte nsive
co-ordination sys te ms among micro-econ omi c players, favour certain
13 I 61
regulation th eory explicitly percelve institution s as mediat ory

mechanisms. Enterprises are th e co-ordinating organizations between th e
micro-econ om y and th e macro-econ om y , since rules of payment , flows of
goods and mon ey and financial relationships are linked into a hierar chical
14 I 61
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-'
(1
structure where deals are
struck between various categories of
histor y of th e twentieth century is that of th e adve nt of th e wage society.
sta keholders with c1aims on th e col1ectively pr od uced added value. The
It was suggested above th at capitalism is a force moti vat ed by th e
conceptual division of th e ente rpr ise int o product markets, labour , and
individual's desire to accumulate money . This force is converted into a
capital, in neo-c1assical econo mic th eory obscures th e essential po int,
dynamism th at transform s th e division oflabour . Since it is int rin sically a
namely th e existence of structure d links th a! are no! market s, links witho ut
creato r and a des troyer , capitalism can only achieve pr ogress for society if
which th e overall co herence " f th e econo mic sys te m is unintelligible .
sets of mediat ion mechanisms, forming a mod e of regulation , estab lish
There are, th ou gh , differences between co nvention th eory and
coherence among th e imbalances inher ent in th e capitalist sys te m. The
regulation th eory on th e ro le of mediati on mechanisms as a means of

accounting fur macro -econ omi c patte rn s: th ey are apparen! in views of th e
cumulative effect of thi s coherence, once it has been achieve d , is th e

estab lishment of a rgime of gro wth.
formation of th e collective entities th rough which th ese mediat ion
The adve nt of th e wage society is th e pr oduct of changes in th e
mechanisms operate. Convention th eory , like th e ideas of th e neo-Aust rian
employe r-employee relationship in th e frst half of th e twentiet h century:
schaol inspired by Friedri ch vo n Hayek, tends to see th ese as spo nta neo us
processes emerging from th e dynamic int er act ion of individu als pursuin g
th e int egrati on of th e labou r force int o th e process of th e circ ulation of

wealth pr od uced under th e stimulus of capitalism o This int egrati on has
th eir int er ests. Regulat ion th eory , by contrast , emphas izes th e organized
estab lished constraints on th e accumulation of capital which have given a
establishment and pursuit of collective int er ests. The creation of

institutions is an esse ntially political act, and politics is never an
collective purpose to th e pursuit of int er ests, th er eby legitimizing both

parts of th e dichotomy between individual goals and member ship of
individu alized pursuit . Gov ern ment int er vention , industrial disputes and
society. On th e one hand , constraints on th e accumulation of capital have
th e formalization of compro mises by th e legislature must be considered in

order to take account of changes in institutions as well as to descr ibe th e
opened up mar ket s created by th e int egrati on of th e labour force. On th e
hier archical structure of th eir relationships. The mode of regulation

manages th e tension between th e expansive force of capital and th e
pr ocess has been norm alized by th e acq uisition of soc ial rights giving
employees access to th e wealth th ey pr oduce. This histor ie transform ati on
democratic pr incipIe. This pr incipIe is th e source of th e m ediat ion

mechanisms th at lead to regular macro -econ omic patterns in which th e
gives rise to th e following pro position: the modes 01regulation in the w age
other hand , th e subordination of th e labour force to th e pr od uction
society are legitim ate to the exten t that they permit social progress .
accumulation of capital can be made compatible with socia l cohesion .

T h e Age of Large Organ iza t io n s and St a b le So cia l H ie r a rch i..s
The Advent o f the W age So ciety
Politi cal debate is indispensable as a means of transformi ng th e aspira tions

The twentiet h century has been an era of social uph eaval on an exce ptional
sca le." In th ese d osing yea rs of this century , when Euro pe has fallen pr ey
to chro nic stagnation, pessimism has bec ome fashionable among sorne
th at stem from experiences th at individuals under go in particular

economic situations int o social aims wh ich can be suppo rted by broad
int ellectuals. As th ey review th e key eve nts of th e century , th ey delight in
sec tions of th e po pulation. After all, political deliberation , whether it

infiuences legislati ve work or whether it results in agree ments between
focusing on its tragedies. This nihilism , or , at bes t, sce pticism,
organizations repr esenting int er ests th at are both mutually opposed and
contemplates histor y and judges it abs urdo
~'I hether
th ey invoke th e curse
of th e hum an condition or th e empty abyss th at lies beyond th e acq uisition
mutually depende nt , has always bee n party to th e creation of the major

social mediati on mechanisms. It is in thi s sense th at it was true to say th at
of freedom , th ese pess imists thrive on a metaphysical th eory in which th e

noti on of pr ogress has no place. Such a point of view is not part of th e
social pro tection are institution alized compro mises. They do not derive
regulation approach , which pos tulates th at th e th read running th ro ugh th e
from
15 1 61
th e rights of employees at work, th e collective negoti at ion of pay rates and

th e
spo nta neous
pr ogress
of
capitalism
but
from
16 1 61
- - - - - - - - - - - - - - - - - - - - - <0>-- -
an
J
A THmR'l' OF CAPITALIST REGULATIO,"
institutionaliution o ,..,Lo.tiotJ between ~rnploy"", and " mplo YM. Th..

mod.. of ~t:lon th.o.t _ .. bJish.d lb. f'ord1st sysI <>m, wh"....b y lb"
e..regont'S, ..... th" driving forot behind rh9 rowth tlLat followed Norld
~"ar
n.
COtls tu ints impos;>d on oopl1.a1 COl reepcuded to lb.. d"U""" o m1"iT" tton
of lb.. Lobour force, w.os Ih frwt of lb. Il1StItutlOJWhz.otlon o economic
t.blish m ..nt of. Gro..th JUogi l1le
r.Lotions.
f rom lb.. capttalist poinl of VI.... lbe twentleth century h.u bHn lb.
c:.ntury of orzanlUtion. CoPll;Wsm b.lMd 011 org=oon in lb. ind\lStfi.ll
ind financial """"o.. h.u becom. 1M llUlll otnglM o f ~ul.ol>on in p~

ot &humpeter's in<bvidu\ "ntr..pr..nWl'1l. 11 is ~ o rganJ.Zoo c.lptWo.Jm
th.at h.as structuri!d tM
lD.UI<lIS
emp!oy4<i
10
industry mto hi<rr~hic.a1
stnl,,", r.ngmg &om th.. ~ WOTW to 1M <mgtnOOT. lo ,...pLo."" lh.
Tbe larg.. org.ontzabOll nOl only da ... newllOCial m ..t.. mto ,!self. JI .olso
provided them ...th .. fr;om8W'Ol"k ;md .. code of membership : .. st.... dy "'..g. ,
;ob IleCUnty, the pi OSl*'t o f elunbmg ........ble promollOn ladde r ;md ru.les
g~rnrn g up.. an:I mobiliry. n.. emploY""" mtegratoo. mIo
the
org.ontzat1on .....r" thus ..ble ro gv.. me.uu.ng lo th"", <1Splu .t1ons by
pursw.ng the gOOofsocial mobihry." Tbis is ...hy C<!Ttain soc:iologtsts were
..ble to soy that th" ....g9 soct.. ty"'as rurnmg d .."" struggl" mto .. muggl..
ov.... st..tus. Thes<> aspir..nons extended ..cross ge""r..tional boundanes
..nd ..ddr<'SSed .. powerful d..mand to schools. which bec..me the prod llCWS
o hum..n c..pit..l, striv;ng for equ..lity o opportunity. In fact , sdooling
Wl! " selectio n process , ..nd schoo ll h..d to ..d..pt to the limit..tions on
soci..l mobility th..t the hierarehy impeled to ensure that the large
org..niz..tions oper..ted in the intereltl of e..pit..l ..ccumul..tion. This is what
medi..tion mech..nisms do effectively: find ..ccept..ble compro mil el
between forces th..t are diametrieally opposed but ineKtri cably linu d.
Another conclusion dr awn from this connection between the maja r
enterpn se or administr ative app.oratUI and the ""hoa l is that the vari oUJ
medialion rnechanisrns ar.. dc v..tailed ro furrn Ihe frarnework of a rnode o f
~ul. tion . Tbis dov"t.oiling does nor hapren ..uromatioo.l.ly bec.ause ...eh of
t h_ org.uuza.tiOllShu its own TltionIl.., rhe mregrity of its 0WlI muctures
tbat m.ll:t'S .t pers<>V"N m ils percerved lIOCial rol... Tbat 11 ...hy th..
moaaIC oflnd"" that cOOIm..i in lb. f.actorWs oflbo. mn..t"""nth ""lltury.

Or. niud c pitalism d""..Jop.d from lb .. end of lb<> DIDe'oonlh C"nllU)'
'Ohd hlossomed fler ~'1orld '.'I..r 11. The m. JOl COln J>dnies, the pubhc
institutions . dmini!rt..r;ng sociol infr"lItTUetures such d S schools , ur b..n
f..cilities . nd tr.n. por! .ysteml , Ih.. 1IOci. in.titutions nd Ih.
interm ediaries involved in lh.. circulatic n o capit. - large cornmerci..l
hu. mee. and the financial IYltem _ gre.. rapidly as the fulltime
employment ..age contract beeame the norm .' All of these organi::ationl
enable markets to function ..hile they themselves operate according te
their O" n rationale _ that of an organization. The form of organi::ation
..hieh divides the ..ork for~ into funetional l tra ta is proordainoo. beca.uoe
it is ..ffectiv.. in th....age lOery. This hiera~hica.l stratifica.tion reduCft
unCt'rt..mty ..bou t th.. behavio ur patterns e >cpooctt'dof thOS<' ..ho oocu py ..
pos:ition within th.. mucrure. Tbe ot'J'"niutions l'!!build .. ,...nse of
beioDgm to SOCI..ty on the nuns of the tTadlt1olwl. fonns o social hfe WI
e"p1t..hsm d<'StToys.'
The larg.. org.ontzanon is inll!lf..ted by m ..ttfica.non, beca.UH lb.
'Uffing syst <'lll it ""tails is robu.r ~OI.lgh to ...thst;md th.. shod:s of lb.
market economy. In the For <htt model,lll>CWt..mty ..... releg..ted lo the
nw-gins o f ca.pitilist ~uLotioll, ro sma.1I suboon tTactl.ng b = _,
La... It 11 .. htstonoo.lly unique ~ttty tbat ""'y be oo.I.led .. growrh

regnn e. By con tr ast , the symplOllV of U baustiOll of .. growth regune,
beu ldrng .. pen ad of =C'eT1l1llly, criIlI "lid ehange, mus! be """,ghl in
",.. !l'w>ct>ons of the mlerlctlon bel _
medW.lion m'OChanisms.
agricul ture, sm.ill tT~..rs, Thu"d ~"orld co untries, ;md "'" forth. In this ...ay,
rhe larg.. org.ontzation \eltttnued ,IS growrh by suchng into the labc ur
forot llOlI-....g~g po puLotions ce the poonphery of Olpluhs:m. and
gJvmg th<'lll th.. chan~ of mll!lf"non mto Ih.. malIlS1rwm <!COnomy. Tbe
tT..nsformabon o th....mpioymenl structure, mvolvmg IIIIgr..bon mIo p.oid
employrn..nt ..nd str..ttfic..tion of Ihe labour fote<' mto socio-professional
In this cab" rellC<' th.at ulttm.ately turns mIO rn.aifu.lIcttoll.1llg , ," rnust
"""..r be forgon"n th.al medW.tioll rn~barusrns at'! chorged ...th the
retlS10ll tlLat .. K1StS betw...en rhe IlIdtvidUll ;md soci<'ty. Tb" compa.ttbihry
betw
mobthty ;md HC\1Oty provided by the larg.. org.uuza.b on _ as ioDg
.as th II .. cah"rent mod.. of NguLol1Oll - roelllforct's mdtVldu.ths:rn, for th..
hi..ruchic..l prrnciple is ..t worl: rhere. Tbi. is how .. coU<>etion o functiolls
posn An TO THE NE W EDIT IDN CAPITALlSM AT T HE T URN
17 I 61
coh....""C<' of .. mod" of NgU!.a11Oll does nOlconfurm to ;my p1"<H!'St..bhsh ed

g~oel"ll
18 I 61
0)--
-'
(1
is articulate d th rough a sel " f rules. Autho rity can no longer be legitimi zed
beeause th e inerease in money wages was linked ta th e pri ee index oThis
by a symbolic ligur ehead or by th e invocat ion of a transcendent moral
made th e impro vement in th e sta ndard of living of th e workforc e
value or religious belief. The large organization considerably alte rs th e
compatible with th e constaney of th e rate of pro fit and henee with th e
are citizens with al! sorts of cards -
stea dy aecumulation of capital. This set of sty lized faet s depicts th e maero -
identity cards, nati on al insurance cards, credit cards. ~'Ie are able to join al!
eeono mic pr ecess whereby th e labou r force was int egrat ed int o capitalism o
sorts " f associations. In sho rt, we belong to man y things. Bu! narre of th ese
To th e first pillar of th e gro wth regime , namely th e distr ibution of
member ships implies any particular emotio nal commitment . Scope fur
wealth , was added another, comprising a high level of investment , th e
auto no mo us action, unthinkable only a few decades aga, has bec ome
inerease in th e labour force, stab le employ ment struetures and a low

unemployment rate oThe pos itive int er aeti on between th e distr ibution of
nature of " ur sense of belonging.
~'Ie
available to a multitude of individuals."

The rise of individu alism , which released a pr od igious amount " f energy
that large organizations suecee ded in harn essing, also ran int o opposition
in th e eve nts of 1968, whieh were experieneed more or less int ensely
th roughout th e ~'Iestern world . ~'Ihile th e lar ge organization gives rise to
individu alism , it must also limit th at individualism in order to play its
mediat ory ro le. The large organization limit s mobility and innovati on ,
beeause th e stab ility of its constituent rules doos not a110w it to
income , on th e one hand , and investment and pr od uetivity , on th e other ,

was a result of th e dynamism of demand o Thanks to th e very broad
redistr ibution of th e fruits of inereased prod uetivity among th e labour
force , po pular demand, based on mass consumption by an ur ban and
sub urban society, lent impet us and a sense of diree tion to teehni cal
pro gress . The result was endogenous gro wth, as it is ca11ed nowadays. The
lon g-ter m development of emplayees' consumption demands ensured a
aecommodate mor e th an a limit ed margin of flexibility in its operating
rapid and very stea dy rate of technieal pro gre ss . The steeper th e lon g-term
conditions. Large companies, for example, in opting for a form of teehnical
gro wth curve , the grea te r pr ogress was aehieved in th e do main of
pr ogress and trying to contro l th e pace of th at pr ogress , will make use of

employees' initi ati ves but will channel th em th ro ugh company
pr oduetivity . These dy namiea11y inereasing return s on a maero -eeon omic

sea le mor e than offset th e diminishing mar ginal retu rn on investments as
meehanisms. These limit ati ons pr eserve capitalist power over th e
th e steck of pr od uetive capital inereased . The int er aeting dynamies of
pr od uetion precess but thi s power comes int o confliet with th e inereasing
consumer demand and teehnical pro gress stea dily exte nded th e limits of
autonomy of individu als. The ques t for an ente rprise culture aims to
rediseover emotional commitment in order to cement emplayees' sense of
teehni eal eflicieney in th e pr oduetion pr ecess, th er eby pr eventing any

reduetion of pro fit rates. It alsa continua11y created new aetivities to
belonging ta a purely a bjeetive type of organization. The failure of th ese
absorb th e labour force th at pr oduetivity gro wth had made superfluo us.
elforts in th e ' 97 0S was one reason why pr od uetivity ran a ut of stea m,

inflati on ar y pr essures built up and th e rate of gro wth declined.
Along with self-sustaining long-term gro wth - which lasted for almos t
th ree deeade s - ano ther remarkable property of Fordism was th e way in
which the gro wth regime could cushion th e fluet uat ions of the business
The Economic Principie s o Regulation in the Fo rdis t Mode l
cycle. Sueh is th e eflieieney of th e regulation mechanism . The coherent
The exee ptional quality of this mode of regulation , which aehieved
dovetailing a f th e mediating instituti ons played a dee isive ro le her e. First

of a11, a stea dy rise in real wages was guara nteed by co11eetive pay
maximum coherenee during th e 1960s, may be illust rat ed with referenee

ta a num ber of sty lized eeono mic faets." The ccre of th e mode of
regulation was th e reeoneiliation of rapid inereases in pr od uetivity with th e
gro wth of real ineome and with stab ility in its distribution. Real wages
inereased reg ularly beeause th ey were linked ta pr od uetivity gro wth. The
functi on al division of ineome int a wages and pro fits remained stab le,
19 1 61
bargaining and by th e expansion of social transfer s, whieh served as a

powerful anti-cyclieal inst rument oIn th e event of a transitory drop in sales,
large companies could foresee that th e trend in demand was na t alte red.
~'Icrking
on a longer tim escale than th at of th e trade cycle , th ey invested on
expee ta tion of futur e demand gro wth ahead of th e pr esent sho rtfa11, thus
sustaining globa l demando
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The financial sys tem and its clase links with monet ar y paliey form ed a
sec ond line of defence to guara ntee th e dur ability of gro wth.
~'Iithin
framewa rk of rules th a! legislat ed in th eir favour , banks co uld administer

int er est rates so as to safeguard th eir profit mar gins. They th er efore
co mpeted with eac h other over cre dit vo lumes. The cre dit sys tem was a
cultures in Euro pe . The Scandinav ian Social Democ ra ts pu t th e sta te at th e

heart of th e collective barga ining pr ocess, as a med iator y thi rd party in a
centralized sys tem of incom e co ntro l. The German far m of welfare-state
capitalism - the 'soc ial market econo my' - developed a tradition of close
buye r'. mar ket , with rigid interest rates and high elasticity of supply. This
collaboration on a regional sca le by th e pu blic , private and caoperative

sec tors to create th e technical and hum an env iro nment that would bes t
enabled companies to invest in gro wth and techni cal pro gre.. al minimum
pro mote th e co mpetitiveness of small- and medium-sized businesses. In
financial cost , which created a high lever age " f borrowed funds over
companies' Qwn capital. This credit supply funct ion certainly tended to fuel
France th e ro le of gove rn ment was to co unteract th e division of th e union
cyclical ten.ion s. The susta ined pace of capital accumulatio n resulted in
France after ~'Iorld ~'Iar Ir was led by a central administra tion, which
succee ded in co nverting th e mer cantilist traditi on established by Jean-
de mand outstripping supply, th er eby creating inflati on ar y pressures.

