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Summary Note: This study guide offers summary and commentary for Chapter 1, Section one; Chapter 4; Chapter

6; Chapter 7; Chapter 10 and Chapter 14, all from Volume One of Das Kapital, or, in English, Capital. Karl Marx's Capital can be read as a work of economics, sociology and history. He addresses a myriad of topics, but is most generally trying to present a systematic account of the nature, development, and future of the capitalist system. There is a strong economic focus to this work, and Marx addresses the nature of commodities, wages and the worker-capitalist relationship, among other things. Much of this work tries to show the ways in which workers are exploited by the capitalist mode of production. He also provides a history of past exploitations. Marx argues that the capitalist system is ultimately unstable, because it cannot endlessly sustain profits. Thus, it provides a more technical background to some of his more generally accessible works, like The Communist Manifesto. This study guide focuses on one component of Capital, Marx's schema of how the capitalist system functions. Marx argues that commodities have both a use-value and an exchange-value, and that their exchange-value is rooted in how much labor-power went into them. While traditionally people bought commodities in order to use them, capitalists use commodities differently. Their final goal is increased profit. Therefore, they put out money and buy commodities, in order to sell those commodities for a profit. The cycle then repeats itself. The reason why the capitalists are able to make a profit is that they only need to pay workers their value (how much it takes to keep them functional), but the workers produce more than that amount in a day. Thus, the workers are exploited. The capitalists are able to do this because they have more power, and control the means of production. Furthermore, the workers' character is negatively affected by the system. They don't own the products of their labor, and the repetitive work they have to do makes them little more than machines.

Terms Use-value - A use-value is something that is valuable because it is useful. It can also be a measurement of the usefulness of a commodity.

Labor-power - According to Marx, labor-power is "the aggregate of those mental and physical capabilities existing in the physical form, the living personality, of a human being, capabilities which he sets in motion whenever he produces a use-value of any kind." Means of production - The forces of production. This is comprised of the instruments of production (tools, machines, etc.), methods of working (skills, forms of cooperation, division of labor, etc.), and applied knowledge (science, etc.). Mode of production - The economic structure of society that defines people's mode of living. It consists of the means of production as well as the relations of production. Relations of production - Relations between people necessary for a certain form of material production. This is comprised of the distribution of the means of production, forms of possession (collective and individual private property), and distribution of the product. Chapter 1: The Commodity (Section one) Summary In this sectionwhich is subtitled "The Two Factors of the Commodity: Use- Value and Value (Substance of Value, Magnitude of Value)"Marx introduces us to his analysis of commodities. A commodity is an external object that satisfies a human need either directly or indirectly. He says that useful things can be looked at from the point of view of quality and quantity. They have many attributes and can therefore be used in many ways. He uses the term use-value in relation to commodities' quality. "The usefulness of a thing makes it a use-value." A commodity's use-value is a trait of the thing itself, and is independent of the amount of labor needed to make the commodity useful. Exchange-value is the proportion by which use-values of one kind exchange for usevalues of other kinds. It is a constantly changing relation, and is not inherent to the object. For example, corn and iron have an exchange relation, which means that a certain amount of corn equals a certain amount of iron. Each must therefore equal a third common element, and can be reduced to this thing. The common element cannot be a natural property of the commodity, but rather must be abstracted away from its use-value. Discarding use-values, only one property remainsthe commodities are the products of abstract human labor. They are "congealed quantities of homogenous human labor." This common factor in the exchange-value of the commodity is its value.

