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Tuesday, January 25, 2011


Who gets the surplus?

In virtually every known society, the surplus is appropriated -- taken -- by some relatively small subset of the population, with the result that the members of that subset live better than the rest of the members of the society. We know these appropriators as kings, princes, oligarchs, pharaohs, priests, generals, landed aristocrats, tyrants -- and as entrepreneurs, merchants, advertising executives, lawyers, professors, and elected politicians. Almost always, the appropriators trick out their appropriations with justifications, rationales [or rationalizations] designed to persuade those from whom the surplus is taken of the rightness of the appropriation. The surplus getters suggest that they are bigger, stronger, more handsome, more charismatic, smarter, more productive, blessed by the Gods, sanctified by immemorial tradition, chosen by a vote of the people, riding the wave of history. And for the most part, those from whom the surplus has been taken -- the expropriated -- accept these rationales, sometimes grudgingly, quite often willingly or even enthusiastically.

The surplus comes in many forms. It is extra grain harvested from the fields, over and above what is needed to keep alive those who grow and harvest the grain. It is cloaks and mantles over and above what is needed to shelter from the weather those who shear the sheep, card and spin the wool, and weave the cloth for the cloaks and mantles. Sometimes it takes the form of swords made from iron that would otherwise provide additional plowshares or in the form of spears that could better serve as pruning hooks. [A little biblical reference there, for those of a religious turn of mind.]

In some societies, the conditions of life of those who get the surplus are only slightly more comfortable than those from whom the surplus is taken, but in many societies, the differences are so great that after a while the two groups of people seem not even to be of the same species or from the same world. The producers of the surplus are short, thin, careworn, illiterate, and short lived. The surplus getters are tall, handsome, healthy, cheerful, well-educated, and long-lived. The surplus producers struggle to keep their children from starving to death. The surplus getters send their children to Ivy League schools and on to the Grand Tour of Europe. Life is good for the surplus getters; not so good for those who produce the surplus.

How do the surplus getters get the surplus?

In many ways. Sometimes, like the Vikings of early medieval Europe, they simply sail up the rivers of Western Europe from the coast each Fall and steal the harvest as the peasants reap it. Or they ride into town as the bandits of the Southwest did and take the harvest at the point of a gun. At first, this is, and is understood to be, simple theft. But as the bandits return, year after year, the peasants become accustomed to the raids, and in an effort to avoid bloodshed, prepare the harvest for the stealing. This is then called taxes. Eventually, one lone bandit rides into town, not even wearing a gun, to collect the money the peasants have managed to acquire by selling their crops. The state has arrived.

Sometimes the surplus getters hold the producers in bondage, forcing them to labor on the lands owned by the surplus getters. Instead of seizing the surplus after it has been produced, they forcibly command the labor of the producers, allowing to the producers only so much of the annual product as is needed to keep them alive and allow them to raise up their replacements when they wear out -- their children. This is known as slavery. The condition of the slaves is often very little different from that of the nominally free producers whose surplus is taken from them, or appropriated.

How do the surplus getters get the surplus in a capitalist society. in which all men are free [we pass over in silence for the moment the condition of women], and all exchanges in the marketplace voluntary and based on mutual self-interest? That there are surplus getters even in this "very Eden of the innate rights of man" [CAPITAL, last page of Chapter VI] is manifest, for cheek by jowl with the slums of Manchester, Liverpool, and London are great mansions in which live the getters of the capitalist surplus. But HOW they get it is a mystery that eludes even the greatest minds of the Classical tradition in Political Economy. It is to the solution of this great puzzle that Marx devotes much of Volumes One, Two, and Three of CAPITAL, and we shall return to this question shortly, for at its heart lies the secret of capitalism.

What do the surplus getters do with the surplus when they get it?

This is actually the question that exercised Smith and Ricardo the most. In their view, entrepreneurs used the surplus [in the form of profits] to expand the scope of production, reinvesting it in an expanded labor force, new machinery, more fields under cultivation, and so on. The landed aristocrats, by contrast, used their share of the surplus [which came to them in the form of rents] to employ crowds of liveried servants, give lavish balls, maintain gilded carriages, consuming the surplus unproductively. Smith in particular was worried that as the demand for grain pressed on the available land and rents rose, so much of the annual surplus would be transferred to these unproductive expenditures that growth would come to a halt and the dreaded "stationary state" would result. It is worth noting that the notion of class conflict was central to classical political economy, and was not in any way original with Marx.