However , th e way in which th ese pressures were eased, namely by
movement and th e arc haic attitudes of employ ers. The renewal elfort in
Baptiste Colbe rt int o a far ce far pro gress , th an ks to th e renewal of th e
increased pr od uctivity , explains th e cre eping inflation th at dogged th e era
lites. The French mod el of sta te direction of th e econo my had a strong
of Fordism .
Monetary po licy was th er efare mainl y directed towar ds th e avoida nce
public pr esence in th e pr od uction sys te m and enta iled tight co ntro l of th e
of inflat ion ar y excesses. Its chief problem was to limit th e liqui dit y of banks
financial sys tem.
by quantita tive measures, which were tou ghened whenever signs of
The use of med iator y instit uti ons th er efare taok on a nat ion al hue ,
allowing th e de velop ment of nation al varieties of th e Fordist gro wth
excessive demand became widespread - mandatory reserves, limit s on
regime . The coe xistence of th ese variants was permitted by th e
borrowing to th e central bank, credit restr ictions. For all th at , th e

recessions which thi s mon et ar y po licy might have pro voked were fairly
internation al monetary sys tem, which left scope far nation al auto no my in
mild and shortlived, far th e reasons given above. The dynamics of inco me ,
demand and investment ensured th at sales always picked up again.
far eign trade co ntributed at th at tim e , th e limited degree of financial
th e choice oft heir mod e of regulation . In fact , th e moo est share of GDP th at
integration resulting from th e restr iction s on internation al capital
movemen ts and th e ability to devalue th e currency in a sys tem of fixed bu t
Go venlmen t and Nation
adjustable exc hange rates offered sorne raom far manoeuvr e in th e

farmulation of economic po licy. In th ose pos t-war yea rs, govern ments
Relation s between gove rn ments and nati on al economies have always been
were able to caordinate th e vario us mediat ion mechanisms. Economic
th e source of bitter ideological strife. The do minant view in th e 1960s was

th at lon g-term gro wth depe nd ed only on supply and th at th e macro -
po licy de te rmined how th e macro -econ om y was to be regulated .
seen that this co herence affecte d th e relationship between pro gress in
econo mic influence of the gove rn ment de pended solely on de mando So th e

sta te had to regulate th e business cycle to mat ch th e lon g-term trend as
pr oductivity , wage increases, sacial transfer s and domestic demando The

pivotal po int of thi s co herence was th er efare th e tot al amo unt of wages and
closely as possible in order to maintain full employ ment, using a
salaries in its dual ro le as pr od uction cost far firms and co nsumer spending
po wer. That is why it was possible to spea k of a nation al wage sta nda rd to
co mbination of budgeta ry and mon et ar y measures. This, at least , was th e

Anglo-Saxo n idea of a synthes is of th e nea -classical and Keyn esian schaols.
~'Ie
have
descr ibe thi s moo e of regulation in a nu tshell . The sta te asserte d its
It was attac ked in th e ' 97 0S by th e ultra-liber als, who did not see any
responsibility in thi s dom ain by stabilizing th e national business cycle . In
reason far macro -econ om ic int er vention by th e sta te, and by th e
th at way , it create d a chro no logical perspective far all econo mic agents
and increased th e pr edictability of th e climate in which pr ivate agents
mon et ari sts, who regard ed it as no more th an nominal pr ice stabilization.

There have certainly bee n other economic histor ies and other po litical
- 21 I 61
co nceived and pursued th eir ventures.
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Apart from macro- econ omi c co herence , which is th e Keyn esian

heritage recognized by th e Anglo-Saxon tradili on during th e era of For dis!
compall1es.
It was indicat ed above that the financial sys te m was a sys te m of
regulation , th e regulation approach un derlines th e more structura l
capitalist mediat ion . It involves eva luating wagers on th e accumulation of
gove rn ment inputs int o institution s. This idea is nurtured by the

experiences of co ntinental Euro pe . These forms of sta te input may be
future pr ofits, red istr ibu ting risks in a rder to spread th em more widely,
and acq uiring and investing funds drawn from th e sav ings of th e genera l
characterized by th e aims th ey see k to achieve: building up collective
pu blic oBut financial activity implies certain risks th at cannot be spread
product ion bases; stimulating techn ical pro gress , overc ommg th e
because th e financial markets are incomplet e , because th e infarm ati on f10w
collective risks inh er ent in th e financial sys te m; and pro moting an

equita ble distr ibution " f incom e .
is imperfect and because attitudes to a particular risk are changeable. The

result of thi s is a contagious elfect which pr od uces co11ective behav iour
The Institutionai Bas e
pattern s, genera ting waves of optimism and pessimism in th e co urse of

which financial values can unde rgo hu ge f1uctuat ion s. These disruptions
The impo rt ance " f th e schaol in th e emergence of th e wage society has
can trigger financial crises, th e social cost of which is far higher th an th e

cost to private invest ors. That is one of th e key reasons why govern ments
already been indicat ed . The same applies to energy, transpo rt and ur ban
int er vene in th e financial sec to r to pr event crises if possible, or at least to
planning. A11 th ese investments are far more pro fitable to society th an to a
limit th eir disastrous soc ial consequences.
pr ivate invest or , because th eir fu11 co11ective value cannot be translat ed

int o a pr icing sys te m. The resources th at need to be raised to fund such
Regulating the Financial Sys tem
co11ective capital are eno rmo us, and th e amo rtization period s are very
long. These infrast ructural amenities are th e social faunda tions of
Unde r th e Fordist regulation sys te m, nati on al gove rn ments have genera 11y
pr od uctivity .
Techn ological inn ovati on also depends on co11ective fact ors - bas ic
been str ongly int er ventioni st in financial matter s. They have established
research , scientific knowled ge and ski11s - which yield fewer return s far a
pr ivate invest or th an far soc iety as a whole. ~'Ihe n th e sta te withdraws from
rules in favour of co ncentrated banking sys te ms, often dilferentiating

between banks and other financial instituti on s. They have co ntro 11ed
thi s domain , sorne of th e co11ective fact ors th at lend impetus to technical
int er est rates to avoid excessive variations and have co ncluded

agre ements with th eir respective central banks to ensure th at commercial
pr ogress are missing, and th e pace of innovati on slackens. The more
banks in tem po rar y difliculties have enough liquid asse ts to guara ntee bank
ava ilable th ese fact ors are, th e more beneficial exte rnal elfects th ey have
deposits at a11 tim es.
on th e pr od uction of mar ket goods and serv ices, encourag ing greate r
The development of social transfer s creates moral hazard s similar to th e
diversity . This process is at th e roo t of th e increasing retu rn s from

capitalist production which pr eserve th e stability of th e rate of pro fit . Sta te
financial risks . These transfer s, in fact , are inspired by solida rity and th e
int er vention can take various far ms. ~'Ihere pu rely co11ective fact or s are
co ncern ed , fact ors which canno t be pr ivately appropriated - genera l
regulated by pr ivate insurance contracts but by social ru les. The moral
scientific knowled ge - th e sta te must unde rtake to prod uce th em in pu blic
need to co ver social risks that cannot be spread. They are not th er efare
hazard lies in th e fact that th e sys te m of social pro tection has no co ntro l
over th e soc ial costs far which it is liable . It administe rs a farm of passive
labor ator ies. ~'Ihere th e fact or s of inn ovat ion can be pr oduced pr ivately records of indu strial research - because th eir use is a source of revenue to
solida rity in which respo nsibilities are diluted. The ways in which sta tes
those who pr od uce th em , th e sta te may restr ict itself to encourag ing
eq uity un derl ying th ese sys te ms of social protection derive from a
invention . It may olfer tax incentives, relax th e rules govern ing patents or
co mmon philosop hy . A pu rely individu alist society cannot exist; th er e
involve itself directly in associations of public labor ator ies and pr ivate
must be a co mmon bas is of solida rity. This co mmon bas is co mprises first
- 23 I 61
have tried to resolve th at co ntradiction vary widely . But th e pr incipIes of
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(1
and furemos! th e fundamental necessities of which no-on e sho uld be
th e established macro -econ om ic regulator y sys te m. Many such changes
deprived and which mus! th er efure be pro vided by pu blic or pub licly
have occurred over th e past twenty to twenty-five yea rs: th e extension of
guara nteed sys te ms. It also implies social justice in th e furm of a sys te m of
taxati on which red istributes wealth while maintaining th e hier ar ch y of
th e wage society as capitalism spreads across th e wa rld , financial
incom es within genera lly accepte d limit s.

Equity is thus an impo rt ant dimension " f th e reconciliation of capitalist
int er ests with social pro gre.. in th e wage society. By pr eventing exclusion,
globalization, th e technal ogical revolution and th e renewal of individu al

int er ests. These upheavals alfect emp loyment , employees' lifest yles and
th e subs ta nce of social pro gress in th e co untries th at were pr eviou sly th e
main beneficiaries of grow th and mass co nsumption .
it reinfor ces citizenship and henee identifi cati on with th e econo mic sys tem.
By pr eser vin g homogeneity in th e distr ibu tion " f incom e , it encourages th e
widespread adoption of mod ern lifest yles and henee th e development of
mar ket s fur mass co nsumer goods, th e very development th at served as
What is Glo b a li za t io n?
The term 'globalization' has bec ome a catch-all word fur jou rn alists,
po liticians and th e business co mmunity . It is th e horizon fur all our hopes
th e main engine of capital accumulatia n.

The Gla b a li za t ia n af Ca p it a li s m a nd Cris e s in t h e Wage Sa ciety
and th e source of all our ills. In co ntinental Euro pe it is accused of having

caused chronic unemployment . In th e Anglo-Saxan co untries it is blamed
fur th e fall in ave rage real wages and th e spec tac ular widening of th e
~'Ihen
A Theory 01 Capitalist Regulation was written , th e Fa rdist sys tem

was just beginning to malfunction . ~'Iith twenty yea rs of hin dsight and
mcom e gap.
These co ncern s are dismissed by th e liber al economists who emphas ize
within th e th ea reti cal framework pr esented her e , we might venture to
th e pr imacy of global co mpetitiveness. Free trade is not a zero -sum game
suggest an und erstand ing fur th e man y changes, jolts and co nvulsions that
but rather an engine of gro wth. The accelera tion of global gro wth in th e
have mar ked th e crises of thi s period oTo th at end , we must reconsider th e
two co ntradicta ry faces of employer-employee relations which brought
' 990S, after th e pr eviou s decade had been one of decline and stagnation in
man y developing co untries, has int roduced hundreds of millions of pea ple
furth th e wage soc iety.
to th e era of mass co nsumption .

Aoove all, globalization means th e spread of paid employ ment which
Let us recall th e hypo thesis that und erlies th e regulation approach,

namely th at capitalism is a furce fur change which has no inh er ent
has enab led capitalism to penetr ate int o th e very heart of
regulator y principIe ; thi s pr incipIe is pro vided by a co herent set of
societies. This is happening because th e int ernati on al division of labour
mechanisms fur social mediati an th at guide th e accumulation of capital in
olfers th e pro spe ct of pro fit . Ma st impo rt antly , th e cost of transferring upto-dat e techn ical knowled ge is falling sharply. An increasingly wide range
th e direction of social pr ogress . The capacity of th ese mediat ion

mechanisms to absarb th e elfects of change in a manner co mpatible with
th e global gro wth rate is limited in two ways. First , the elfective ness of
organizatia ns lies entire ly in th e sta bility of th eir internal rules, bu t th ese
allow them limited scope to respond to variations in th e co nditions
govern ing th e accumulation of capital. Second, th e institution alized
co mpro mises between int er est gro ups, whether th ey are co ntractual or
enshrined in law, only red uce uncertainty by virtue of th eir rigidity . The
causes fur th e malfunct ioning of th e gro wth regime must be sought in th e
non-~'Iestern
of activities has been pro fitably included in th e internation al exc hange of

more highly skilled work in th e mor e developed co untries fur lower-skilled
work in th e less developed co untries. This two-fuld dy namism, broadening
and deepening th e division of labour , is stimulating th e gro wth of
pr oductivity . In th e most advance d capitalist co untries, th e serv ice sec to r
is being revolutionized by th e upsurge in int ellectual work on co ncepts,
symbols and furms - technical and financial co nsultancy , design , know-
distor tions between th e changes unleashed by capitalism and th e
how, infurm ati on and co mmunication . In th e develop ing co untries, th e

intensit y of capitalist activity is increasing with th e prod uction of capital
impotence of the existing instituti ons to dea l with them in th e framework of
goods, th e gro wth of pr ocessing indu st ries and th e expansion of financial
POSTFA CE TO THE NEW EDITI DN: CAPITA LlSM AT THE T URN
25 I 61
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serv ices. The int ensification of th e int ernational division " f labour is
th er efore equivalent to an inerease in pr od uctivity .
There is another dimension of th e international division ofl abour which
collective pr ocess which depends on investments in th e infrastructure and
loo ks sel fur a promising futur e al th e sta r! of th e next century , and th a! is

th e exchange between genera tions. The sav ings of th e ageing active
need to form ulate regulator y pr incipIes th at can guide th e accumulation of

capital int o a new era of wage societies calls for changes in man y
population of th e developed countries will be exchanged fur fla ws of future

income earne d by th e young labour force of the newly industrialized
co untries. This type of int egrat ion is based Qn salid demogra phic trends.
instituti ons. Nation-sta tes are required to rede fine which social rights are
human capacities. And so th e globalizatio n of the econo my is leadin g

neither to th e disappearance of nations nor to a minimalist sta te. But th e
truly fundamental and to stre ngthen th e collective bas es of th eir

co mpetitiveness.
The rate s of gro wth and th e unemployment trends over three decades
The average age " f th e po pulation of th e develop ed co untries is bound to

rise because of th e declining fertility rate amo ng women aspiring to greate r
suggest th at th e changes in th e social med iation mechanisms are pos ing
independence , and because of increased life expec ta ncy. Furthermore , th e

declining birth rates that are now being registered in mor e and more
more serious pro blems in Euro pe th an in th e United Sta tes. There has not
bee n a long-ter m slackening of gro wth or increase in unemp loyment , and
regions of th e world will result in a relative increase in th e size of th e labour
th e economic po licy options have not been rad ically changed, in th e
force as a percentage of th e who le po pulation. The transfer of sav ings that
United Sta tes. In Euro pe , by co ntrast, discr iminator y divisions have
results from thi s really did take offduring th e ' 990S. It is a key fact or in th e
emerged . Britain has seen th e overthrow of th e regulator y sys tem ,
pu rsuit of financial globalization, altho ugh th e latter phenomenon dates
resulting in th e int rusion of co mpetition int o indu st rial relation s. Yet th e