Thus, a use-value only has exchange-value when it consists of abstract human labor. This is measured by the amount of labor-time socially necessary to produce it. A commodity's value would stay constant if the labor-time also stayed constant. With greater productivity, it takes less labor to produce a commodity, and thus, less labor is "crystallized" in the product, leading to a decrease in value. "The value of a commodity, therefore, varies directly as the quantity, and inversely as the productivity, of the labor which finds its realization within the commodity." Something can be a use-value without being a value. This occurs when something's usefulness is not produced through labor. However, nothing can be a value without also being a use-value; if something is useless, so is the labor contained in it. Analysis Marx presents several definitions that will be important throughout his work, so it is very important to be clear on their meanings. A use-value corresponds to the usefulness of an object, and is internal to that object. For example, a hammer is a use-value because of its contributions to building. Its use-value comes from its usefulness. In contrast, a hammer's exchange-value comes from its value relative to other objects. For example, a hammer might be worth two screwdrivers. An object doesn't have an exchange value in itself, but only in its relationship with other objects. However, the fact that the hammer and screwdriver can be exchanged at all suggests that there must be something common between them, some means of comparison. Marx says that this is the object's value. Value means the amount of labor it takes to make the commodities. This labor theory of value is very important to Marx's theory. It implies that the price of commodities comes from how much labor was put into them. One implication of this is that objects with natural use-value, such as forests and other natural resources, do not have value because no labor went into them. One problematic question, then, is how such natural resources can have exchange-value (people do spend money on them) without benefiting from labor. It is also important to consider how Marx's conception of the roots of exchange value differs from modern economic theory. In modern theory, something's exchange value is rooted in people's subjective preferences. While the amount of labor required would be linked to the supply curve of a commodity, its exchange value is also determined by the demand curve. Marx focuses exclusively on labor. This section also gives a general sense of Marx's approach in Capital.Here he dissects one aspect of the modern capitalist system and presents a schema for understanding why it functions as it does. Later Marx will analyze things like the role of money and the capitalist. While this book makes many historical and sociological arguments, it is largely a book of economic theory and its implications.

Chapter 4: The General Formula for Capital Summary Marx says that capital's starting point is with the circulation of commodities. The ultimate product of this commodity circulation is money. We see this every day, when capital enters various markets in the form of money. Marx distinguishes two kinds of circulation. C-M-C (commodities transformed into money which is transformed back into commodities) is the direct form of circulation. In this case we sell commodities in order to buy more, and money acts as a kind of middle-man. However, there is also another form, M-C-M. In this case, we buy in order to sell; money is capital. The first phase transforms money into a commodity, the second transforms a commodity into money. Ultimately, then, we exchange money for money.

Marx then compares C-M-C and M-C-M. They are similar in that both have M-C and C-M phases, involving commodities and money, and buyers and sellers. However, in the case of C-M-C, the final product is a use-value, and thus gets spent once and for all. There is no "reflux" of money because it is lost in exchange for the product bought. In M-C-M the seller gets his money back again; the money is not spent, but rather advanced. This reflux of money occurs regardless of whether a profit is made, by the nature of the process. Use-value is the purpose of C-M-C, while exchangevalue is the purpose of M-C-M. Money is indistinguishable, and it seems absurd to exchange it for itself. It is distinguishable only in amount. Thus, in M-C-M what really occurs is M-C-M', where M' = M + excess. This excess is called surplus-value. The original value adds to itself and converts the surplus value to capital. Since M-C-M is buying in order to sell, the cycle is endless. Both M and M' have the "same vocation, to approach, by quantitative increase, as near as possible to absolute in wealth." In the end, money is again the starting point, and from M' we go to M'' and so on. Thus, the possessor of money becomes the capitalist. He is a capitalist in so far as the increase of wealth is the sole force behind his actionsin this role he is "capital personified and endowed with consciousness and a will." His aim is boundless enrichment. M-C-M' is the general formula for capital, as it appears in the sphere of circulation. Analysis Marx introduces here the idea that money plays a very different role in modern capitalistic society than it does in traditional society. C-M-C uses money as a unit of

exchange. An example would be a person who sold a hat for $30, and then used that money to buy corn. The money is instrumentally useful in trading commodities. Thus, the person with the hat doesn't have to find someone who would like to buy it with corn. Rather, he can sell the hat to someone for money, and then buy the corn from someone else with that money. The ultimate purpose of C-M-C, then, is to consume use-values (in this case the corn). M-C-M' represents modern capitalism and is very different. Its ultimate purpose is the accumulation of money. There is a never-ending cycle, because the end product is simply more money. Here, money is properly thought of as capital. It is an end in itself, and is put out into the market to buy goods in order to sell them for more money. Notice that according to Marx, by definition a capitalist's goal is boundless enrichment. Insofar as a capitalist is not working towards that goal, he is not a capitalist. One thing to consider when thinking about Marx's characterization of capitalism is where this capitalistic ethic came from. Marx says that capitalists have an endless need for more money, and that the system of capitalism requires and perpetuates this attitude. Even if this is true, however, it does not explain how capitalism developed in the first place. What made people view M' as an end in itself? Where does this thirst for profit come from? Marx's description does not spend a lot of time explaining how people could have come to develop these ideas. This limitation is a potential theoretical difficulty.

