Wednesday, March 14, 2007

The Contradictions of Capitalism


The Contradictions of Capitalism

My last column, on dialectics, showed that for Marx all change takes place through contradictions. To nothing does this apply more strongly than the development of capitalism. Capitalism is a mass of interlocking contradictions.


As capitalism drives the productive forces forward, so the need becomes ever more urgent for the social ownership and democratic planning of the economy – one thing capitalism, by its nature, cannot deliver.

Then there is the contradiction between the capitalist class and the working class rooted in the exploitation that takes place in every capitalist workplace. This class conflict has accompanied capitalism from its birth. For centuries the bourgeoisie has used all its economic, ideological and political power to incorporate, divert and repress working class resistance. Time and again it has been successful, inflicting on the working class numerous grievous defeats, and time and again its ideologists have proclaimed the end of the class struggle.

But to no avail. The fact is capitalism cannot do without the working class; it needs it to produce its profits. And the more capitalism grows and expands, the more it is compelled to increase the size and potential power of its mortal enemy. The bourgeoisie can win battle after battle but it cannot win, or end, the war. The class struggle can end only with the overthrow of the bourgeoisie and the abolition of capitalism.

A further contradiction is that between the capitalists themselves. Capitalist production is organized on the basis of competition between rival capitals. This competition permeates the whole system from the level of the smallest corner shop to the biggest super market, from the most humble workshop to the mightiest multinational corporation, and, because the state is the instrument of capital, it produces competition between states which in turn leads to imperialism, arms races and wars.

Capitalist competition is competition to accumulate capital through the exploitation of labour. Any capitalist business that falls behind in the race risks bankruptcy or take over by its more profitable rivals. Every capitalist is therefore compelled to attempt to increase the exploitation of their workforce and the sum of their profits, thus intensifying the contradiction between the classes. Free market competition turns into its opposite, monopoly, as unsuccessful businesses are swallowed up by successful ones, but competition is not ended, it breaks out anew between the monopolies.

Competition drives capitalism forward and accounts for its historic dynamism, but it also undermines it, preventing it ever achieving stability or equilibrium, and pitches it into crisis.

Competition pushes the capitalists, especially when the system is booming, to produce more and more, but because workers are always paid less than the value of the goods they produce there can arise a crisis of overproduction.. More goods are produced than the workers can afford to buy with their wages. This leads to some businesses being unable to sell their goods and making their workers redundant. This further diminishes the purchasing power of the workers and leads to more cutbacks in production and more workers being made unemployed. A vicious circle develops in which the economic boom turns into recession or slump.

The tendency to overproduction can be overcome but only by means that exacerbate other contradictions in the system. The government can intervene with a programme of public spending which employs workers on various state projects. This puts money in the pockets of workers and stimulates demand thus reversing the downward spiral into slump. But this method known as Keynesianism ( after the British economist Maynard Keynes) has the effect of generating inflation, caused by too much money chasing too many goods, and this fuels the industrial struggle as workers fight for wage demands to keep up with rising prices.

Overproduction can also be avoided by the capitalist class itself buying up the surplus which the workers can’t afford, either as luxury goods for its own consumption or as means of production ( new machinery for its factories etc.) If the capitalists of one country opt for consumption then that country’s economy will grow more slowly and fall behind countries where they opt for investment in new means of production. But opting for investment feeds into another fundamental contradiction of the system, namely the tendency of the rate of profit to decline.

This tendency derives from the fact that the source of all profit is the exploitation of workers, of living labour, but the trend of capitalist production is to combine ever greater amounts of machinery, technology etc i.e. dead labour, with relatively smaller quantities of living labour thus reducing the rate of profit as a proportion of the capitalists’ outlay. If the rate of return on investment declines so too does the willingness of the capitalists to invest, causing the economy as a whole to go into crisis.

But if this is the case, why do the capitalists concentrate their investment in machinery rather than in living labour? The answer is because there is a contradiction between the mass of profits and the rate of profit and the interests of each individual capitalist business and the interests of the system as a whole. Each individual capitalist unit is driven by competition to try to increase its mass of profit and its share of the total profit in the system. It can do this by investing in new technology which enables it produce more efficiently and sell more cheaply thus, at least temporarily, stealing a march on its rivals. But once the use of the new technology is generalized the temporary advantage is wiped out and the overall rate of profit is reduced.

The tendency of the rate of profit to decline is only a tendency. It too can be countered or offset in various ways - by increasing the rate of exploitation, by imperialism, arms spending and war – but each of these methods generates resistance and sharpens the other contradictions in the system.

None of these contradictions by itself, nor even all of them taken together, guarantees the victory of socialism but they do make the system, for all its immense power, vulnerable. The question is can the working class overthrow it before its contradictions destroy us all.

John Molyneux

3 Jan 2007


Rosa Lichtenstein said...

Nice try John, but this 'theory' you attribute to Marx is bogus from start to finish.