Germanic mod el of negoti ati on s and co mpro mise between organized
mu ch farther bac k.
This transform ati on of th e division of labour on a planetary sca le is a
source of capital accumulation which is fuelling a new gro wth regime .
However , as has always bee n th e case in th e hist ory of capitalism , thi s
int er ests has remained unchanged . The ramp ant gro wth of social inequality
in th e British mod el , which mat ches similar American develop ments, and
th e relentless rise of unemp loym ent in th e Germanic mod el both und erline
th e difliculties facing wage societies th at have experienced Fordism when
techn ological revolution is not self-reg ulating. The po licies, mentaliti es and
instituti ons which int erfer e with th e determinant fact ors of capital
th ey try to eq uip th eir instituti ons to establish a new co mpatibility between
accumulation do not develop at th e same rate as techn iqu es, working
th e accumulation of capital and social pro gress . To arrive at a better
method s and markets.
und erstand ing of thi s tension , it will be useful to describe th e numerous

forms taken by th e globalization of capital.
The Europ..an Dim..n sion

Ec onomic Integration
So th e new accumulation sys tem th at is establishing itself is not th at
dreamed of by th e th eorists of free trade - a global economy unified by th e
Globalization is a multiplicity of distinct but int er connect ed pr ocesses.
mar ket . Altho ugh economic po licy has shifted towar ds liber alism , it has
0ccurring at different spee ds , in different sequences and in different places
not retu rn ed to th e co mpetitive capitalism of th e ninet eenth century .
with vary ing degrees of int ensit y , th ese pr ocesses are far from co herent .
Neve rtheless, th e institution s of Fordism have found it very diflicult to

ada pto The regulations th at pro ved effective in th e 1960s have bec ome
They take roo t in th e main areas of change in th e int ernati on al division of

labour . But by int er acting with existing regulation mod els th ey create
lar gely inadequ at e . This doos not , however , alte r th e fact th at th e twentiet h
various types of disruption in th e econo mic , financial and mon et ar y fields.
century has see n th e rise of th e wage societies. In th ese societies , social
Economi c int egrati on is a pr ocess th at has increased in scope since th e
rights are a co nstituent element of citizenship; th ey are th e cement of social

co hesion . The organization of th e work pr ocess has increasingly bec ome a
1960s. The most obvious measure of its develop ment is th e fact th at world
trade has bee n gro wing at a co nsistently fast er rate th an world GDP. This
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tr end has pro ved ro bust enough to withstand th e financial erises and
has been affected by th e disappearance of th e rules th at guara nteed its
structura l shoc ks th a! have studded th e hist ory of th e las! th ree decades.
stability during th e Fordist era. The more techn ical ski11s bec ome ava ilable
to co mpanies th roughout th e world, th e greater is th e exte nt to which th e
Econ om ic int egrat ion genera te d by trade has no! been hom ogeneou s. The
establishment of regional econo mic areas, where th e greates t inereases
have occurred in foreign trade , has b een a particularly co nspicuous
development in Euro pe , bu! th e trend has no! left Asia or America
untouched . However , spec tac ular th ou gh th e development of trade may
be, it doos no! account fur th e pr ecesses th a! are transforming th e
co nditions govern ing th e accumulation of capital. It doos no! satisfacto rily
explain why such severe and lasting da mage has bee n done to th e macre-
cost of the various typ es of labour is de te rmined by co mpetition on a

supra natio nal sca le. If spec ialized workers and engineers have th eir incom e
de te rmined in supra natio nal market s, th eir int er ests will split. Co11ective
barga ining, which used to maintain a stable wage structure accompanied
by a stea dy increase in real income , is no lon ger un der pinned by a co mmo n
int er est in th e up war d shift of th e who le wage ladder .
econo mic equilibrium of th e co untries of Euro pe . To do th at , we must focus

on th e forms ofcompetition to which th e technical pr ogress of our age has
Weai<ened Co ll e c t iv e Bargaining
given rise and which feature in th e int ernati on al division ofl abo ur .
The globalization of co rpo ratio ns has un dermined th e stability of wage
Internat ion al co mpetition has bee n exte nded to bread areas th at were
structures. As lon g as th e exc hange of goods was th e predominant form of
shielded from it un der th e Fordist sys tem. These include pub lic transpo rt ,
int ernati on al int er dependence , th e labour of one co untry co uld be

exc hanged for th e labour of ano ther without th e cor e of th e domestic price
co mmunications, inform ati on
sys te ms,
television
net works, energy
distr ibution and financial serv ices. This amounts to a decisive shift in th e
dividing line between mar ket s and public serv ices. The social shoc k has
sys te m being significant1y affected by such exte rnal transacti on s. ~'Ihen

firms bec ome int egrat ed net works of plants locat ed th roughout th e world,
success fu11y supplied by nat ion al pub lic mon opolies in which th e
th eir co mpetitiveness doos not depend decisively on th e co mparative

advantage in a particular co untry . They are co ncern ed with global
workforce had enjoyed spec ial co nditions of employment . In co untries
profitabilit y and th e centralizatio n of cash flows which are means of th eir
been a11 th e more dee ply felt in co untries where public serv ices were
where a high percentage of th e labour force had th e sta tus of civil servants,
th e labour co ntract in th e public serv ices used to have a strong influence
on wages and pr ices in th e who le economy. That is why th e impact of
co mpetition is causing co nsiderable upheaval in those co untries.
This upheaval is amplified by th e effect of th e exchange between ski11ed
stra tegic dec ision-making on capital accumulatio n. Because th e int er ests of

multinati on als no longer coincide with th ose of th eir co untry of origin,
co11ective barga ining ceases to be th e pivot al element in th e sys te m of
nat ion al macre-econ omi c reg ulatio n.
and unski11ed labour resulting from world-wide expansiono The expansion
Labou r sta nda rds linked to fu11-em ploym ent equilibria , determined
th emselves by multi-year co11ective barga ining, were th e economic
of mar ket s for mass co nsumer goods and serv ices in the newly
linchpins of wage societies during th e Fordist era . Cyclical adjustment of
indu st rialized co untries is establishing a product ion base with low wage
econo mic po licies , discre tionary devaluations and exc hange co ntro ls were
suflicient to reconcile th e nat ion al autono my of th ese regulations with
costs relative to th ose in th e more developed co untries. However , than ks

to th e low cost of techn ology transfer and to dy namic increasing return s to
int ernati on al trade . By co ntrast, pr esent-day economic int egrati on is
sca le , pr od uctivity is high. The result is a disto rtion of th e wage structure in

advance d capitalist co untries, with up war d pressure on th e pr ice of ski11s
forcing co mpanies to co mpete on labou r costs, to make employ ment th e
req uired to pr od uce goods and serv ices with a high added value , and
downward pressure on th e cost of labour in indu st ries where th er e is
req uirements. Financial int egrat ion has bec ome th e leadin g force of
co mpetition from foreign manufacturer s.

Besides th e gro wing quantita tive inequ alit y , th e distr ibution of incom e
2 9 I 61
residual variable and to adjust th eir pro fitability to tight financial

globalization. It is in th e financial sphere th at th er e have appeared sorne of
th e key instituti on al forms of th e new grewth regime .
The nat ur e of int ernati on al co mpetition changes when th e int er ests of
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co mpanies cease to coincide with th ose of th eir respecti ve co untries of

origin o The competitiveness of enterpr ises depends on th eir ability to
th reatened by vicious cird es and self-fulfilling pr ocesses, because finance

pr od uces infurm at ion from infurm at ion . This process can always
organize f10ws " f goods, producti on fact ors, enginee ring and finance
th roughout th e world . The producti on and distr ibution of econo mic value
degenerate int o pu re spec ulation , detached from th e real world of
by corporations are bec oming detached from th eir ter rit ory of or igin o
sunspot eq uilibria , overshooting, hetero geneous expec ta tions and shifts in
Since th e coherence of th e Fordist mode of regulation lay in th e
beliefs.
relationship between prod uctivity and distribution in a nati on al co ntext ,

th er e is a feelin g th a! th e institution s which monitored th ese adjustments
These disruptions have repercussions on th e sec ond functi on , namely

th e eva luatio n of th e financial asse ts th at de te rmine th e direction in which
are in disarray. In deed , real wages and prod uctivity inereases have been
disconnected , weakening uni on s and empty ing th e cantent of collective
accumulation is guided and th e allocation of sav ings by internal means

(self-financing) and by exte rnal means (credit and share issues). The
barga ining.
quality of th e first two funct ions co nditio ns th e third , which is th e
pr oduction , and create disruptive phenomena: spec ulative bubbles ,
The other side of th e coin is th at th e globalization of enterpr ises
superv ision of th e use of sav ings. This thi rd functi on is a means of
int ensifies co mpetition , and hence th e pr epo nd erance of capitalist
exercising proprietary rights over ente rprises. It can either be do ne
int er ests, th roughout th e entire soc ial fabric of eac h nat ion . '~'Ihatever
moves in th e world econo my puts co mpetitive pressure on fact ors that do
centrally on th e bas is of judgements arrived at by th e financial markets or

in a decentr alized manner th rough bilate ra l relations between co mpanies
not move'." The set of mediati on mechanisms th at maintained th e delicate
and financial intermediari es.
balance between privat e int er ests and social co hesion has bee n bro ken,
which has enabled pri vate multinati on al int er ests to break out of
Since th ese three functi ons of finance are not independent of eac h other,
it is th e type of co mbination between th em th at defines th e financial regime
co nfinement . Capita lism is engaging entire societies, and th e individu als

who live in th em , in co mpetition witho ut any lon ger being subjec t to th e
of macro-economi c regulation . During th e Fordist period , accumulation on
co nstraints th at furmerly channelled th e ques t fur capital accumulation in
a nati on al bas is was supported by th e mobilizati on of nati on al sav ings ,

co urtesy of int ermediari es co mpeting within an oligopo ly . This
th e direction of social pro gress .
co mpetition was co ntained and channelled by a detailed set of ru les

gove rn ing mar ket activ ities and co nditio ns. The strict co ntrol of
The Op e n in g o Fi n a n cial Market s
internati on al movements of capital added to th e co herence of th at sys tem.

The opening of financial markets was th e result of th e crisis of Fordism
Unlike econo mic integrati on , which has been pr oceeding at a stea dy pace
co ming int o co njunction with th e increase in econo mic integrati on . This
fur more th an thirt y yea rs , th e opening of financial markets was a

discontinuous regime change arising from dere gulation and financial
br ought about an ab rupt change in th e financial sys te m , fullowed by th e

slow emergence of new furms of macro-econ omi c regulation . This
inn ovation . Finance , after all, is a key mediat ion mechanism in the
discor dance prod uced th e banking crises and th e upheavals within th e
regulation of capital accumulatio n.
finance mar kets which pu nctuated th e 1980s and ' 990S.'.

There are numerous links between th e opening of financial mar ket s and
Financial intermediaries sha pe th e str ucture of asse ts and liabiliti es

which give rise to objective co mmitments stemming from th e idiosyn cratic
econo mic integrati on . They affect th e three functi on s of th e financial
endea vours of entre pre neurs. The logic of finance co nfronts uncertainty to
establish th e economic hor izon in which capitalist proj ects can be
sys te m descr ibed above. The crisis of Fordism resulted in an econo mic
slowdo wn , th e severity of which varied between develop ed co untries,
implemen ted and to ass ume liabilit y fur spec ific risks arising from th e great
diversity of co mpany wagers. This mediation has three funct ion s. The first
resulting in differe nces between co untries in th e way in which th e balance
is th e pr od uction and circ ulation of infurm ati on . Financial logic is
became a net debto r and Ja pan a net creditor, a po larizatio n th at became
31 I 61
between sav ings and investm ent shifted. The Unite d Sta tes , fur example ,
32 I 61
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(1
eve r sharper as tim e went a n . Even so, th e globalization of ente rprises led
to lh e mobilization of int ernational financial resa urces. These forces

brought about lh e dismantling of co ntro ls on movements of capital on a
co untry-by-co untry basis. As a result , we have seen lh e beginnings of a
finance are divided int o elementa ry co mpo nents. These are formalized by
financial instruments which make th em negoti able - in other words,
redistr ibu table to anyone who is able to take th em over with pro fit . A large
disconnection between do mes tic sav ings and do mes tic investments.
number of int er dependent mar ket segments have co mbined to pro vide th e
elements of a wholesale mar ket in global liqui dit y . Curre ncies are
T h e Ris e o the Institutionai Inv<'stor
exchanged th er e , th e risk and tim e pr ofiles of po rtfolios are remodel!ed ,

and barriers between banking and non -banking activities are removed .
These micro -econ omi c inn ovat ion s have spec tac ular macro -econ omi c
This discon nection is a ne reason fur lh e int ernat ion al diversification of

financial wealth bu! it is no! lh e only reason . The other po werful foroe
effects. A co mplex web of financial int er dependence is being woven
derives from lh e change in sav ings th emselves. The relative decline in
currency spec ulation and int ernat ion al cre ditor and debtor pos itions. This
financial co nfiguration is spreading gra dual!y across th e whole world as th e
sav ings in lh e form of bank deposits and lh e pr odigious rise in

instituti onalized sav ings have led to a demand amo ng savers for higher
retu rn s. The institution al invest or s have bec ome th e inst ruments of th e
diversification of financial wealth . But th e management of a po rtfolio makes
between co untries th ro ugh th e arb itrage of int er est rates, th ro ugh
new capitalist countries make th eir currencies co nvertible and dereg ulate
th eir financial sys tems. This is th e dominant mediati on mechanism in th e
establishment of th e new gro wth regime .
very differe nt de mands th an th ose made by banks in terms of transpar ency

of inform at ion , ab ility to manage risks , eva luation of financial asse ts by the
mar ket s and forms of proprietary co ntrol of enterprises.
T e c h n ic al Progress , Exaggerated Individuali sm and Identity

Crisis
The sys te m of mar ket finance , with its pr edom inance of instituti onal
invest ors, has th er efore replaced th e financial sys tem administere d by th e
banking oligopo lies. The new sys te m has decisively changed the
The globalization of economies is far from being th e only profo und change
th at wage societies have un der gon e . They are also subjec t to th e forces of
co nstraints on th e accumulation of capital by changing th e way in which
individu alism th at strike at th e socia l fabric and threat en it with
proprietary co ntrol is exercised. The old form of manageri al co ntrol
disintegration . Ind ividualism can develop in societies where th e main
accepte d pay deals based on stable distribu tion of th e added value of th e

firms. Long-term stability of accumulation was th e management objective .
social bond is money . It is only un der capitalism that this fact or can
bec ome a drive th at determines individu al goals as wel! as a genera lized
Institu tional invest ors with holdings in a co mpany, by co ntrast, insist on

th e performance criteria as eva luated by th e financial market s. They
behav iour pattern . This is th e case because , un der capitalism, mon ey

bec omes more th an just th e sta nda rd by which everybod y's place in th e
co mpel firms to maximize th eir eq uity value in th e short ter m , un der th e
division ofl abo ur is judged . Money bec omes a form of wealth that is sought
co nstant threat of hostile mergers and lever aged buy outs. This form of
co mpany management breeds an obsession with cutting wage costs and
for its own sake, not out of sorne pathological craving, but as ev idence of
th e social recognition accorded to individu als. By int egrati ng th e wage-
shedding jobs to boast share pr ices witho ut mu ch thought for future
earn ing and salaried po pulation int o th e circ ulation of wealth, because
develop ment .
th eir incom es exceed th e levels required for th e mer e perpetuation of
Ano ther characteristic of market finance de rives from innovation in the
existing lifest yles, th e wage society has given individu alism a massive
management of risks. The enor mous increase in th e volume of tradin g in
boast.
sec urities and th e extraordinary boom in de riva tives are entire ly th e fruits
~'Ie
of thi s revolution . Instead of being exclusively administered by th e banks ,

which hold claims until th ey fal! due , the risks associated with mar ket
33 I 61
are al! wel! aware of th e exte nt to which th e genera lization of wage
labour during th e pos t-war boo m co ntributed to th e financial autonomy of

individu als. ~'Ie are also aware of th e exte nt to which it changed th e nat ur e
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A THEOR\' OF CA ~ I TA lIST RE GULATION
of the family by allowing individual aopira tio ns to be fulfilled o utside th e

con.train t. ofthe family unit. Although sorne o f the dynamics of consumer
demand were generated by ..ffotts to ,mprove the living conditions of th..
family as a group, c hanging li~yl"", d iverted anoth er part of this
Fro111 e lisi' lo T echnologi<-al Revolution
dynamiJm intc the sati.Jfaction of mdividual d....""".
Nhen the maes-prcducncn-besed productivity boom in the United Sta t...

ran out of steam, this trigget~ th.. crisis of Fo rdism. In th.. COUt ... of tbat
crisis, th~ Jtruggl~ wag~ by ..nt.. rpn.ses to halt th.. doclin.. in th<>it
lIeve rt he lea, ind,vidualism does mtellSlfy Ihe contradiction inh"t"nt in

the reLotionship betweoen Ihe ind,vidualand soci<!ty. Th"", is a posttiv.. and
a n<tgUtv.. ..d.. to ind,vtdualmn. '. Th.. posttin std" coIl51StS in
..mancipation frotn th.. lhad:l", of a syst<mt of social aII<>gtanC<t, from
profilabihty gav~ rise re innovations tlLat u plored. n" w lochnologic.a.l

fronMI'S. scme obeervers ..... in Ih.. tntroduction and subs;oqu"nl
wid"SpTNd UH of computers, Ihird mdustrial N!Volution, bi!c.allS<! th..y
beheve lhal infonn.atioD l.chnoiogy, which has pLay~ ,ts own par! m
pononaI RboTdinattotl, loyalty and ob5<lrvane<t of ntuals l<>gtttmtz.ed by a
promotmg Ihe mlflll.iltion.al divtSion. of Labour, 15 also transformtng th..