Chapter 6: The Sale and Purchase of Labor-Power Summary Marx here addresses the problem of how money is transformed into capital. He says that he must explain how someone can buy commodities at their value, sell them at their value, and also make a profit. The change in value cannot occur in the money itself, or in the resale of the commodity. Rather, the change must occur in the first act of circulation (Money to Commodity, or M-C). The commodity's use-value must be a source of value whose consumption is a creation of value. This occurs in the case of labor-power. However, there are necessary social conditions in order for labor-power to be a commodity. First, the individual must be selling his labor-power as a commodity. This means he must own his own person, and he and the owner of money must meet

in the marketplace as legal equals. In order to treat his labor as his property, he must be willing to put it at the buyer's disposal. This means that the laborer alienates himself from his labor, in order to claim his rights to it. Second, a person must not be able to sell the commodities that his labor has created. Rather, he must be forced to sell his own labor-power. This will only happen when the laborer does not own the means of production. For example, a person can't make boots without leather. He also can't make boots if he can't afford to buy food until the boots are finished. In these cases, the person will have to sell his labor-power to someone else, who will provide the leather or the food. While Marx will not explore here why it is that some people own money while others only own their own labor-power, he does observe that this situation is not natural. It is "the product of many economic revolutions, of the extinction of a whole series of older formations of social production." Furthermore, the existence of capital is rooted in historical pre-conditions that took all of the world's history to develop. It "announces from the outset a new epoch in the process of social production." How, then, is labor-power's value determined? Labor-power's value comes from the amount of labor-time needed to produce and reproduce itself. "The value of laborpower is the value of the means of subsistence necessary for the maintenance of its owner." There are therefore historical and moral elements to this definition, because we have to define what subsistence means. The means of subsistence must be paid for by the worker's income. If the price of labor-power falls below the cost of subsistence, then it falls below its value, since the labor-power cannot be maintained at a normal rate. Analysis Marx spends a lot of time discussing the ways in which capitalism is rooted in social institutions. Capitalism is not natural, but rather depends upon social structures, such as property laws. One social factor that is very important for Marx's theory is that the workers don't own the means of production. Because of this, they must sell their labor to others. It is precisely because workers do own their own labor that they are able to give up all claims to it, by selling it as property. As a result, they don't own the commodities they produce; somebody else owns their labor and the products of that labor. The result is that workers become alienated from their laborthey do not control or own what they create. In Marx's framework, labor-power is a commodity in the market. Its value is determined in the same way as for other commodities, and it is used by capitalists as another commodity in the production process. Marx's labor theory of value becomes very important when looking at the commodity of labor-power. A hammer's value comes from the amount of labor put into it. What,

then, is labor-power's value? Marx applies the definition of valueits value is the amount of labor needed to produce and sustain labor-power. Or more simply, it is the amount of labor needed to keep the laborer alive and functioning at his capacity. Let's say that a worker needs $100/week to survive and function. The value of his labor-power is, therefore, $100/week as well. A worker's "price" (his wage) must be at least $100/week in order for the worker to be paid at value. This concept will be very important in later chapters, when Marx will try to show that it is possible to exploit labor.

Chapter 7: Labor and Valorization Processes Summary In the first part of this chapter, Marx attempts to analyze the labor-process. When a person purchases labor-power, he sets that labor-power to work. The seller becomes a worker, and is compelled to produce certain use-values. To simplify, we first look at the labor process itself. Labor is a process between man and nature, as man takes on the materials of nature and adapts them to his own needs. Through this he changes his own nature. Man's labor is different from that of animals: "what distinguishes the worst architect from the best of bees is that the architect builds the cell in his mind before he constructs it in wax." Man realizes his own purposes through his labor. He must subordinate his will to the work, and force his attention on it.

