12 March 2011

Glossary: The accumulation of capital

The essence of capitalism is an ongoing accumulation of value. All complex societies are characterized by a social division of labor. Under these conditions, everyday life is structured by the need for individuals to produce some good that others will exchange for money, so that the producers can in turn use the money to purchase the goods they need to live their lives. Marx represented this process as C-M-C: commodity for money for commodity.

Capitalism is defined as a system by the inversion of this process: M-C-M'. Under capitalism, the end of sustaining life becomes only a means, and the means of exchanging money becomes the defining end. Of course, exchanging money for the same amount of money would be pointless, so the second process ends with M': a greater amount of money than was initially exchanged. This highly simplified schema maps out the underlying property of capitalism as a system, namely an endless accumulation of capital - growth for the sake of growth. This helps explain why GDP growth, despite the fact that it tells us almost nothing about the quality of life going on beneath it, is the central indicator of economic health under capitalism.

In order to expand itself, capital must successfully cycle thru the realms of both production and consumption. Value must first be produced, and it must then be realized by finding a buyer. However, there are different social configurations that can facilitate accumulation, with dramatic consequences for the nature of culture, class, politics, and social relations. In its history, capitalism has found expression thru a number of more-or-less coherent social systems that superficially can seem quite different but are all structured by the underlying dynamic of endlessly expanding production and consumption. Examples we will be discussing include postwar Fordism (1950s-1960s), neoliberalism, and whatever might succeed neoliberalism.

All of these systems, however, are marked by the inherent contradictions of capitalism. They can proceed in good health for decades at a time, but inevitably will run up against their inherent limits. If problems crop up in either the realm of production or consumption or the juncture between the two, the regime of accumulation will need to be adjusted. If the problems are systemic in nature, a completely new configuration of society supporting a new regime of production and consumption must be pursued. The breakdown of a regime of accumulation finds expression in chronic global crisis. The Great Depression of the 1930s, the crisis of the 1970s, and, perhaps, the current crisis of neoliberalism are all examples.

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