organnal1Oll of the WOTI: pt"OC<ISS. This 15 '"""" m I<!SWI'Ch mIo articwl
inlelhgfilCe, m human g"llet1CS tngg....~ by th e social cosr uf mcr.......d hf<t
symbolic order. ThU emancipatioD seJ"V'" as th.. I:..y lo rattonal.economic

behavt01lT, opI'IUIlg th.. dccr to lb.. J>UI=l1 by mOMlary means of the
tndividual ~ _ call inleresa. This also sustams th.. dynamic's of
effec!IV" dl'1naDd by e..usmg constanl div......tieatton of supply , an
innov"lion which eaplu1ist "IlI<!tpnS<!S can tum lo ..ccounl in oro.... lo
ren ... Ih.... profil..bl.. mvestmetll bas..s.
Th.. Ilag..ltv.. aspect 01 individualism , bow........, is tbal memOOnhip of
_ y , in oth... words Ih.. Je.gtttIn1%attotl of mdivtdual ..cts , has lo be
oonsranlly recWLmed . Tau n lO extremES, mdivtdualist demandos telld to
diQoIv. tbt lOciaI bric Irom wtach ruch d..mandos denve th etI validity. Or
..1M, th<t im~ o l loba.liutio n o ll organiutlo ns mal:es indivtduals unsur..
01 ~ id<tnltty wtth,n ~ ,nd d""'lioys th.. bonds 01 soltdanty tba t
o~ aI.Iowi tM col1ecttv.. ""pt<!SSlOlI of individual .. xperiellC<lS .
Individualism is thw, ll.<tgalt" li::>roo m th.. 5"llH tbal '1 ti!SU1ts from tIwt
failur.. of tM medutioD m.chanisms to prodUCtl social cohestOn.
FOTdmn 1llOI"" OT lea provtd.~ 1M condittons m which mdividuals
coukI vt.. to asMrt th.... tndividual asptIattons m th.. l<>gtttmat.. boh"f tbat
th")" ~ contnbu tmg to lOciaI progr""". Thee condittons w",.., V1S1bl.. m
th.. hi...uchic,\ strugg\<tl wtlhiD Lorg.. orgamzattons. Th"y I<!COnciled
upw..rd lOciaI mobillly, which Was hmlled by structural constramts bul
Was IlOIIl<tghgtbl.., wilh th.. st..bihly of .. hi..rarchy of social m ala baHd 011
uptctaney , lhe chaU""gell ,..,LoI~ lOlboo deg:radatton of the btosph....e, the

punutl of lpace explor..ttotl and Ihe revoluttomzmg of the food chain by
len"'lc engm~g .
~'Ol ..... capllalism captures theH frontiers of I:nowl~ge , '1 develops a
oompartmenl..hzed system lO incorporale the n.... acttvtty mio ,ts
stnctur.. - product desigll , zraphic d
informatton , co=unicatioc>.
!he oonNquellc. .lI' dr.utK: for tboo hi arcby of qua.hficatlons inhented
from 1M It ag' uf mus product>oD. !he producttve eap.actty o f coU<tct:tve
worl: pelixmed throogh co--opet at>on by highly sblled tearn.s cannot be
lMasUIed by a c:om.moll. ya.rdstK:I: mth th.. c:ontnbut1on o f ,,",chindividual
gII ,
'"Ilwied ... parat~ly. Y"" one rtllgl.. Lapse on th.. part o f a l""-"l m"m!>et
can hav.. tM gravelt uf eonseq u..nca for productton proc;!SS'OS tba t ......
highly vu!nfl"abl.. 10 bred:doorns OT acad... nts. This m<!.allS tbal th..
srrllggl" were waged, w". gllatanleed by Ihe . teady increa... in each

individua]'. rul wagell, Ihelow llnemploy menl level and the .horl p;riods
individual margm.aI producttvtty uflabour losesaIIstgmficanc<!, as does th..

pnnapl.. 'to NCh acc:ordmgto tus Lobour'. Fromanoth..r pomlofvt<!W, th..
appltcanons of ne" l.chnology .are changeabI.. and th..r"fore Ulle<>rtam, so
Ih")" ..... far from luding to Ih.. syst...... ttc d....elopm..nl of Ihe hIId of
produet rang" lhal r..wled frotn lhe mvention of electriaty or Ihe molOT
caro The faC'l ir lhal Ih~ ptesenl tul"" of soaal hfe, Ihe vanous forlll5 of
cultural r91ist..~ ..nd publi c insr,lutions ar e oul of tun e ..,Ih pr.....nl-<iay
poPibililiell for techmc..1progress.
The diNppeaunce of Ih~ linl: bolw....n individu al earnings and lhe
margin al productivity of I..bour , lil:e Ihe uncerlainly ru rtounding Ihe fale
ofbllsinesMI Ihal engag~ in innovation, is leading lo the breal:-up of wage
of une mploymenl.
seal". Th.... hesilation. in the accumulation of capital are also causing
profemOllaI r"111:. Thi. w". r..l\oected in an mcom.. structur.. lbal dev ..loped
s1owly , op'millg up unlil th....rly 19605 and closing Iherealter . Th..
illlegr alioll of individu..l., th.. prOC<lSS" wilhin which Ihes<! hiera rchical
POSHACE TO THE NEW ED ITION' CAPITA LISMAT THE TURN
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extensive and abrupt fluctuations in the demand fur labour . The result is an
individu alizat ion of career pattern s. Empla yees who have un der gon e
patchwork of individual destinies is emerging as unfureseeable changes

plun ge one person int o redundancy , ano ther int o precari ous employ ment
and yet another int o work fur which he or she is over-qualified . The sta te of
identical initial trainin g may have entire ly different pay levels and careers,
depending on the companies or collective activities int o which fortune or
social helplessn ess is reflected in th e feeling th at th ese anarc hic inequ alities
misfortune has led them .
are not th e transient effects of a remod elling of th e division of labour in th e

light of techni cal progress and globa l competition. They are perceived as
chro nic sympto ms of exclusion, in other words of backsliding int o a furm of
capitalism in which th e int egrati on of th e labour furce is no longer on th e
T h e Uncertainty o t h e Employ ee
Unde r th e impact of technological change , th e economic gro und rules
within companies have been overturn ed , since th e mobility of capital has

created co mpetition between social sys te ms, th a! is, th e body of
institutions and rights on the basis of which employer-employee relations
were regulated nati on ally . Mor eover , th e overthrow of th e rules within
companies has destabilized th e soc io-professional hier ar chy. The
disappe arance of th e sta ndards th at had helped stab ilize struggles over
rank, as well as th e waves of reor ganization which have resulted in
redundancies among furmerly pro tected categories of employees, have
caused uncertainty about what tomor ro w will bring. In creasing num ber s of
employees canno t find th eir place in th e division ofl abour . The des truction
of funct ion al identities turns out individu als without any sense of
belonging, individu als fur whom th e question of socia l identity poses a
pro blem . That is a measure of th e depth of th e malaise which has gripped
wage societies in th ese trying tim es. The very principIe of th e int egrati on of
labour int o th e corporate structure, th e pro gressive furce behind th e pos twar boo m, is now under th reat . This malaise eats int o th e individu al psyche
when th e energy th at used to be channelled int o work is converted int o fear
of an unfureseeable future.
agenda. This profu und and sustained erosion of th e social mediati on

mechanisms of th e Fordist age has left its imprint on th e econo my in many
different ways.
T h e Economic Sym p t o ms o Crisis
The spec tac ular fall in gro wth rates and th e inexorable rise in
unempl oyment are th e most evident sympto ms of crisis fur th e po pulation
of Europe. This twofuld phenomenon derives from a weakening of th e
dynamics th at once powere d th e accumulation of capital, namely th e
maintenance of a balance between techn ical pro gress and th e expansion
and diversification of consumer demando This dynamism had sustained
both th e stea dy pr ogression of real wages and th e redistr ibution of labour
among th e various fields of econo mic activity.
The joint effect of th e slowdown in pr oductivity and in final demand in
~'Iestern
countries was so spec tac ular as to undermine th e indust rial
relations th at had developed during th e boo m. In th e United Sta tes ,

econo mic liber alism decisively weakened th e unions and th e collective
This profuund identity crisis leads to splinte ring of th e inequalities th at
bargaining pr ocess , decentra lized th e dete rminatio n of wages and created

very fier ce competition among job-seekers in th e labour mar ket . A gro wth
are no longer stra tified by common sta ndards and to collective demands
fur which th e political process can no lon ger assume responsibility. It also
rate based on very small labour pr od uctivity gains has estab lished itself.
Sta ndards ofliving have deteriora ted fur many social stra ta. Two or th ree
causes a genera l decline in solidarity. The result is a loss of legitimacy
sources of income are necessar y fur families to sustain a lifest yle th at was
among trade unions and political parties, which can no lon ger clea rly
portray th e socia l fabric as one within which conflicts can be managed and
pr eviously financed by one wage. The gro wth pro vided by small
compro mises negoti at ed .

The fragmentat ion of inequ alities is penet rating eve ry
other words a net gain of 40 million jobs, between ' 97' and 1993!
socio-
pr oductivity gains absorbed a SS per cen t increase in th e labour furce , in
profession al stra tum. No lon ger do qualifications, seniority or hier ar chical
At th e same tim e , th e employ ment str ucture has bee n transfurm ed ,

th anks in part to a very considerable wave of immigrati on and to th e
responsibility guara ntee
shortcomings of th e educa tion sys te m. The competition from this new
recognized
pos itions in
organizations. A
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unskilled and non-unionized abour force in dece ntra lized labour markets
has led to th e crea tio n " f a huge num ber of precari ous and low-paid jobs in
th e non -indu st rial sec to rs. The result of lhi s dr amatic reshaping of th e
employ rnent structure is th e anarc hic patchwork of disparities, with
extre me individu alizat ion " f pay structures and differences in pay and
co nditions between employees with th e same qualifications in th e same
occupation .
In Europe, th e gro wth regime has been far more seriously undermined .
There seem to be t W Q main reasons which explain lhi s difference . First ,
indu st rial relations in Euro pe are more rigidly structure d by co ntractual
mediat ion mechanisms, and diree! mar ket influence in th e regulation of
wages is weaker . In particular , th e sys tem of soc ial protecti on is
co nsiderably stronger. For severa l yea rs after gro wth had been slowing
down , th ese mediati on mechanisms defend ed th e sacial benefits of th ose to
whom th ey had pr eviou sly bee n gra nted. A dichotomy develop ed within
th e labour force . In th e ' 97 0s, an 'inte rnal labour mar ket ' pr eserved th e
was co mpletely destabilized , but th e po litical initiative that might have

esta blished new mediat ion mechanisms for a fu11y int egrat ed mar ket was
not forth coming. The result was a vac uum in th e co ntent of co11ective
bargaining. The sys te m of nati on allabour sta nda rds th at pr evailed during
th e Fordist era has bee n rep laced by a Euro pean mon et ar y sta nda rd. "
The mon et ar y crite rion is becoming pr edominant . Instead of relatively
autonomous nati onal pr ice sys te ms th at are harmon ized with eac h other
by means of exc hange-ra te variations, th e tar get - at least in France - is a
set of homogeneou s nati onal pr ice sys tems subjec t to th e co nstraint of
fixed exchange rates. ~'Iages are expe cted to bec ome once more th e
'variable capital' of which Karl Marx spoke. Because th e labour force is less
mobile th an co mpanies, its pri ce has to adjust to financial co nstraints. This
req uirement for wage flexi bility is made a11 th e mor e imper ati ve by th e fact
th at Euro pean govern ments have pro ved incapable of coordinating th eir
macro -economi c po licies, despite th eir pro fessed desire to esta blish a
mon et ar y uni on . The co ntradiction between th e respect of mon et ar y
existing barga ining mechanisms and th eir co ro 11ary , th e organizational

sta bility of co mpanies. ~'Ihere high wage costs were a barrier to
tar get s and th e persistence of former pr oced ures of wage bargaining has
employ ment , businesses had recourse to th e 'exte rnal mar ket ', passing on
th eir problem to a workfurce th at was not pro tected by co11ective
un em ploym ent .
agreements. From th e ' 980s onwards, and at different tim es, depend ing on
th e sta te of th eir respe ctive econo mies, a11 countries experience d th e
repe rcussions of th e stra tegies whereby co mpanies sought to free
pr od uced th e wor st possible result : pr essure on wages and chro nic mass
In th e absence of po litical management , th e pr ob lem posed by th e need
for wage flexi bility has been exacerbate d by th e partial dismantling of
esta blished instituti on s in th e wake of macro -econ omi c difliculties without
th emselves of obligations de riving from past pay agre ements, which had
th eir being replaced by other co11ective sys te ms linking incom e to

pr oductivity . The result was an unseeml y rush to abolish obstacles to
bec ome millst on es around th eir necks in th e co ntext of int ernati on al
dismissal on economic grounds, to un dermine th e sta tuto ry minimum
co mpetition . The more bitterly thi s assa ult on labour costs was co ntested ,
th e more serious was th e impact on employ ment.
wage in sorne co untries, to end th e indexing of wages, to embrace an

extre me and arb itra ry individu alizat ion of wages and salaries th at would
obliterate any relation between pay and pr oductivity , and to make th e
Europe Ve rsus the W o rld
sys te m of unemp loyment benefits increasingly restr ictive . The remod e11ing
of wage structures is th er efore part of th e hidden agenda of th e Euro pean
Second, the countries of co ntinental Euro pe had to respond to th e
co nstruction pr ocess and is an area of co nfrontation rather th an

co11aboration between gove rn ments.
globalization of ente rprises to safeguard th e co nstruction of Euro pe . The

solutio n th at was ado pte d, after Euro pe had run th e risk of markin g time
until th e mid-' 980s, was to move towar ds econo mic and financial
int egrat ion (the Single Market proj ect) th en to pr oceed to monet ar y
The St a te and Debt
int egrat ion (the EMU proj ect). Conse quent1y, th e mod e of regulation bas ed
The other main dime nsion of th e susta ined crises within wage societies is a
on strong nation al auto no my which had guara nteed pos t-war pro sperity ,
result of financial co nstraints. These are a direct pr oduct of th e
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malfunctioning o f tbe for ma r mode of r<'gulation . Becau"" of the weake ning

of tb e dyn amic rela tio nship linl:ing produc tivity, inoome and emp loyrnen t ,
l"te 197 01 which rllile<:! widespr elld doub t llhaUt the llbility of mon et llry
the valu. added on which social tra nsfers "ere leviad has increa""" mor..
slowly sin~ lhe 197OS. Al lhe S.l.rn.. tirn... lb.. trann ers nooessi tated by the
J<><:UI rules in fo~ hava rilen far mor<! s h.arp ly as une mploym..nt h.u
" gene r"l flCll pe into inll.lltio n, these llntllgomsms imperilled. the mon etllry
foundarions of cllpitlllism . l he time blld come to re-<!S1:11blish mo ne t.lry
discipline.
increased. This rneant 1M! .tU countri.........eh al its own p,l0!!, incurrd
blldget d..fia!1 and increued lh. utio botw<><m public debt ud COP. Th..
qU$! OT rnNM of fundmg IbIS d"lit , .long Wlth th.. gloNhutlon of
..nlfl'PriMs and the UpboNv.l! iD th .. mt<mW.tional """"",ney IIlHUts
As logtc <hClllled,;1 wUlb" USFed",a.I R..serv.. which rntlLlled lb.. shift m
m"n"gem ent te resolve l itulltions o f finllncilll llntllgonism . By en oourllging
from lb. o.:J CJUU, ".os 011.. of lb<> mam I'MSODS for th..
tr.onsfonn.11Of\ of lb.. 6n.loncW ~""",", Deh! Iws once agam becom.. lb.
lb.. hoLa.nce m mon"'olf)' cotl$tTllml m vour m lb .. credtlors' mleNStS by
pndomm.ult etor ID 'OlIOllUC pobcy. Deht unpli"" the obligatlon 10
suddtl n<\ unexpected chllng" m course roosulled m Ibe msolveney m
""l . JI cre..U" " IItwltlOll of potentW nvalry betw....n debton .md

cn<blors,. Ilt1Ultlon ID ..bieh mon.., pUJ"S;m mt"""OOu1y role.
In lb. 197 OS, lbe d.b.ilte 0lI mOllet.,., doctnne _ as ragmg. Bul, in
practic., mOllelolf)' poIiey YOUred lhe d..blor as long as lb .. syst.. m m
Ilghtly res:uliled fuw,c. ..as rtill m force. l o s.-.guard gmwth as W as
Slnnll lOVer<!lgn d..blOTl m lb .. d......lopmg counlnes. 11 a.Iso Cllused lb ..