Marx says that the "simple" elements of the labor process are the work itself, the object onto which work is performed, and the instruments of that work. Many objects of labor are spontaneously provided by nature, such as caught fish. The object of labor is "raw material" only if it has already been altered in some way by labor, for example, as is the case with extracted iron ore. An instrument of labor is something that directs the worker's activity onto an object, such as a tool. More broadly, we may also include the conditions necessary for carrying out the labor process, such as workshops and roads. The labor process then alters the product, producing a usevalue. Labor becomes "bound up" with its object; "labor has been objectified, the object has been worked on." Other use- values, the products of previous labor, also enter into the current labor process as a means of production. Whether a use-value should be seen as raw material, as an instrument of labor, or as a product, is determined simply by its function in the labor process. Labor consumes products in order to make products. In its abstract form, then, the labor process is purposeful activity aimed at making use-values, and is common to all human society.

Marx then looks at our would-be capitalist. He has just bought all of the needed factors for the labor process, both the means of production and labor-power. He then consumes the labor-power he has bought, by making the laborer consume the means of production through his labor. In the beginning, the mode of production must be seen as a constant, the capitalist taking the laborer as he is. The labor process, when the capitalist consumes labor-power, has two main characteristics. First, the worker is under the control of the capitalist, to whom his labor belongs. Secondly, the product of the worker's labor (the use- value of his labor-power) is owned by the capitalist, and not by the worker. In the second part of this chapter, Marx turns to the valorization process, the creation of value. Capitalists do not produce use-values for their own sake. Rather, they are produced only insofar as they have an exchange-value. Furthermore, the capitalist wants a commodity greater in value than the sum of the values of the commodities he used to produce ithe wantssurplus value. Thus, let us now look at the production of commodities as a process of creating values. The value of a commodity is determined by the amount of labor "materialized in its use-value." Thus, we must see how much labor-time is objectified in it. We can treat the labor required to make raw materials and the labor required to make the final product as part of the same process. Part of the value of the commodity thus comes from the value of the means of production. It is important to note that in this context, all kinds of labor have the same character. We are no longer concerned with the quality or character of the labor, but rather only with its quantity. The total value of the product is equal to the total amount of labor put into it. This result would seem to suggest that there is no surplus value, because the value of the end-product is equal to the values of the inputs. There is, however, surplus value. This comes from the fact that the cost ofmaintaining labor-power is different than labor-power's expenditure in work. The first determines labor's exchange-value, the second determines its use-value. The fact that half a day's labor is necessary to keep a worker alive does not mean that he can't work more than this. The capitalist takes advantage of this distinction. The capitalist pays the value of a day's labor, and therefore has it for the day. However, let's say sustenance for the laborer only costs a half-day's labor. Here, the value of a day's labor- power is half a day's labor, and the capitalist can pay the worker at that value. The other half-day's labor goes beyond the value of labor-power, and is therefore surplus-value. Thus, the value the work created is double what the capitalist pays for it. Marx says, "this circumstance is a piece of good luck for the buyer, but by no means an injustice towards the seller." The capitalist paid full value for all of the commodities he used, and then he consumed their use-value. Because

of the asymmetry between the use-value and exchange-value of labor, however, this allows the capitalist to make a profit. Analysis Marx begins this chapter with a discussion about the character of the labor- process. According to Marx, labor is pivotal for people's self-definition. Marx believes that how people labor largely defines how they live. The way humans labor sets them apart from animals, and they have a special relationship with those products of their labor. In this chapter, Marx attempts to create a schema for understanding how the production process works, and then more particularly how the capitalist structure works. Marx's labor theory of value again makes an appearance, as he tries to explain a seeming paradox. A capitalist purchases all of the inputs needed to make a commodity (labor-power, raw materials, etc.) at their value. He also sells the endproduct at its value. If this is the case, where does the surplus value come from? If there's no surplus value, then capitalism cannot exist, because there would be no profit. Marx's answer comes from the unique character of labor- power. Laborpower's use-value (what it can create) is not the same thing as its exchange-value (what is needed to sustain the worker). A worker sells himself at his value, but he produces more than this value. In this way, the capitalist gains surplus-value. This is significant, because it explains how exploitation can occur as the result of a series of freely made trades. The worker could complain that he is not being paid for the value of what he produces. However, the capitalist can reply that the worker is being paid his value. Once the worker is paid for a day's work, the capitalist has the right to use him for a day. Justice is part of the overall mode of production of the times, and as a result, this exchange can be considered "just." Why do the workers put up with such exploitation? Couldn't they demand higher wages, that match the value their labor-power produces? Marx's answer is that the workers don't have the capacity to work without the capitalists; they require factories and other means of production. The workers are selling an abstract capacity to labor, and because of this, the capitalist is able to exploit them by only paying laborpower's value. Consider whether you think Marx's characterization of the labor market is fair. Does labor have the ability to fight exploitation and set wages closer to the value of what they produce? Think of this both historically and theoretically. Chapter 10: The Working Day