Not only can 'contradictions' not change anything (being merely linguistic items -- unless you think nature and society are minds), this whole idea is derived from a series of crass logical blunders Hegel committed (mainly because he was the George W Bush of logic), wherein he confused the alleged negation of the law of identity with the so-called law of 'non-contradiction' -- a confusion you yourself perpetuated in your otherwise excellent 'Arguments for Revolutionary Socialism').

More details at my site, where I systematically take this 'theory' apart, and from a Marxist angle (and yes I am in the SWP -- check out my letter in this week's paper).

[Marxist dialecticians' Hegel's logical blunders are exposed in Essay Four, and Essay Eight Part Two.]

Rosa Lichtenstein said...

Incidentally, blogger keeps signing me as 'Red Menace', when my name is Rosa Lichtenstein!

Rosa Lichtenstein said...

and it looks like the above link has been reproduced only in part.

Here is is again:



Rosa Lichtenstein said...

I have just checked your other article on this 'theory', and you repeat the same hackneyed errors about formal logic (ones I pointed out to John Rees in person, in 1990! -- and he promptly reproduced them in his awful book; so I might as well have been talking to the cat).

You cannot possibly have checked this against a single logic book, and you appear to have copied it off other dialecticians (like Novack) who merely copied it themselves off others (none of whom checked the details).

And you get the syllogism wrong (it has to have quantified premisses and conslusions) and your attempt to 'define' the law of identity is a joke.

"This matters because the dominant mode of thinking, based on the logic developed by Aristotle, is not founded on the principle of universal change, rather it deals with fixed states or ‘things’. Its basic axioms are that A = A (a thing is equal to itself) and A does not = non-A ( a thing is not equal to something other than itself), from which are derived sequences of sound reasoning known as syllogisms."

Aristotle knew nothing of this 'law' and his logic is not founded on the things you say, and it could cope with change. Proof at my site -- Essay Four.]

And I'd like to see you try derive a single syllogism from your attempt to negate the version of the law of identity you quote.

[Try negating Leibniz's version -- a much more sophisticated form.]

Finally, modern logic (especially temporal logic) copes with change admirably well.

More details at my site, where your neat little 'theses' are thoroughly taken apart.


Anonymous said...

uh, yes, Aristotle did propose a law of non-identity, i.e. something could not simultaneously be A and not-A, just as he did a law of identity and another of excluded middle.

but, change and motion, of process, depend on simultaneous A and Not-A as contradictory unity, without which we have puttered to a stop amongst our mountain of snapshot 'motion'.

'coping with change' is hardly the point now is it; more than ever, change must be consciously made (but then every 'red menace' must be aware of that).

Anonymous said...

'Without contraries is no progression.'


Anything interesting you can remember is likely to have been sparked by one conflict or another.
The generation which fought the second world war found themselves challenged by the growing economic power of their children, and a decade of outrageous creativity was born from the ensuing generational struggle.

Colliding tectonic plates generate energy.

etc etc etc.

Kenali dan Kunjungi Objek Wisata di Pandeglang said...

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Pandeglang telah hilang Kenali Si Dunia Aneh

Anonymous said...

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Anonymous said...

I thought it was a pretty sober interpretation of Marx. I don't know what the Red Menance is talking about.

Rosa Lichtenstein said...

Juan, I'm sorry, but I have only just seen this:


What has this got to do with Identity? [LOI] The LOI concerns the supposed relation between an object and itself, not the truth-functional connection between a predicate and its negation.

Aristotle in fact said this: “It is impossible for the same thing to belong and not to belong at the same time to the same thing and in the same respect”

This is his so-called 'Law of non-contradiction' and it has nothing to do with the so-called Law of Identity [LOI]

So, in "A =A" the "A"s are singular terms, not predicate letters. But in the LOC the terms are predicate expressions, not singular terms.

So, I repeat, the LOI is unknown to Aristotle, and what little he says about sameness shows he was dismissive of formal attempts to turn it into a metaphysical principle:

"Now 'why a thing is itself' is a meaningless inquiry (for -- to give meaning to the question 'why' -- the fact or the existence of the thing must already be evident -- e.g., that the moon is eclipsed -- but the fact that a thing is itself is the single reason and the single cause to be given in answer to all such questions as why the man is man, or the musician musical, unless one were to answer 'because each thing is inseparable from itself, and its being one just meant this' this, however, is common to all things and is a short and easy way with the question)." [Metaphysics Book VII, Part 17.]

And sure, he used formal principles we now call 'excluded middle' [LEM], where have I denied this? The point is that neither the LOC nor the LEM formed the basis of his logic, as John often asserts.


That is a dogmatic, a priori assertion you have done nothing to substantiate.


I agree, but that just underlines the fact that us Trotskyists need to stop saying stupid things about logic.

On this, see my comments over at Wikipedia:

Rosa Lichtenstein said...

By the way, LOC = Law of Non-contradiction!

Anonymous said...

Wow, talk about polishing turds!