ch otb", lo produce lb .. most
orher ~"est'!llll countries lO .,.. ..,Ih
restriet1v.. mOllelolf)'pohcies. 1nI"'es1 r.l rockeled . Ibe recesslOll spr...d
.croes lhe world , .ud Ibe unemp!oymetll r.le sc.a.Ied h...gh!ll unl:nown
JIO'Slble , lb. mOIlelny ll\llhont>oos "ft II gre.ill deal ml......lly for bank CTechl
otIIfa, rNorcl mOIlel olf)' restr. ml h.id succeecl ed in COll'l uerm g inillltiocl
by I\l.l!g"tmll lb . elfecu m infur.!><m 0Cl nomin.lI mler es! r"les . The
by !he mid 198<le.Bul '1Illld done much more Iban lbat. It blld t,""llsforme<!
~tulg
r.o<hc.tlly chll.llgmg lU motl"'olf)' pohey .1 lb .. st.rrt of Ibe 10805. T1us
JUlc.lbe SeoOIld '," orld '," n . By llCC'eptm g exorbtt;ml I,""DSlllOnaJ soci.oI
rubMquenr dett_ in rNl mleres! r"les lnuered " re voll lImong

CTedllon .uuciowI ro pr_~ !he rNl va.lu.. o f lb...,. fin.anci.a.I llSH!lI .
lb. NlaI otlbe fuwtcW rystem by opemng Ibe door to hbe rilized. fin.anci.a.I
nurhU.
FI!lllOCUJ innov"llOns bes"n ro pro w.. r"r.. o n lb.. lIl.ItI.a!:lve o f fin.anci.a.I

llg" n!ll, " OO o ffred .ffectv. inv_..nr ins!rum... n!ll ro oo...r infI.allo n n<\
Tbe mbiliullOn o f infl..l.lIon . t low Ie....ls ;md Ibe m.amtell.ll.\lC<l o f high

inr..res! ru es gre.atly i.ncreased Ibe cost of mdebtedness . Public d..bu
oo mpe Ued rh.. IMm commfl'rial b.uW ro li:>\Iow swl.
bgellllW highly o rr.erous, . OO debl -seTVlCe obhgll!:lons perpetuared budg" r

e nts W11b
d..IiC1U. lb.. high mterest r. tes etIC'OUrllged linancia.l mv_
lb. !WO orher li:m:es for cbing.. m lb.. fin.anci.a.I structure .....N lb.. Med.
mgov"l1Ul1"IHS !O unce rh.. pubhc d..bl by non-tnfLal1on.uy m-e.ans ;md

tb" reeychng
moil rVtl uoos. T1us S11ull1lon roosulted m lb.. crw.l1on of n....
Iinll.Ilcul nurkts m ..lucb mt",oos! "'tes b<!cllm.. far mor.. ""'DSl!:lV" to
vlll'i.ltions m tb" "'t"

inillll1OD. In the Late 197 05, Ibe inlel1llll1onaJ
tb _ m u \:ets bid lllr....dy CT....led II nootworkof fm.ancia.l
dV..lopmtlt
prospec!ll of high sOOrHerm return. Arr.d so, Ibe fIow of credtl mto
prodUet1v.. mvestmtlU ,nvolYUlg mdustnal nsl:s vtrtu.ally dned up m
favour of specuLahOll 011 Ibe pnces: of Ihe eXtsttng mstrumen!ll of pnvue
-..Jlb - sh.ires, lb.. property IM r\:et, bwldmg Lmd ;md so on. lbe
C. pila.list .conomies, r.dlSCOVenng m Ibis Ihe ch.or. ct..risttcs of Ihe
interdepend<>nce ..lucb cllused d,sord..rs m exch.ong.....u le movemenls. A
Edw.rdun " . , bec.m"IJ>ehStllVe .gdm 10 CTechl eyel.... . nd lo Ihe priC<l of
vicious circl.. d.... elcped W1..oeen Ihe d..precwtion of cerldm currencies
properly holdmgl. Nh " .. Ihe nom"..1 hase vdlue is gudIdnleed by Iow
and th.. acceleraticn of inlldlion m olher counlries, belw....n Ih..
. nd S1.bl.. inll.lion Idle , v. ri.llions in mIeles! Idl.... ""'1 Ihe IOlle for m.ocro-
llpprecilllion of 10m" CIlJTencies dnd lOS! of co mpe tiliveness in olher

countrift. lb_ mllcro-COno mic disord ers forced moneldry poli cies lo
economic . djllS!m.ntl. lb. lensions Ihdl hdve emerged wilb reg.rd lo Ih..
chllnge r"diclll!y . Since Ihe US dollllr is II key cu rrency in lhe inlerMtioMI
...ttleme nt of debll U e . Iso ll/f""'ling Ihe rhylhm of pr od ucli on . nd

inveetment ..hich il becoming more eru tic . lb..... fiuclu. tions . re
mOnetllry IYltem , il "U tb e globll! Cn .,s of co nfidence in th e doIlllr in th e
occurring in Ihe ccntext of . et...dy disch.rgmg of co mpllny de bt s but . 150
POSHACE TO THE
~ E W ED I T IO ~'
CAPITALISM AT THE T U R ~
- 41 I 61
42 I 61
-'
(1
of govern ment deb!s. J udged against th e imp er ati ve of financial riga ur ,

expend iture on social pro te ction has to be reduced. The twofuld vigilance
multinati on al business was sharpened .
of financial mar ket s and central bankers has pared away means of fundin g
Parliamentar y majoriti es ado pte d an int ransigent econo mic liber alism
th at erooed th e econo mic pos ition of employees who had farmerly enjoyed
th e pub lic serv ices . The impotence of po litica l actio n has co mbined with
sta tuto ry pr otection. Excessive de re gulation of pub lic serv ices in th e
th e pr ob lem of individualism to pul th e cahesion of th e social fabric un der
United Sta tes and th e headlon g rush int o pri vati zati on s in th e United
Kingdom wro ught rad ical changes to th e structure of indu st rial relations.
serious th rea! .
These relations became highly co mpetitive once more , resulting in

violently fluctuating un em ploym ent rates as th e trade cycle turned . In th e
T o w a rds a N e w Age o the Wage So ciety
United Sta tes, th e de mand far labour varied greatly with cyclical changes.
The wage soc ieties of th e de veloped world are tryin g to co pe with th e tripl e
challenge of th e globalizatio n of capitalism , th e disinte gration of social
identity and th e shrinkage of th e sta te . I have tried ta sho w how th ese three
ills are d osely int erlinked . The same applies to th e encouraging trends, th e
initi ati ves and aspira tions th at might br ing farth new mediat ion
In th e United Kingdom , th e trade cycle mainl y affecte d th e supply of

labour , th e activity rate of th e po pulation having become far more
sensitive to econo mic fluctuati on s. The essential feature of thi s typ e of
labour re gulation is th e high turnover of sta ff in job s. In th e United Sta tes,
mechanisms capable of redefining th e regulator y syste m . These are more
un employm ent was not a ste p on th e ro ad to exclusion, but disparities in

incom e and educa tion levels were such th at th e pro mise of up war d social
visible in sorne ~'Iestern co untries th an in others.

The fact th at severa l typ es of wage society were able to coe xist with
mobilit y , th e essence of th e American Dream , was seriously co mpro mised .
Fordism testifies to th e diversity of moo es of regulation. These are
Segmen t a t io n of t h e Labour Market
co herent sets of mediat ion mechanisms, not a sta nda rd uni ver sal tuning
sys tem far a11 mar ket s. The type of re gulation sys tem de pends on th e
In Europe , deals negoti at ed between organized co11ective int er ests play a
dominant mediati on mechanisms. It was possible, far examp le , to

distinguish an Anglo-Saxon far m of capitalism , in which th e mar ket s and
far greate r part in th e functi oning of market s. Social rights strongly affect
th e sta te int er act ed within a framework of active economic po licies, and a

capitalism , where co11ective int er ests were
presence of employees on co mpany board s or th e co ntro l of ente rprises by

th eir own management create a variety of co rpo rate moo els. The lon g-term
organized and social co mpro mises were negoti at ed and capable of making
co ntinuity of th e ente rprise, th e sta bility of th e rules gove rn ing its
accumulation of capital and social progress co nsistent .

of mass
operation and th e m aintenance of co mpetitiveness are aims pursued by

th ose who hold econo mic po wer in this far m of capitalism o The sty le of
proouct ion , and th e prolifer ati on of individu alism had differe nt effects on
th e different types of wage society . In th e Anglo-Saxon vers ions, th e
per sonnel management th at re sults from thi s favours th e existe nce of an

'intern al' labour market within firm s, protect ed against co mpetition from
incom pati bilit y of th ese trends with Fordi sm manifested itself sconer in th e
th e 'extern al' mar ket . This segmenta tion is an int egral part of th e organized
far m of co ntradictions which th e mar ket s int ensified -
and far which drastic mon et ar y cures were
capitalism that flourished in th e Fordist era. That is th e main reason far

what was termed th e rigidity of th e European labour mar ket .
pr escr ibed: th e mon et ar y shoc ks experienced un der Paul Volcker in th e
Serv ing as th e basis of a virtuo us circle as lon g as gro wth was strong and
United Sta tes and Margaret Thatcher in th e United Kingdom in ' 97 9. The
decline of manufacturing indu st ry and th e rise of th e serv ice sec to r were
stea dy, thi s segmenta tion was also at th e root of th e degradation of th e
so-ca11ed Rhenish-type
Glob alization , technical
financial inn ovati on s -
changes
outside
th e
do main
inflati on and
wage costs. The do minance of a har d cm e of major share ho lders, th e
very rapid. The po larization between precari ou s job s with no prospect of
emp loyment structure th at occurred un der th e impact of th e rad ical

change in th e gro wth regime. One of th e segmenta tion fact ors was certa inly
social mobility and highly valued job s in th e worlds of finance and
th at of farmal qualifications . Thus th e stea dy increase in un employm ent in
- 4 3 I 61
44 I 61
- - - - - - - - - - - - - - - - - - - --
--<0 >--
-'
(1
France during th e ' 97 0S and 1980s essentially affected unskilled labour .

Mor eover , th e existence of in-hou se labour mar ket s pr oduced hyster esis effect lagging behind cause .
~'Iage
~'Iithout
claiming to answer such a vas t question , we can sta te that it

coincides with th e renewal of th e social-democ ra tic blueprint for Euro pe .
negoti ati on s do no! depend on th e
How can thi s blueprint be explained? Acco rding to regulation th eory , it is
aggrega te level of un employrnent bu! on its variation. The terms un der
necessar y to identify th e social mediat ion mechanisms which, in
negoti at ion do not , in fact , de pend on th e po te ntial co mpetition from th e

dole queue, since segmenta tion has eliminate d th at , bu! on th e threa! to
co mbination, will form th e required mod e of regulation . These mechanisms

must be such th at th ey work together to guide th e accumulation ofcapital
existing jobs. ~'Ihatever th e level of un employrnent , as soo n as it is stable,
in th e direction of a red istr ibu tion of incom e th at will re-establish
th e pay of th e 'insiders' can be inereased . ~'Ihen lhi s hap pens, co mpanies

have to make other workers red und an! to red uce th eir wage bills. Once
solida rity. A few pro positions can be advanced , pro positions which have
unemploym ent has struck, once a person in France is in th e 'extern al'
Fordism as well as th e new sources of gro wth.
profound implicati on s and which may help to analyze th e demise of
labour mar ket , th e od ds against findin g another job within th ree months
are four to five tim es greate r th an in th e Unite d Sta tes. As period s of
unem ploym ent len gth en , with th e accompany ing deterior ation of working
CO'l'o r a t e Go v e nla n c e , Institutionai Sa v ings and the

Redistribution o Income
capacity and demor alization , th e segmenta tion of th e labour mar ket

co ndemns people to exclusion. The atte mpt to overcome this exclusion
Given th e pro blem pr esented above , th e viable mediat ion mechanisms are
th rough man y forms of assista nce , often in th e guise of recr uitment
th ose th at recon cile efliciency and equity. As th e po pulation ages , one
incentives, ultimately founde red on th e rock of massive pu blic deficits.

The question of th e futur e of th e advanced wage societies is as follows:
crucial dimension of eq uity is that of fair treatment of different genera tions.

But it is alsa a saurce of financial po wer th ro ugh instituti onal sav ings. The
th e fact ors we have analyzed th at plunged th e Fordist sys te m int o crisis

were sufliciently po werful to lay th e found ations of a new accumulation
institution al invest ors can sure ly be ide ntified as th e most impo rt ant
mediat ors in th e new gro wth regime . The po litical imp lication s attac hing to
sys te m. This sys te m has borro wed from Anglo-Saxo n capitalism th e
institution al sav ings still have to be emphas ized.
emphas is on co mpetition, th e co ntro l of co mpanies by instituti on al
In th e logic of Anglo-Saxon capitalism, th e ro le of institut ion al investor s

is co nsidered from an individu alist and purely financial po int of view.
share holders and th e place of pro fit and market value as th e key criteria of
success. But thi s type of capitalism is no less depe nde nt on wage societies
in th eir entire ty , eve n th ough co mpanies and financial institution s are less
These bodies pr ivately administe r a fund made up of ind ividu al sav ings.
In vestment funds are numerous and co mpetition between th em is fier ce .
attac hed to any particular nati on . But , in wage societies , th e legitim acy of
Per form ance criteria are relative , th e aim of eac h being to pr oduce a bette r
capitalism lies in th e social pr ogress th at its dynamism susta ins. The crisis
average retu rn th an its co mpetitor s. Pension funds have developed int o a

po rtfolio str ucture in which shares pr edominate , because th eir long-term
of Fordism halt ed and even reversed social pro gress in th e co untries of

co ntinental Euro pe where it had flourished most ab unda ntly. But mar ket
yield is superior to that of other financial assets. Because institution al
capitalism, eve n in co njunction with econo mic po licies designed to
sav ings have been advancing more rapidly th an any other form of sav ing,
maintain a high level of employment , canno t justify its existe nce in th e
th ese int ermediari es acq uire sta kes in co mpanies, which indu ce th em to
abs ence of adequate regulation of social inequ aliti es. Is it possible th at th e
exercise influence , albeit passively , on co mpany stra tegy. They impose th e
co ntradictions inh er ent in Euro pean societies will be resolved , th at th e

enormo us changes req uired to enable Euro pe to benefit from th e new
criterion of financial pro fitability . They insist on transpar ency of
gro wth regime will be made and th at a mod e of regulation will emerge
dealing. They do not hesitate to sell blocks of shares and reinvest in rival
which is able to reconcile mar ket capitalism with a renewed pr incipIe of
co mpanies. In short , th ey are th e agents of market discipline , ensuring th at

co mpanies' sale co ncern is th e pro fitability of capital.
solida rity?
45 I 61
inform at ion , th e suppression of cor ruption and the pr evention of insider
4 6 I 61
- - - - - - - - - - - - - - - - - - - -- - - <0>--
-'
(1
Bu! th a! idea is inadequ at e . It doos no! incorpo rat e th e financial
So th er e are regulation principIes th at are now shared by a11 wage
dimension of industrial relations. Far from being only th e int ermediari es of
societies: th e pr edominance of th e financiallink, in other wor ds, of pro fit-
individu al sav ing, th e institutional investo rs are also th e pote ntial agents of
sharing and share ho lding, in incom e inequ aliti es; th e fact th at th e
share holding employees. The whole questio n, th en , is wha ultimately holds

th e co mpanies' shares as a result " f lhis mediat ory mechanism . ~'Ihat may
supra national, multi-prod uct co mpany has superse ded the bra nch or
indu strial sec to r in th e nat ion al econo my as th e unit within which th e rules
emerge th ro ugh th e mediati on " f th e institut ion al invest ors is a capitalism
of inco me distribution are applied; th e pr imacy of th e pro fitable use of th e
of consolidated individu al funds, th e socialized ownership of ente rprises. If
co mpany's own funds, dictated by financial globalization, inst ead of th e

negoti at ed sharing of th e fruits of pr oductivity gains in accordance with
lhi s develop ment is given po litical bac king, it may lead la a wage soc iety
tha! is very different from Anglo-Saxo n-sty le mar ket capitalism while also
nat ion al sta nda rds govern ing increases in real wages.
aba ndo ning th e Euro pean mod els of cor po rate capitalism th at mar ked th e
In thi s mod e of regulation , cor po rate gove rnance is decisive . The rise of
For dist era.