Summary We have assumed that labor-power is bought and sold at its value, as determined by the labor-time necessary to produce it. However, the amount of labor needed to provide subsistence does not always equal the length of the work-day. The time in excess of the necessary labor time is surplus labor. Thus, the working day is a variable quantity, which changes according to the amount of surplus labor. However, it can only vary within limits. There is no real minimum limit; there must be some surplus labor because of the nature of the capitalist system, and it can approach but not reach zero. The maximum is constrained by physical limitations and moral constraints, such as the need to fulfill other obligations. The capitalist has a very particular view on this matter. "As a capitalist, he is only capital personified. His soul is the soul of capital." Capital's drive is to create surplus-value, and make the means of production absorb as much surplus labor as possible. If a worker uses his disposable time for himself, he is effectively robbing the capitalist, because the capitalist lives on surplus labor. Thus, the capitalist tries to get the maximum possible benefit from the worker's use-value. However, the worker has his own view about how much he should work. His laborpower is different from other commodities, because it createsvalue. From the worker's perspective, the capitalist's demands reflect an excess expenditure of laborpower. For example, a capitalist could potentially use so much labor- power in a day that it would take three days to restore it. "Using my labor and despoiling it are quite different things." The worker argues that the capitalist can't use three days worth of his labor power and only pay him for one. He demands the value of his commodity. Based on the principles of commodity exchange, both sides have equally valid rights in this case. Here, force will be the solution, and the history of capitalist production reflects such tension between the capitalists and the workers. Analysis An important theme in Marx's work is class tension. According to Marx, all of history has been defined by class conflict. Modern times are no different in this regard, and are defined by tension between the capitalist and the worker. Marx describes one source of this tension in this chapter, as he mentions again the asymmetry between the use-value and exchange-value of labor-power (already discussed in Chapter 7). In this class conflict, the capitalists are the stronger class. This allows them to exert more force and define what workers will be paid. However, the fact that they are the stronger class does not simply give capitalists more bargaining power. Rather, social

institutions such as property laws are defined to support the capitalists' needs. The mode of production reflects the economic system of capitalism. It will continue to do so, and continue to favor the capitalists, until it self-destructs. It is important to realize that the capitalists cannot behave differently; there will always be tension between them and the workers. The very essence of a capitalist is his desire to gain surplus-value. The only way to do so is to exploit workers by failing to pay workers for the full value of what they produce. In order to survive, the capitalist must exploit. Thus, the tension between workers and capitalists is structural. The capitalist system requires exploitation. Measures to ease workers' hardships, such as a minimum wage or welfare are simply band-aids; they cannot change what a capitalist is. Chapter 14: The Division of Labor and Manufacture Summary In a section entitled "The Capitalist Character of Manufacture," Marx says that the modern division of labor makes it necessary to have an increased number of workers under one capitalist. The minimum amount of capital that the capitalist has must continue to increase. The worker is transformed by these manufacturing developments. He loses some of his identity in order to fit his specific job; he must become an appendage of a larger machine. Marx says, "the worker is brought face to face with the intellectual potentialities of the material process of production as the property of another and as a power which rules over him." The worker becomes impoverished of his individual productive power. Capitalists wish to discourage imagination, and they make the worker machine-like. Manufacture attacks the individual at his very basis, and is thus "the first system to provide the materials and the impetus for industrial pathology." Manufacture is originally spontaneously developed. However, with time it becomes "the conscious, methodical and systematic" form of capitalist production. The division of labor is a specifically capitalist form of social production; it is a way of creating surplus-value at the expense of the worker. It is both a necessary part of civilization's progress and a more refined way to exploit workers. There are obstacles to the development of the division of labor during the manufacturing period. However, with the advent of machines these obstacles are pushed aside and capital takes center stage.