A share of the social surplus in most societies is consumed buttressing, protecting, and rationalizing the privileged position of the surplus getters. Some of that share is used to support a substantial military and police force which is available to put down any dangerous protests from those who are being denied the fruits of their productive labors. Some supports priests and churches, in which the virtues of submission and the promise of plenty in the next life serve to dull the resentment of the expropriated producers. Some must be devoted to maintaining lawyers and judges who can be counted on to resolve all disputes in a manner favorable to the surplus getters' interests. And there is even a bit of this share left over to keep in comfortable unproductivity artists to provide amusements for the surplus getters and philosophers to explain why all is for the best in the best of all possible worlds.

The secret of the explosive power of capitalism, as Smith, Ricardo, and Marx well understood, is that it alone, among all the forms of economy and society that history reveals to us, relentlessly allocates as much as possible of the social surplus to reinvestment for the purpose of expanding yet further the magnitude of the surplus. "Accumulate! Accumulate! That is Moses and the Prophets to the capitalists," as Marx writes in one of many brilliant passages in volume I of CAPITAL.

There are of course books to be written on every one of the observations in the preceding paragraphs, and Marx wrote a good many of them himself. But in the interest of brevity, I shall concentrate here on one question among all those that have been raised or intimated, namely, How in a capitalist economy does it come about that entrepreneurs exit from the market ever richer? Exactly how is it that in a capitalist economy the annual surplus is appropriated by one class, the entrepreneurs, or capitalists?

To answer this question, Marx must wrestle with and finally solve a technical puzzle concerning the determinants of the prices of commodities in the marketplace that had baffled Smith and in the end stumped Ricardo.

In the next post, we shall begin our discussion of this famous puzzle, leading finally to Marx's version of that centerpiece of Classical Political Economy, the Labor Theory of Value.


JP said...

Aaah, we are now getting to the bit I have been waiting for. Please do not skimp on giving Marx's argument for the Labour theory and on explaining its conceptual foundation/coherence. (Personally I don't care much about the more technical stuff like the transformation problem, but I assume others will.)

This series is terrific.

Robert Paul Wolff said...

You asked for it! I have been thinking and writing about this for thirty years!!!

Chris said...

Professor Wolf,
I'm not sure if it's within the scope of this course, but it would be fascinating to find some Marxist literature on the surplus directed into derivatives. Smiths warning of excess on grain surplus going over to luxury goods, and thus wreaking havoc on a population, must carry over into excess derivatives trading for the subsequent pomp lifestyles we see of wall-streets financial-gurus finest.

john c. halasz said...

Maybe it's worth remarking at this point that the surplus-getters don't just get the surplus by happenstance or by the adventitious application of brute force, but by being in some wise "functional" for the organization and generation of productive surpluses. The ancient alliance between priests and warriors subsumed behind a divinized kingship happened because the scribal priests were key to organizing and directing extended irrigation and other agricultural works, while the warriors were key to defending/expanding the territory subject to such extended production. In turn, the god-king was to secure the confirming sanction of the heavens, while representing the "ultimate" ends of the society and its organization of social labor, (in however monstrously transmogified a form, as reflecting their mythic delusions). At any rate, the collaboration of people in their own oppression is not a factor to be readily discounted, but it doesn't happen for utterly non-functional or un-structured 'reasons".

The core insight of "historical materialism", following up the insights of classical political economy, was that different historical societies could be fundamentally characterized by the ways in which they generated, extracted and distributed the sources of productive surpluses, their "mode of production", which would form a basic constraint on the further elaboration of social structures and institutional orders and their developmental possibilities. AFAICT that railroad tracks and rolling stock metaphor, over which so much ink has been spilled, is just a restatement of the forces-of-production/relations-of-production dyad, which is an analytic, not a substantive distinction.

john c. halasz said...


You're jumping ahead quite a bit there. The discussion of the role of the system of credit and finance occurs in Vol.3, including a prescient account of "fictitious capital". Any financial "asset" is just a legal claim of production incomes and reduplicates and "mirrors" what happens in the sphere of actual production and investment. When they then are traded off against one another and further derived from the trading process, they can mount up upon the actual realizations of the production system and the profits and wages derived therefrom, resulting in a fun-house inverted mirror-image of what is actually going on. As profits-of-production fall and such claims mount, financial crises can result.

On the other hand, economic rents are not just derived from land or other natural resources, but accrue to market-dominant positions in production, and, to the extent that they aren't counterbalanced by actual increases in resulting technical productivity, they amount to a private tax on the rest of the productive economy. So your basic instinct is correct: whenever large gains in income accrue to certain interested parties, it's worth asking after the source of such productive surpluses and whether they actually contribute to the development of the larger social "whole" or are merely parasitically extracted from it.

wallyverr said...

Could there please be some suggested chapter readings from Capital for each post? Also, any thoughts on the respective merits of the Fowkes/Fernback Penguin translation versus the venerable Moore/Aveling translation?