If the trade unions are to regain th e po wer to influence th e distr ibu tion
a share holding labour force to ass ume co ntrol of th e pension funds could
alte r th e balance between th e int er ests of savers and th ose of th e wor kers.
of incom e , th ey must realize that th e battle to be fought and won is th e
That would suit th e trade uni on s of co ntinental Euro pe . Their histor y ca11s
battle for co ntro l of co mpany share ho ldings. The develop ment of

employees' funds will be th e paramount mediati on mechanism that will
on th em to transcend th e co rpo rate int er ests of ind ividu al trades and to

vo ice th e needs of th e entire labour force . In employee s' funds th ey would
enab le th e capitalism of co ntinental Euro pe to remain distinct from th e

Anglo-Saxo n variety of capitalism o
find th e med iation mechanism to influence the ru les of pro fitability .
T h e Primac y o Pension Fu n d s
pro tecting th e management from hostil e take-over s.
Instead of a maximum sho rt-term yield, th ey could demand a guara nteed

lon g-term rate of retu rn for a stable ownership of co mpany asse ts,
~'Iith
a greater
pro spect of economic stability, co mpanies co uld regain the room for
In fact th e co nversion of co ntractual sav ings int o pro perty rights in respect
of co mpanies implies a decisive change in th e way co mpanies are run o
manoeuvr e to negoti at e pr od uctivity co ntracts with th eir emp loyee s,

which would indude pro vision for linking real wage and pr od uctivity
Companies are contro 11ed to an eve r-diminishing exte nt by th eir own
increases and adjustments in wor king hou rs. The opening of thi s window of
organization in th e manner of th e manageri al capitalism of For dism and to

an eve r-increasing exte nt by pension funds. These funds impose criteria in
oppo rtunity on th e Euro pean co ntinent would have th e advantage of
terms of financial return s which de te rmine th e nat ur e of investments and

th e distribution of th e value added by th e co mpany . Anglo-Saxo n pension
funds, spurred on by co mpetition and by th e pu rely financial de mands of
th eir d ients, require co mpanies to achieve a very high yield - about '5 per
cent - from th eir own funds. Since thi s performance sta nda rd is
hast ening th e adv ent of supra national co11ective barga ining in th e

ente rprises whose activities are spread across th e who le ter rit or y co vered
by mon et ar y uni on . After th ese bad tim es, when nat ion al co11ective
barga ining structures are being des troyed, a mor e hopeful phase may
fo11ow, in which th e reor ganization of indu st rial relations on a Euro pean
sca le can be launched in line with th e needs of th e co mpanies th emselves.
co nsiderably higher th an th e reallong-term risk-adjusted int er est rate , it is

reflected in th e tremendous increase in equity mar ket values. To co mply
with thi s financial co nstraint , co mpanies invest pr imarily in inform ati on
techn ology so as to minimize th e cost of unski11ed labou r th ro ugh quality
co ntrol and on-line processes. In this way , individu al sav ings pattern s are
bec oming th e main engine of th e distribu tion of incom e via th e institution al
invest ors' gove rnance of co mpany behav iour.
- 47 I 61
Goventmen t , Socia l Inve stment and macro_e c onomic

R<>gulation
To assess th e globalization of capital, we must first recognize th at
ente rprises are no longer th e main genera tors of social integration within a
nat ion . Enter prises create co mpetition between th e nati on al co11ective
4 8 I 61
- - - - - - - - - - - - - - - - - - -- -----cr-
-'
factor. o f productivity: lhe generallevel a f education, lhe scientific basi.

for technical progr&Sl and lhe infrastructural ameniti... in eaeh country .
Enhancing lhe ccllecnve basis o f productivity growt h to seUat a high pri~
which thi. pnnciple can be put into prac tic<! o

T OM ards a Mo bil e Labo ur r o ree
lh.. fruits o f . " pensive hbour is lh.. o nly lCC<!ptabl.. solutio n ror di!v eloped
"'Age societifl. Il is lhe o nly way 10 ..ntic<! comp.onies cone-ernoo. with
glo~
profilability te local" plants wheh CN!<lt.. a high "vel of ...ddild
value. BUI , sine. lhe co1lttve ~ ofproductiVlty ..... ..xploited lor th..
accumulanon of Ci plt.u by ~tfl"Prues that ha",! p1o.y<!d httl.. part in thar
CNoItion, a h....vy burdfil of NspOtISIbihty NSts Wlth gov..rnm",nts. R<>orm
of Ihe
~".,
mv-estoc
In
of its.unu ..ud of lb m"""", of aruon, so th.o.t 1\ becomes."
the bVUlg OTceI: of prodUctIVlty, IS essentW. 1fthe ....tton is 10
ncLum lts plice.AS lb. cr..d1e of common ,...Jn""" of SOCLl1 coh<!'51on. In tlus
T8SJ"K1
tbotre is no
..,lhm lb.
&1ob.ll
CO:IlU i Wet1OlI betw.... n compeb tlon .omong n.ottons
C'OIllpetJtI". fu m<!WOl"l: ."d IDIprov..m..nts in ".tton.ll
bVUlg ~."dmD .
Ift bot ~ ..tion between work., unemploym.... t and mact>Vlty .. lo be
overoom. , i mNllll mus! be found of iCCOrdmg s:oci.ll re<:ognlt>on lo lb.

id... of fulI ict>Vlty IhfO\lghoul i penen', worhng hf~. T'lw; unpb...
oonsideribl& or.miz.tiocW c h.ing... of Ibe ty>e lba t hav~ t -n explored in
lb. 11. !w Wids i OO 1M Sa.ndma vu.n COUIltn.... Sllle-e emp!oy .......
i~b.m& fl! lOIM.r comp.niel loc.ens ",lb Ibe gIobbzaoon o f capiWism,
l! mus! be ~plee! Ih.il e Merp rues are nol Ibe o nly plae-es ..bere
profeaionai sblIs can be ~Ull"ee! and maJ.Il!ai.nee!. In lb.. Ford1s! ..ri !he
ee!lI<:aoon sys!flll, b&SId... detetm1IllIlg Ibe gen....all<!V..1of oo.ucaoon , aIso
esu.bbmee! Ihe hieruchy of fonna1 quahficallons ..hich h..1d th.. uy lo
re<:nUlll1enl and JlartUlg l<!Vels III comp.l.Il1es and d"linoo. th.. scope fm
promonon d unng lM WOl"hng hfe of an employ...... Th.. oo.ucal1on sys!em
must become tu mcre mvclved III lralDIDg human capllal throughoul Ihe
WOThng lw.. of in<hVld1Ub. The lllVest>ng s!al e is th.. OM !hal olfers
flllp\oy&&s 1M m...1U of i cqumng evo\utionary and mobl1.. shIIs _ in olher
words , sl:ills lhil Ci n be lunsf","ee! from One comp.ony lo anolh..r Ihrough
a sys!1lIIl of pencdic !'&Version lOi funnall....mmg proces!i.
This is lhe first aspect of ree!uce<! working hours lOe should consider _
nam.ly a reduction of Ih. individual', entire worl:ing Jife in orde r lo
enh ance lhe prcductivity fi clon Ihal he or ,he embodies . This basic
cc ncem mUJI beccme i n "'enlial compo nenl of the social contracl wthin
nation" altho ugh thare mu't allO be lOOp<! fur a very wide range ofway, in
POSHACE TO THE ~ E W
ED I T IO ~'
CAPITALISM AT THE T U R~
- 49 I 61
IndividualJ whc are 1_ dependenl on p.orticular comp.onies fur tbe

acquw tion o fspecific .bllJ ca n tal:.. advantage ofthe te nde ncy lo orani%e
production pro c _ in i more ftelOble manner, N!COncihng stR and
<bv.mty. As w. hiv. _ , Ihe Forom enlerp...... had a vertical structuN
suppornng a functwtW h,eruchy. Conversely, the mobihty of capllal

encouTag" comp.oni... lO dopl i netwoTl: strucluri!. It favours a subtle
lIUll of coop;l1" anon end COtnpelltlOn betw""" Ulllls belongmg lo the same
enl&!"pOM. 11 .al1.,. Ih. types of Illducemenl olJeroo. lo ..mpioyoos. 1Ass
anachee! lo a p.uI1CIl1or enlerpns<o, employees willlarg..ly lend lo 1oi: for
IlIIlployrnenl COlIlriet. ID ..hich lb..... moblbty .. not p"nalized.. Tbe
developmenl of negoti.lbl. sblIs .. a fundomenl.al ass<>t . Bul so are Ibe
availabihly of bro.ilder i nd mo... precise infonn.otion aboul poIenllal fulure
jobs and WOI"hng houn lhil etI.ilble Ihe mWVldual lo _ 1: new employrnenl
..hile WOI"hng in his or her pr.....,I ;oo ...lboul havmg IDendure a period al
unemploymen!.
The relitiocW iIpeet of WOI"I: lIbould aIso be ahl.. to o perale in Ibe

oomalll of lOciaIly usetul sel"VK:'el III Ibe reglOllS and k>caI CO= Ulllt:les .
CollectIVe and in<hVldualsernc:... are beonllllllg front-hn.. s:oci.ll issues in
roday'...age ..xMMlI. II .. Ll'npetah ve lba r lb.. !rt.ot.. , hould be lb.. pl.an.nJ.ng
bod y, b&cause 1M populatlOn will depend lll<.T'USlllgly o n th<> r..li..obihty
andquahty of a cJo.elywoven netwoTl:ofserVle-es ..luch shapes our hvmg
en vircnmen t, Il is up re regwnal andlocal autbont><!S, ...th th.. su pporl of
cen tral gcvernment, te deve10p combmallons ofpubhc and pn vaI" fundmg
in order te fuel a tillenl demand ..hich has ..nonnous jo1>-crllOn
poIenttal.
Comaulmenl of 1M Jlil. 10 Ihe lra1lUIli, pres<>rvat>on and r..""..a1 of
human r<IIO\ll"C&I couId not be furlher removee! from Ihe ideology of lb..
minimalst Jlil.lhil .... illlh. rase mlhe 19805. The invertmg s!ale is Ihe
natural ally of technical progreso. The gerDlS of growth Jie in Ihe cr....live
cap.ocily of brain worl:. Bul rormins Ihefaetors of innovation is a colllive
business, since Ihe social relurn On Ihal mvestmenl i, grealer Ihan il,
priv al. ret urn . Th. impelu, of Ihe ,tate in edu cation , rese arch and Ihe
social infrasl ru clure, far from e"c1uding private investment , aclually
50 I 61
-'
(1
co mplements such investment . It is a gro wth-enhancing input . This doos
macro-economl c po licies designed to stimulate growth. If structura l
mean , however , th a! gove rn ments have to invest with a view to impro vin g
measures are taken in a co ntext of stagnation, and if macro-econ omi c
th e employability of th e whole po pulation rather th an creating jobs in
po licies remain neutr al or restr ictive , th e increased mobility ofl abo ur only
spec ific co mpetitive sec to rs. In form ati on technology , after al!, has ta ken
th e mar ket econo my int o areas hitherto regard ed as non -cornm er cial. And
serves
so the sta te is no lon ger called upo n to pro vide , either directly or th rough
to
co nvert
structura l
un em ploym ent
int o
Keyn esian
un em ploym ent . The structura l measures do nothing to

pr oductivity or gro wth.
improve
int ermediar y co mpanies, transpo rt , telecommunicat ion , pos ta l, electricity
A sec ond reason fur an active anti-cyd ical po licy relates to deflation in
and municipal maintenance serv ices, and so forth . The co ncentration of

budgeta ry expend itu re on investments with wide-reaching exte rnal effects
a globalized financial env iro nment. Monetarist doc tr ine rationalized th e
is a ne of th e main aspeo!s of th e new mix ed econo my.
mon et ar y po licy of th e ' 97 0S at a tim e when administe red financial

sys te ms sho wed obvious signs of malfunct ioning. The extre me elasticity of
th e supply of bank credit and th e widespread indexati on of wages and
REofocusing the State
pr ices in nat ion al economies handed th e initi ati ve to debtors. Monetary
If th e sta te were to refocus its activities on th e develop ment of th e
po licies genera lly co nsisted in restr icting th e liqui dit y of banks by curbing
th e supply of mon ey from th e central banks. This line of approach was
collective pr oductivity fact ors, budgeta ry pr actices would have to be
rationalized by reference to th e notion of a 'natural' equilibrium level of
modified . Neither pu blic accounting nor parliamentary pr oced ures are
un em ployment rate as expressed in th e lon g-run vertical Phillips curve .
co nducive to investment . Depreciation is part and parcel of any type of
Since long-term growth was independent of inflati on , it was not th e co ncern
capital. But th at co ncept is abs ent from th e pr incipIes of pu blic accounting.

Equ ally , no investment can be made witho ut an eva luation of th e re turn it
is likely to yield. Those who pr od uce analytical furecasts and pu blic
econo mic assessments should co me out of th e ivor y tower s of econo mic
science and add th eir views to th e po litical debate . There cannot be
investment in th e most bas ic fact ors of gro wth witho ut a dear lon g-term
of monetary po licy to respo nd to real shocks , so employ ment did not have
to be treat ed as a po licy aim.
The error made by govern ments in Euro pe , by co ntrast with th e United
Sta tes , was to treat thi s doc trine as axiomatic , whereas th e exte nt to which
it was true de pended on a very spec ific set of financial circ umstances. Let
us recall th at A. ~I . Phillips demon str ated a long-term inver se relation ship
perspective . The investment in resear ch and th e resou rces fur higher
between increases in mon ey wages and unemp loyment ." This relationship
educa tion must be pro tected from th e vaga ries of th e business cyd e by
means ofl aws establishing lon g-term pro grammes.
was particularly dear-cut in th e half-centu ry pr ior to
Sta te respo nsibility fur maintaining th e rate of techn ical pro gress is th e
way to influence lon g-term gro wth. But th e stea dy -sta te gro wth is also
impo rt ant . It implies po litical respo nsibility fur anti-cyd ical measures,
which mon et ari sm had denied . The first reason fur thi s ste ms from th e
growth fact ors th emselves. ~'Ihere techni cal pro gress is chiefly linked to th e
experience of wor kers who gra dually raise th e prod uctivity of th eir teams
as th ey wor k together in th e prod uction pr ocess, recessions have adverse
effects on growth pattern s, because th ey diminish th e employability of
red und ant workers, espec ially if th ey are length y and recovery is slow, as
has been th e case in Euro pe . Consequently, structura l po licies designed to
impro ve th e quality and flexi bility of jobs canno t functi on independently of
51 I 61
~'Iorld ~'Iar
1. From
th e po int of view of financial adjustments , co nditions in th at period are

co nsiderably more re leva nt to us th an th ose which pr evailed twenty yea rs
ago. It was an era of financial globalization , of int ernati on al co mpetition, of
changes in th e division of labo ur resulting from th e sec ond Ind ustr ial
Revolution . In th e econo mic structures of th at period , th e financial
mar ket s th emselves co ntained mechanisms fur th e co rrection of nominal
pr ice increases, which th ey accomplished by setting lon g-term int er est
rates. There co uld be no susta ined inflationary trend in th e furm of a selfperpetuating pr ice spira l. But th at type of economy is vulnerable to
int ernati on al shocks , which destabilize th e short-te rm relation ship
between inflati on and unemp loyment . One reason fur thi s inst abilit y is th e
behav iour of economic agents when inflati on is dose to zero.
52 I 61
- - - - - - - - - - - - - - - - - - --
----<(r-
J
A THE OR'f OF CAPITALlST REGUlATION
.nlen Ihe "'lUdtion. il is the instrtutions ..hich infIuence Ih.. control of
Eq u ilibriu m a n d Un ..m plo"m.. nl
oenlerpnses ud Ih....mployahility of the Lohour rore<!. M ror tboo &IoNI
Domng poriods Wh"DmLatwD. 15 vj' 1ow, lII.l!Iy indtvidual comp.my pricft

sbould f.ill. Bu! som.. key IIlOM}' pric>es u. Iix..d by ..U"""m<mt ar by lb..
d.cura of\og1c. Mon"'Y ....i~ do fIOI' f.ill ~nt.LnJllS1y, nor do nomin.}
int.. r_ rnes becom.. n~atl. .... Tb.is ~ tb.o.r oomp.o.nes und..r p l'ftSUr..
rom di..... ccmpet:ltors , ~ lOre.d ro ~r thftl" lIIO""Y P"""" , re
level of regulabon. which is overn9d hy macr<HlCOnOIDlC policy. tt Ul
OOlllpeU9d lo resp<md lo tbe derim.it>oll oh h ..... pretil marglIlS by cu ttml
resu!l IDKfre m lbe ";denrng disp,i n tiel and d,mj"j.h j" Ksolidanty th<il h,ye
n . llet rw
t 01 lb ..... adustm'illts is dl4lt