Analysis First, it is important to understand what Marx means by the division of labor. With the division of labor, workers specialize in one task and work together to produce commodities. For example, in building chairs, one person would cut the wood, one person would put the pieces together, and one person would paint it. No one person is responsible for the final product; each simply does his own task. This is typically thought to be more efficient than to have each person make a whole product, and it is considered to be an important aspect of the industrial revolution. Now, considering that Marx believes labor to be integral to the human character, it is not hard to guess that he would find such as change in how people labor to be extremely important. According to Marx, its impact on the individual worker is quite devastating. Being forced to do the same repetitive task every day squelches the imagination. It makes the worker little more than a machine. Marx gives a very harsh critique of the role of manufacture and of the division of labor on the individual. However, he was far from alone in making such a critique. For example, Adam Smith, commonly thought of as the father of classical economics (and a major supporter of capitalism), was very concerned about the division of labor's detrimental effects on the worker. Smith's response was to encourage public support for education. Marx mentions Smith's observations, but he does not believe that education is a suitable solution. How convincing do you find Smith's and Marx's criticisms of the division of labor? Do you think there are solutions within the capitalist system for this problem?

Study Questions and Suggested Essay Topics How is it that M' is bigger than M in the M-C-M' model of circulation? Answer for Study Question 1 >> The M-C-M' circulation appears at first to be paradoxical. It describes a circulation where a capitalist purchases a group of commodities (for example labor and raw materials) at their value, and then later sells them at their value, for a profit. Where might this extra money come from? The answer comes from the idea of surplus value. Surplus value is the excess (M') that the capitalist ends up with at the end of an M-C-M cycle. The commodities the capitalist buys are being paid for in full-value (MC). Therefore, in order to gain surplus value we must be able to create value through the use-value (consumption) of one of those commodities. This is the only way that we could end up with more M than we started with (C-M'). This actually happens with labor-power. Labor-power's value is the amount of money it takes to keep the worker functioning. However, in the capitalist's consumption of the labor-power, he can

receive total value greater than the value of the labor-power. Therefore, when the product is sold for its value, the capitalist receives a profit. This is exploitative of the worker, but the worker has no choice because he doesn't own any means of production, and therefore doesn't have the option of working for himself According to Marx, is there room for compromise between the interests of the workers and the interests of the capitalists? Answer for Study Question 2 >> Marx sees little room for compromise, and is in fact critical of socialists who believe that the evils of capitalism can be eliminated through reforms that preserve the essential structure of the system. The interests of capitalists conflict directly with those of workers. By his nature, a capitalist seeks ever- expanding profit. This, however, can only be achieved through exploiting the surplus-value of a worker's labor. To remove the exploitation would be to eliminate the capitalists. Thus, compromise is not possible. Furthermore, the entire social system protects and preserves the interests of the capitalists. The legal institutions and social structures have been made by the capitalists, and therefore are intended to preserve their own mode of production. When capitalism is overthrown, which Marx believes will happen, this overthrow will have to be a violent destruction of the entire social system. What is the labor theory of value? What are the potential criticisms of this theory? Answer for Study Question 3 >> The labor theory of value begins with the concept of exchange-value. Exchangevalue reflects the relationship between different goods, how much of one good is worth another one. However, if these goods can be compared at all, there must be something common between them. For example, what could make a desk worth two chairs? Marx's answer is that both required the same amount of labor-power to produce them. This labor-power is the value that the desk and chairs share. Their exchange-value comes from this value. Marx uses this theory of value in his discussion of the exploitation of the worker and the circulation of capital. One potential criticism of this theory is that is doesn't adequately account for all kinds of exchange-values. Marx says that there are some things with use- value that don't have value because there was no labor input. Things like forests would be examples of such use-values. However, in reality such things do have exchange values. Marx does not really address how these things fit into his overall theory. One could also argue that Marx does not leave sufficient room for consumer demand in his labor theory. Depending on the popularity of a given commodity, its exchange-value would likely vary considerably. While the amount of labor input would have to have some

impact on exchange-value, practical experience would seem to suggest that it is not the sole influence.