=employment becomes seJlSItlv" l O lbe ner.ol lev el of pnces m ..n
<tqlUbbnum Sltu.lbon Wltb v..r 1ow mLallOn. 11 15lb.. Ysl: o C'eDtnl b.onb
;oo.;ond reduang lb ..... d..bts.
z..
to evcid tlus typ<> of m..ffi.ci...., whbnum olnd ""lIee lo .....k lb.. tW.DCe
~Il mLab on and UD<mIp\oym<m1 th.1t wtl1 bost promot.. st...dy roottb
jum6.9d hy lb.... XJSt<m<:e of multlple ~llilihria and hy lb.. me.ap.K1ty of

ma.rut <ldJustm.. nts to
Khi~e <l UtlSctory ~llilibnumm
<l spontaneous
~ ,.
Tb_ pnnC'Iples , haw eve t ,eannot of lhe mse ly"," resol ye lbe problems
been expenenced smce Ih.. stut aftbe 1 ~. So1idanty is not gu.oranleed
by commercial msuru ce poIicies . l t ;. a MI of rul es throub..hich a natl.OD
assuma lhe nsl:s th<il Ibreat..., bN In .aciety. Accordm&lo Ibis sobdansttc
r<lttonale . Ibe ultunale foundation of .aJidanty is lb.. IlDposs1bihty of a
purely indt...duahsttc soci..ty. Dernocncy cannol be ...tal ud active unlen
in Ih.long runo
A t"ir<! r.. a5<>n for c10sely involving rb.. mon..tary authorities in
con""rn fer lb.. res publiea ;. inccrporated in to lb.. aspirations of t he
econo mic regulatio n is co llC<'rll ror rbe It abilit y o f rhe fina ncial sys tern s. In
..hich individuals attam effectiye eedcm, and th at q uality dependo on
.. globah,"" financial "tru cture lb .. priCfl of financial assels are l ubject te
uni yer lal mem bership of saciety . That i...hy real freed om ..ithin a saciety
co nsiderable f1uctuation. The behavio ur patte rn s of financial opera tors
i. measur ed by th e resour~e. of it. pcoreet members. A highly inegalitati an
may be affected at any mom en t by a burs t of frenzied spe culati on . It is
.ociety , ~onsumed by th e eXcesses of ind jvid ualism , is liable to dt ift
illu. ory to believe th at prud ential regulation and supervi.ion of
te..ard. tot alita rianism. The totalitarian tempt ation de rives from endemic
in.tit utions ..i11 be enough to shore up th e banks if the financial markets ar e
violence and from a lo of mvolvemenl in Ihe de moc ra lic proce. This
un. table and the busines s cycle is sub.la ntial. Fragile banl:s ..ill, m turo ,
dr ift can be an insidiou. developmen t and may nol lead a11 lhe ..ay to Ihe
imp.o;r Ihe macr o-economic efficiency of mo nelar y policy. They may
ftlablishmenl of a lol alilan an order. Marginalization of minorily
n\llllrahze Ihe effect of a precauliolU ry CUl in monelary inlerffi ..les hy
"'ll"egalionist ideol"l'.... aggressi ve alMl"lion of Ih.. ribl. of ..thnie or
reflecttn&Ihe cul m Ih....r ownloendtn& rales. Tbey may o{&"I Ihe effKt
cullural minonb"". tal< revolts aOO system.otic d"nigrab on of th e st at .
of U incre.as<> in lb.. money suppIy hy dftlroym&som.. mon..y m an effort
omd.... some tawdry li1>ert.trian NDn.... _ lh_.lN som.. of lb.. symptoms of
to redu"" lb",,"d"hls. And so, m &Ioh.aJued linancial syst.. ms . central Nnb

cannol separu.. monet.1ry policy and pNdentu.i pohc:y. One of th....r
u IDm&d..mocncy.
respoDSlbiht:les IS to ..usure !hat "ayes o fspecuLo.t:Ion m lb<! fin.ancial assets
R<>l ri..v in g C itiz..nship
no!
people. This imp lies a qualit y and Yarie ly o f social int"ractio n th rough
grou~,
ma.rUtl do I>Ot assume dangel'OWl proportioM , ........ lbe case ID !he Lue
In th9 m.ojor ~iffiern countries lbese ailme ntl developecl "'l lb lb e de<:lllIe
aflbe Ford1S! mode of regula tiOll. Tbe dtsinlegr~UOD of lb e coh....ve lOCial
f.,bric OCCUI'Ted al lb .. lam.. ttme.as eapll.w.m".as be'lDg free<! from ev..ry
CODstr.unI. JI 15 hib tl.me thlt poIitical dtxusston r<!COV<!1"ed sorne of ItS
1~.
Tbe pl"tnClples of reguLob on thu "'v. heen SUUesl9d so 1M .,... comp.obhle

"'llh lhe &Iohaltzation of economies. the pnmacy of m.rrbel competl.tI.OD
and lhe mobihty of Lahour. hecause they come mIo play before the price
fono.... V1&0Ill lo ""1 ~bout redefinrnl th e stan<Urds of socW. jl15ttce. ~ft ....
y.m< of apen host::thty or indtff<!1"9DC9 to such 5Wld.rrds m Ibe Dame of
economic liber.lltsm. To est .blish <l sbMed con""pl of socio! justicettd 10
system a nd <lffect lb.. loN I economic ~uilibrium. BefeN! lb" pn"" system
POSTFACE TO THE NE W EOITI ON CAPITAU SM AT THE TURN
53 /61
Sol /M
ensUfe that it is mccrporated into the n ghts " hich it is the duty ofthe state
to enfor~, i.lI ro give mean ing once agam to the notion o f citizenship.
deve lopment of social righls in Ihe rour... ofthe Fordisl era .
In the Fordillr age, social righu " ..r.. formulat"" o n a b.asis of

oc<:Uparional sohdanty . The y d..v..lop<!d "':th co lli!ctiv.. b.araining and
[k>moc-ra "y and Solldali ly
" ere implemented by a n increa.singly co mpl.. x and ill5CTUtabl.. syst..m of

J<><:Ul rransers. The redisttibutiv....l..m..nt, d....gnOO' to rOOrHS the
The r....ffirmation o so lida rity today d"p"'nds o n th.. r..lLabilitation o f

politics as rhe main age nt of social eoh<'SK>Il . The meaning of demacra"}'
mus! be red..cover~ a r its very roots: sohdanty as a eolloctlve value
disparities inherenr in the atruUI.. over r.mk, "as combinoo. with

mechuUflns afford mg protect\Otl agamst nsl:s, th.. fundmg of ..hich
nvolved nonreciutnbutr..e k.-ioos, parlIcularly in Fran~. The
ma\funct1OflUlg of tb. regula tioD stTuctur<o provol:ed a d..luge of Ul'ienl
calls for actron to nutt gate tbe ../fts of lb.. nse m un..mp\oyment and 10
~ 'PU" alhng b.altb COS1S. lbe l"i!SJX>IIS'!'S 10 lb""" d..mands, entathng
one eXlra ccet after tbe otb er, mtTeased tb.. tax burd ..n but also caUHd
peopie lo 10M"gbt of tbe justi cation for tb.. paym<mt of tax. !hat IS wby
red..fming lOCiaI ngbu also m....ns being eonumn oo. to lb.. r..habihta tton of
lbe levy pnnaple. lbe cob <!Slon of a """"e1y may be judg<!d by ,u
acce plance oft u for .. hat ,t dtould be, nam..ly lb.. reaprocal eonumtment
of lbe a 1tZ9Il olIld lhe nabOll to ptOY'ld.. highly prodUl."1tv.. worlo m r..rurn
for a 100<1 qlU1ly ot hfe. !hal ilI bow lOCiaI progress can be r..n.... ed in
hannocl y "'lb a regularory p!U>C1.ples wlUch mus! slrengthen lb.. na!>on so
tha r ,r "an ub advollltag. o / the o pporturnttoos o ffered by glob.a.l ca pttallSm.
The r.aprocal comm,t'menr of lb.. LDdiVKIual and ,,,,,c,,'ty cannot be
re~ llnIess thera ilI a mora! unpentl.......hicb c\e.arly chst:mguishes
W'tlbour ..luch the ind,vid ual Cll nnOldi!V"Iop. Tbat is the only ..ay to maht
lhe imperattve of lOCiaI cob <!SlO1l compattbl.. W'ttb the op<!nmg of th....age
societift to globalwt>on. Sucb an approacb avoids the type of idenllty
MaTCh ..hich, tbougb tTe.ilttng coll<!C1>v" valuoos, IS also suscepttbl.. to the
snaNS of popuhsm and natioD.ahsm .
lf lbe pohttc:a1 bluepnnt iNcceeds m restattng lb.. need for sohdanty lbe
IlC01lOIllic r~ reqU>1~ for 'u Impl..mentatian willlead, especiaIly in
Frolllce, lO Ihe mst>t1Itton of a proeess- of radical tu r~form and to a
red efintlioll of lOCiaI rigbu. By lb.. end of this process, lb~ welfare Slale will
hav.. ~ oomp\et..ly over hauled .
Toda y's ..age societi... ar.. char act erued by a loos<!ning of lbe link
bet>o"n pay aOO lhe per Cllplta margrnal produl."1tV1ty of labour , but also
by COllttnu.:! r"l.ml k>r work as the paramount entenon of mt"llntion mIo
SOC'I"ry. ConNquenrly, the ligbt agamst social u clusto n means increasmg
rhe demand k>r t.bour ..hile a nde.ivo unng to ..nhan<>e lbe employabihty o f
rhe labour Sllpply. It also m....ns d..fming and g =g ..=eptan<>e fur rhe
moral nghts from a purely passI.... lOrmofsohdanty. To an exrent, ,t is a

ngbr of membership, rhe ngbr not to be u dud<!d, ..hicb mus! become the
prlDC1ple o f eqwty 1!I tha dlStrtbu tioD of N!v..nue, so tbat employ......

r:<o1Ve a reasonably faLT abare of th.. total valu.. add<!d. Proper regul.anon
Sllpre me val"e, as ....nas tbe loer1li!1oftb.. pohttc:a1 d..hate. Froodom from

e""hmon mus! btcome tbe tDJ.Ill.IIlum ngbt enshnn<!d m the social
contract, aOO hence tbe "at"llanca! unperattv.. for tb.. stat... HOW<!ver , IbIS
aun, ..hich ougbt 10 be at tb. b...rt of any n.... V..TS1on of the social~
of the diVlSion into ..ases alld profiu depoends on the bnsl:nHS of demand
and rhe pace of investmen t. GovernrnenU can act on th""", two aspecIS of
NVen"e dutnbu non rbrougb tb. tax structur.. and redtsrnbutlon.
Nhen a companson .. made for ...cb country betwe<!n tbe srructure of
..ho benefit from t""hnolO;"al mod..mityand globalizatton, tbose ..hose

eccncrmc poIitions are still protect<!d by statut.. or by tbeir dientele, and
those ..ho are excluded. Thelast of thes-> groups "':11 inevit ably rem ain a
bu<lgetary expendr ture aud the tax srst..m W'ttb tbe aid of OECD Slat>s1lcs,
two chancteristics emerge. Fraoe<o aod Gi!rmany devote f.lr small..r
amounts than the United Sta toos aod Japao to public investmeot but
allocale larer percentag... to social tr aorlers aod operating ~llpenditure.
Th_ t..o Europe.ln eountri... d..riv.. a partiCiJlarly small amount of th";r
minorily ..ilh no IlCOnomi" leverag... A poli"}' fur lhe promotion of

solidarity cannot therefure derive from th.. inl..raction of economic furc....
It cannot be dnven by lhe occupatiooal inl..resl groups ..hich fosleroo the
fiscal revenu.. from capital duties, ..hich accouot fur 1~ per c~nt and ' 3 per
cent r...pectively of all talleslevi<!d compar<!d to almost 30per cent in the
United SIal... and Japan. In mOte geoeral t~rm. , in al! the Anglo-Saxon
demccranc bluepn m, ilI d,ffiCiJIt 10 adui!V" , fur d",ng"" m tb.. worlo

p1"OC<lR have divided tbe ..age soci..ty mto tbr.... interest groups: those
POSHACE TO THE NEW ED ITION' CAPITA LISMAT THE TURN
55 I 61
56 I 61
o-
-'
(1
co untries, where accepta nce of capitalism and th e primacy of th e market is
co nsumption , employees who are victims of int ernati on al co mpetition
widespread in al! stra ta of society, th er e is a far heavier fiscal burden on
co uld share th e benefits derived from thi s co mpetition by th e po pulation as

a who le th ro ugh th e impo rt of co nsumer goods. It is enough to tax sta ple
capital th an on th e Euro pean co ntinent . This burden is offset in differe nt

ways - by lower excise duties in th e United Sta tes, and eve n in Japan , or by
lower income laxes in th e United Kingdom and Austra lia.
items at a lower rate to meet any fear s th at such a measure might

ultimately run co unter to th e aim of red istr ibu ting wealth .
The logic th at co nsists in using taxati on to fund welfare benefits not
co vered by national insura nce co ntributions is a result of the way in which
Refonlling the T ax System
th e mod ern wage societies have developed . The po litical philosop hy which
These great disparities un derline th e fae! th a! taxat ion sys tems are no!
carved in tablets of sto ne. Ambitio us refurms are possible if th ey are
guided by a dear focus on solida rity. As far as France and Germany are
co ncern ed , th e ur gent pri orit y is to seek red uctions in th e welfare charges
levied on th e wages of unskilled workers. The mod est sta rt th at has been
made over th e past few yea rs ought to be developed a good deal further .
But whatever else happens, we must not fall into th e demagogues' snare by
red ucing th e overall tax burden. As we saw above, govern ments have a
crucial ro le to play in th e new regime of gro wth. They need substa ntial
resources to recover sorne roo m far man oeuvre , whilst getting to grips
with th e excessively high levels of pub lic de bt.
There is no miracle remed y th at will remod el th e tax structure in such a
way as to turn activities with lower mar ginal revenue pr oducts int o
pr ofitable ventures. It will no doubt be necessar y to increase th e tax
burden on capital in co untries such as France where it is und uly light . The
French Govern ment must scra p th e arra ngement whereby incom e tax is
sub ordina ted to demograp hic co nsiderations th ro ugh a sys te m of child
allowances. All individu al incom e , whatever its origin , must be made
regard s solida rity as an attribute of citizenship is replacing th e co ncept of

social solida rity based on occupational categories, which has been
un dermined by th e destruction of th e co rpo ratist fabric un der th e impact
of technical progress and globalization. The result is th at social rights must
never again take th e degrad ing farm of sta te hand outs, and that th e aid
currently give n to co mpanies sho uld be focused on people . France is sure ly
th e co untry th at has made most use of employ ment incentives, peppering
co mpanies with a variety of subs idies th ro ughout th e 1980s. This method
was part of an exte nsion of Fordism , based on th e pr emise th at th e
enterprise was still a vehicle of soc ial int egration . The French gove rn ment
persisted in thi s approach at th e very tim e when co mpanies were
discard ing unskilled labour and loo sening th eir territorial roo ts. It is
hard ly surprising, th en , th at such aid has had littl e effect.
~'Ihat
is more
serious is its blind adhere nce to thi s pr actice in th e co urse of the ' 990S. Its
illusions, however , have now been dispelled. The employ ment and poverty
traps th at thi s array of assista nce schemes creates are being de nou nced
from all sides. The tim e has co me far a po litical blueprint far a rad ical
taxable . If th e tangle of benefits accorded to certain categories of person is
refarm of th e red istribu tion sys tem. It is a matter of esta blishing a

guara ntee d minimum incom e th at will pr ovide individu als with th e
eliminated, it will be possible to increase th e revenue from incom e tax

while preventing mar ginal rates from becoming excessive in th e higher
econo mic resources on which th e exerc ise of th eir inalienable rights
stra ta. In cidentally , th e transpar ency resulting from a sensible tax refa rm
would be part of a national po licy of solida rity which would rede fine th e
and social justice .
spec trum of social rights.

It is high tim e th at part of th e bu rd en of charges levied on low wages was
A Gu a r a n teed Minimum Income
transferred to th e widest possible range of other taxes. In substituting a
Econ omi sts have often made thi s type of pr oposal." The advantage of a
uni ver sal welfare levy and VAT taxes far social sec urity co ntributions on
guara ntee d minimum income is th at it pr oceeds from a universal

un der standin g of taxation as an incentive to work rather th an a de terre nt.
wages, a mom entum can be created in favour of solida rity and th e fight
against exclusion. If taxes on wages are replaced by higher taxes on
57 I 61
depends. That is a mechanism des igned to co mbine economic efliciency
Because thi s income is gra nted to eve ryone of wor king age, it avoids any
58 I 61
- - - - - - - - - - - - - - - - - - - - - - <0-
-'
(1
discr imination between th ose who are on benefits and th ose who are not o
o...d . l ;n, " tu " . n , ' (.u t h ,, ~ fin;" .n j .
Because lhi s incom e is maintained whether th e individu al is in oc out of
Th; , " n", ".n . f m.n, " h " h ;, n.t ....nt fr .m th . "".. . f Kad Mu x . n . " h ;, h ;,
. 1> n fth. fou n . , " . n , . f "'.n..;. n ."n.m;", " .. ox. Hd t1. m.n".n. . . . . u t . ft h.
. " finH "n .f . mu t ."n.m. o. C. B. n . t" . n . J. Cu t.H", Ma", hand<, <010"0"
,ap"aU<t, Pu;, , . 80. A " m" " ol. fo, m uJ." . n m o. fou n. ;n M. A.H. " n . A. Od ' . n ,
La Vid . n .. l. mo"na..,Pa,
work, it doos no! create a poverty trap . Finally , lhi s incom e is an aid to
individu als, no! ta co mpanies. It cor reets th e disparities th a! result from
huge pay differentials and makes it po ssible to employ low-skilled workers
,.S.
In A I1I. o"" of e ap" aUrt R ula"o", " , W . n . t "m. " h . n th . t" m 'm J." . n ' " .. n.t
with limited mar ginal pr oductivity .
, ..n . .." oH, h m th;, ..n>. , th ... m"h.n;,m, u . "fom. t. . .
This red istr ibu tion mechanism co nsists in de te rmining th e amount of a

fixed-rate lransfer witho ut means testin g. Al th e same tim e , a standard tax
'in , ,,tu " . ul fo, m , '.
rate is sel and is deducted al source from eve ry type of income . Final1y , an
So,'al I n<o," "o" <, C. m o" , . 8,.
element of pro gressive taxati on is int rod uced in th e furm " f a surtax on
On
~"uduul
fo, m,' "
m. lfth; , " " h m o. fou n. ;n A. S,h." ", I1I. E, o" om'" I1I. o"" of
S.mfth . toxt> .n " h ;, h th " n.m;" .f " nT.n".n , ;, o.... . pp.u ;n J. P. Du.ut
. 1., ' ." 'l.'E" n . m;. ... " nT.n".n ,', ;n R ..u. E, o" om'o u., , d . l ;u. , Mu, h , . 8 . S...1>.
large incom es. The averag e rate of taxati on is assessed in such a manner as
to ensure a net balance between receipts and expenditures. The minimum
th . " n"" .. "" ,t o. A. Od ' . n , An.ly", . , o" om'o u. d.on,. n"o"<, Pu;, ' ... .
incom e can th en replace th e existing social transfer s - child benefit and
S" t
A I1I. o"" of e . p" aUrt R ula"o" . ... ';0.. h . " th . "
d . t l ;n th . UnH
n . " h . H h.. m t. " . uJ.t. th u m u J.".n . f
H. l. In th . fon .,,;n . .....,
m u lt , u n . u H" . o. "fo"n" t. th . oxp";.n,, . f Eu " p..n " u n " ;... S. "J.l
th
housing benefit in France - which amount to less th an th e minimum
, ".n".n ;, . ;n t. th . "u". l m. . .." .n m" hn"m, " , th , n th u m u J.".n , .,t. m ,
incom e ; where such benefits exceed th e minimum incom e , th e excess

amo unt of benefit would remain payable . ~'Iith th e same amo unt of incom e
. " fo" n m. Em ph , ;, ;, . 1> 1." n th . ;m" ".n,, . f th . u " . n .. th . "udolf
ofw hatever type being subjec t to th e same amo unt of tax , thi s mechanism
can be linked with th e universal soc ial levies, health msurance
contributions and th e remaining vestiges of child benefit.
th . "J." .. , m" " . n ,, .. . u t . f th. m h uJ." . n . n . th ", . fu d.n ;n.;. , . u.l

m ,"tu " . n , " '. "n, ..t" ' " . h"J.l " h.... n Ou" n . th ,,;f u., ""th.
In th . " u n ,,;...fth . W..t" n " . d., 8. t. ' 5>" " n t . ft h. ., ,,.. ..pu J." . n " ' " " . u n m ;n ' .,. , " m. u " Hh 1... th . n , " con t t th . , tu t . H h. t" .n" .th con tu , .
Th.t ;, " h . " . " m. " " m t. t mm"m ;n th . ..d . l" . l . pp" "h.. ;n, . ",.
The stage is th er efare set far a po litical debate . The real challenge 1S
certa inly not to dismantle th e welfare sta te or even to erooe its benefits. On
o. Kad p . J.n.;. w h '. p . J.n.; . ". ,... . n m " lu l. , ;, . f th . " ' ;n " h ;, h
... H.H, m ...t" . , th . fo, m, . f ..d . l Hfo ;nh" H fr . m th " -;nOu,,,;. 1 . u, h .
un u " l. u n m " m. t.. th . . ...d t. t. " "..t. th. . .d . l f",;, n . u t o. . .d . l
th e co ntra ry, th er e is a particularly pr essing need far soc ial cohesion . The
" n fH,", . ". ; tht th
n o. , h , ft ;nt. th H" ..l u . u , thn" t. th m" u",
pu rpose of th e po litical debate is to de vise a means of giving expres sion to

people's soc ial rights so th at th e new grow th rgime can put wage soc ieties
. , ;n d.l. " h ;, h . n"u u
H"..l . " u . , t. oxpm , th . " m m.n ;nt. m t> th " u . h
back on th e road to soc ial progre...
" n"" .. , h.n n.l>.

M. P.....t . 1.,L '. mp ,'''' d.ro",an'<a"o", Pu;, , . 8,.
" G. M. n l, , . m ,IUo", d '''' d' ,'du , <an<app
Translated courtes!J ofEurostat

This essay was first pu blished in New Left Rw iew ,
nan , Pu;, , . 83,
A I1I. o"" of eap"aUrtRula"o" . u l.", th
, n t.,l .. th ,,1.t. t. th. Un , t Sto t...
Th. . . .n on . u H" . , " , th . u ;, " . n , t. " fl.d , d fi, u " . ul , ,u m , " n m . Su,h
. u J." . n " h . " " , ..nn.t .., t u " .n th . fun m.n" l hd th .t . n W..t. m " u n " ;..
o. n . fi t fr . m " m m.n . " " th " . , m .
No. ~ 3~ , November-December 1998
A. B"n. ", ;n L ',,"p."'1ifd. ""Uda n" . L. f""m f. l. mo" doa U<a"o", Pu ;,
,. .
r " fin H"n . f th . fi un, J.l ,., t.m, . n . .....,;, " . n . H h. , h u . d ,,;, ", fo. tu m . f
th u ;. u, ,,;m , ... M. A.H. "., Ma,,,,.,o" om'. fi na n,'
~
J. P. m . u ; . n . P. R...n..n . n "fo, t
, Pu ;, ' .." , 1>. . , , .

;" .. ;n.;.;. u.H, m . n .
n " . ,
m . , . , . u.H,m ;n L< "ou, . I d "'aU"<, Pu;, ,..6.

Th; , ;, . n ,t",.n . ft h . . ..th " t. th . n . " , . ,".n . f m. Rula"o" .. ,,''''< du
,ap"aUmo., O. '. J. " o, " n . o . u " O<t.O" ' .,.
Tun>l,".n n . t.. w . . . ..d . t. ' ;, tun>l,".n . H h. t" m ~ ...d'" ..lu ;.l. ' o. " h ;, h ;,
m..nt '...."t. " h ;, h 1 , un. " th . ;m.ul> f ... H. H,m . n . ;n " h ;, h " _ l" . u , _
O. fu th " n u n t fo, m . f . m. lm.nt _ ;, . 1>. th " mm.nt ..u,,, . H.t.l m.n.
It fon .", fr . m th;, th . t th . " m" o,H t. o. t"..n " " ''' . n . ;n"m. h.. t. o. " . uJ.t
59 I 61
R. B" , "''u n . " no N, " . ul L" 'u, S" n . u . ," u n Eu " . ..n M. n . tu. S" n . u .',
Rh.",h''',o" om' oudoLou,.'", 1. 59, n... '-' , ', 93" Ph ' H . , ~ ",. m . l , tu , .."'. th . "J." .n>h , . o. t"..n " mfl,".n . n .
u n . m. lm.nt " . lm..t . " n tu , . 'Th . R.J." . n , h ;. B. t" ..n Un.m. lm.nt . n . th . Ro t.
. fCh.n f M.n W R. t.. ;n th. UK, , 86,_,. ,,', E, 0" om', a, Nm o" ' 958.
, It ; , m", h ,...u , t. , , "u. th . ,;.ht-"m" n.m;, t M't. n r , ; m.n .. th . ;nT.nt" . f
60 I 61
- - - - - - - - - - - - - - - - - - --
----<0-
-'
(1
'1., . ".... 1. It " .. pu t fon.",! in Pun" b. L. St.!i , u in '1. ..m ' in , in . ' 1 " ""." fr .m <
m , u l .",."U.. in ,,1,,1 , ,,;,'n1>uh ,n .1. ,,;,tI. Hm,' " l. T1. , . .. " ..
m ",. , ,,'
<n'O ,
<om. l. t. l <ff" .nt ..." ..h b. P. V.n Puij n o . n . n tm . .. t -
"'. n,,". n " hool fo, ,,1 0m ' 1 l m.nt .f " ll " u . . .,,<!u, h . It. <om. l. t. l. ".u. t..
in"m. fr .m ".
(... V. n P ui' , Sou,.rI. ",Ud"n", P Ul'
,." j. A " j, ,,Uon
. H n ,h .,. u b . W. , on '1. con " "" 1" th.t "". l, , h U '1 nn" p. l m..n h ",.l
int. , ,,Uon, . n o ,. . .u ' m H.. t. '1 " ,moU, o.." ..h ",.nU. .. t fod h b. F. Bou , d. 1<F. n ,! .h on S.in ' -S;mon , P" l' ' . .,.
POSTFA CE TO THE NEW EDITI DN: CAPITA LlSM AT THE T URN
61 I 61
- - - - - - - - - - - - - - - - - - --
---.0-
-'
(1
Om, A., " 3n
Gum,d, A., " .
Gun ou , A., , bon
Index
Gu ''u m., M., , , 6n
Hu " . , R.r., '"

H. , .1, G.W.F. 3 '
Hm . " P ., , S<n
H'fu ,h n " R., ""n
Hm , h , F., ".' . n o n
Hm , h , J., o8
" ,hm., W., 3'3
H" " n , J.A., 30
",1;.".,M., 201m
Hofu n 1>u" , , oon
B. " n , R., o," . n o n
".1<1" , N., "7. '"
B,;'u, E., , Sn
"'"' " M., "
Bu .n, P ., "7. ,"on
4n
"'h u.", E., 3 ,6 n
Enl. t, e., ,",n
Kon ,hH, J., . . . n o n
B. u ,, m",, '., , , 6n
"'.n..,'.".,' 54. "",n,""
B.n. tU e., , Sn
""M; , J., ' 3n
B. d . , A.A., , 67 . non
B..,,,. , P," 3n
L";n;, s ., 3,on
Bo', D.C., , . .n
L.n, o, O., '4n
B.v.., s ., " n
L. ,,,lu. , , bon
B" "n.,".H.,. , n,"oon
L.fO' .,. , H, 30. 3'
B,unh.ff, S. O" ' S9n , o..,n, , ,,n, "on
eH,..,., L., ,..n
Bum., A.W., ,,a
...."k, G., , 31m
o" ,. h", J., ,Sn, ",o n

o..,.lb , M., , 8
...... ff, H., 3"
Ch , m , ,,'; n, E.H., '09n
...l. m . n ' , J., ,",n
Ch . n . l", A.J., o"n
...lt h u . , A., ",.n
e h . . . h " , J." ., ,8
.." , P.W., 3,n
.n.n
"u. h n , S., " 3n

"., x,le, " , , " , 30,3', 36, '3"7, "on , 30',3" , 3So
...,,; , P., ",
e l." u ., R.A., , Son

e.m m.n ., J. R., ' 3m
e. H., A., 309n
...HH , P, ' 37 n
" ..n . , G.L., , 6o . n . n
D. n.m n . , J. L., :#>n
" , ho.n., R.,"
Dunl , J.T., , . ,m
Elh. , W., o," . n . n
" ,"h.n , w.e.,"a

",,; n , F., " 7n
Em m . n u .l, A., 30
N ,;, A., , 8
E" "l. " R., ,",n
N",n, R., 3'
F.nm .th , R., 3"n

F;. h " , 33 0
F" .,n , J. , 38
p . n " x, e ., " n, <oon
F, ;m .n, "., 33an
Pu u " , "., 330 n
G; n h., H., ,"n
p .,;n. th , L., ' " . n . n

p . hnkm, D., 330 n
G. lm ,'h, R.W., " S . n . n
P. d . , v."
INDEX- ' , 3
'"
---------------------~O-
-'
(1
Pmou x, F., '3n
P1. 1. , B""n , E.H., 9" . n o n , " oon

P ;.. n , FoF., , Son
Pou bn" '" N. , ' !4n

R. .. .,k, S.G. ' 3m
R"m..n ,J. , . .n
" , 1 m , tt, B., n, ,,,n, 330 n , 345n

S, h u m P"", J., ""
" , h " " ' ,, A.J., 33Sn
S;,m on ,h , J., , n
" a lf., P., " 76n
"""'Y,P.,"7. ''', ,"o n

Wh . t. , W.F., '44n
INDEX- 3 1 3
- - - - - - - - - - - - - - - - - - - - - - - - - <0

Aglietta. M. (1979) A Theory of Capitalist Regulation The Us Experience

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A THE OR\' OF CAPITA LlST REGULAT ION

A THE OR\' OF CAPITA LlST REGULAT ION

- -+ - MI CHEL AGU ETIA

T1; , " j,h . n . u'H, h b. Vm. '0 ' 5

,"'u do< , ap ..aUsm

C C. lm. n n -L; ,.,6

u '" 6 .. ,"'! S' m ', Lon o.n W, F oEG

J., ",m' , Su , "

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" " "" '.........m

.fN." L.ft Boo"

ISBN- ' 3' .,8- , -,8.,8-'38-, (PB)

w,," f Con, ,,..

Punt ;n t1. US b. . ... 1. P",.

1. The Capitalist Production ofthe Mode ofConsumption

1. The Formation and Evolution of a Ilorm ofSocial Consumption

The Factors tha! Differentiate the ~age-Earning elass

II . The Eifects of the Socialization of Consumption on Changing Forms of

I ntrod uct io n: T h e Need fu r a T h e o ry of Capitalis t Regulat ion

III. The Eifects of the Socialization of Consumption on the Long-Run

1. The Canalization of Economic ela.s Struggle by Collective Bargaining

T h .. T ransfonnat ion o t h e ....' a ge R..la t io n: t h e La ws o Ca p it al

Stal ..s and the Long-Run Movement of~lages

l . Th.. Product ion o Capital

1. The Creation and Accumulation ofSurplus-Value

1. Abstract Labour and the General Equivalent

Rate and Mass ofSurplus-Value

3. Productivity ofLabour and Relative Surplus-Value

1. The Definition of Concentration and its Determinants

1. The Concentration and Centralization ofIndustrial Capital

Overview of Capital Accumulation in the United States

1. General Conditions ofDevelopment of the Forces ofProduction

General Tendencies in the Accumulation ofProductive Capital

The Foundations ofFinancial Centralization

1. The Mechanization ofLabour

Financial Centralization through the Transformation of the Mode of

3. Financial Centralization through Public Expenditure

Taylorism Superseded by Fordism

3. The Problems Posed by Automation in the Labour Process: NeoFordism

The Influence ofFinancial Conditions: ~aves ofMergers

1. Financial Centralization through the Financing ofFixed Capital

2 . T r ansfonnations in the La b o n r Proc ..ss

The Determination of the !lominal Reference ~Iage in the United

1. The Evolution ofModes ofCorporate Organization

The Struggle to Establish a Ilormal ~orking Day and the Formation of

the Trade-Union Movement

3. The Predominance ofProprietary Control: Financial Groups

nI. Forms of~age and Labour Process

Planning and Managerial Control

5 . G..n ..ral Rat .. of Profit a n d Co m p ..tit ion among Ca p itals

1. Time ~ages and the ~orking Day

1. The Conditions of Existence of a General Rate ofProiit

Pieceworkand the Stimulation ofOutput

1. The Theoretical Status ofPrices

3. The Influence of the Collectivization of~lork on Forms of~lages

The Expanded Reproduction ofSocial Capital

3 . T h .. T ransfonnation of t h ......'a g.._Ea n l ..rs ' Con d itions o f Lif..

n. The Competition ofIndividual Capitals on the Basls af the General Rate

Production and Exchange

The Factors tha! Diiferentiate Rates ofProiit

3. Ilew Modalities ofDevalorization: Planned Obsolescenee and

The Capitalist Attributes ofMoney: the Formation of a Ilational

II. Financial Crises as Ilecessary Aspects of Capitalist Regulation