The Circulation of Capital. Its Effect upon Society

In present-day society production is capitalised ; that is to say, wealth functions as capital. It is the nature of this capital to take on peculiar characteristics. All capital is such that it seeks to fructify, become ever larger and larger.

The process is carried on like this. The capitalist, i.e., owner of capital, starts out with a certain amount of money for the purpose of making this amount into a larger one. This is how he sets about it. With his money he buys means of production, e.g., a workshop and machinery, and then raw materials ; he next buys labour-power for the purpose of setting his works going ; in other words, for producing wealth. At the end of a certain time the capitalist has goods produced of a greater value than he formerly laid out in money for procuring means of production, raw material, and labour-power, or which is the same, the money he laid out as constant capital, i.e., that portion of his capital whose value does not vary, and the money he laid out as variable capital for labour-power, i.e., that portion of his capital which brings him in extra, or added value. But yet he has not received that larger amount of money that he sets out to obtain. How then is it procured ? He must deliver his goods to a certain market for sale. For instance, if it is boots he has produced then he must seek a market where boots are in demand. If he be fortunate enough to sell all, or nearly all, his boots he will then have realised his extra value, his profit, i.e., reckoning on the assumption that his boots were sold at, or about, the average market price.

It will be seen then, that capital must of necessity circulate. There must be an ever whirling round of commodities, i.e., articles of exchange. For this markets must be found ; hence the keen competition that we see between the leading capitalist countries to gain colonies. This is the prime cause of wars in capitalist society. A successful war to a country is, generally speaking, a starting point for industrial development and supremacy. As De Gibbins, speaking on England’s industrial greatness, said:

“The high place the nation (England) thus came to occupy was due to various causes, among which the state of European politics in the latter part of the eighteenth century may be reckoned. If we consider the condition of the great European powers after the peace which terminated the Seven Years War in 1763, we perceive that England was in a favourable position. In the first place she had seriously injured her great commercial and colonial rival, France, in her possessions both in India and North Ameria. By the Seven Years War England had gained Canada, Florida, and all the French possessions (except New Orleans) on the Mississipi River, while in India the victories of Clive had established English influence as supreme and laid the foundation for a further extension of trade and sovreignty.”

There can be no doubt about it that, with England’s acquirement of colonies, her trade developed by leaps and bounds; so that it is only quite natural that the countries which have come later in the field as capitalistically developed countries should seek to gain markets. Hence the present European war which is at bottom competition for the Balkan. States’ and other markets.

There are, however, people of the Norman Angell type of mind (whatever that may mean), who claim that war is of no benefit at all to a country ; it is caused, they say, through ignorance plus military vanity. It must be said here, that we are speaking in the capitalist sense. We agree that war does not and cannot benefit the great mass of the people of a country i.e., the workers. But it does benefit the capitalists of a victorious country as Norman Angell himself attests when quoting Sir J. R. Seeley in the appendix to his book, “The Great Illusion.” Says Seeley:

“It is admitted that a particular order of men—namely, the merchants who trade with the Colonies—may have benefited from the monopoly, but their gain has been at the expense of the bulk of the nation.”

Since wars are proclaimed by the ruling capitalist class, this class will see to it that there is a good chance of gain before they embark on so costly a speculation as war. So we may dismiss this Norman Angell idea by pointing out that the richest capitalist country (England) has not lost but benefited by her possessions ; and that the other capitalist countries know this only too well, hence their endeavour to do likewise. The capitalist countries do not, as a rule, seek to conquer territory that has been already capitalised, as the Angellists seem to imagine, but to gain territory where capitalist conditions are very little or not at all in vogue, e.g., China.

Many times do we hear the Angell economists (?) trotting out the claim that markets are free to all ; it is the one that can sell the cheapest that corners it, they say. Yes, that is all very well, but who has the monopoly of a market at the average price ? Obviously the occupiers of the country or colony. For that reason a country without colonies and depending on home markets is forced to institute a system of protective tariffs to stop the influx of cheap goods.

What is the effect of the situation then ? It is this : A leading capitalist country with little or no colonies must, if she wishes to capture a foreign market, undersell her competitors. She can do this by either of two methods, or by both methods together. By cutting down expenses as much as possible in the works, or by relinquishing a certain portion of the profits. The former can be done by speeding up the worker to the highest pitch, and the latter by employing commercial travellers and agents who, by various devices, such as advertising extensively, seek to get a sale for certain products ; all of which expenses must come out of the profits of the capitalist. Thus it will readily be seen how handicapped the capitalists of a country without colonies are.

Further, it will be seen that the capitalists of a country so handicapped will be forced to develop their industries to the highest possible extent. In such countries like America will the anomalies that capital imposes upon society, e.g., sweating and unemployment, riches and poverty, be most marked.

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With a view to helping the business man out of the difficulties of competition for markets and the antagonism of the workers, an American writer, Norris A. Brisco, A.M., Ph. D., has written a book, entitled “Economics of Efficiency.” I quote you the following rather lengthy passages without any apology.

At bottom of page 3 he says :

“The nineteenth century has been frequently called the century of the machine. Successful industrial management was concerned largely with obtaining greater efficiency through two sources : firstly, the acquiring of a more efficient plant through more efficient buildings and arrangement, and secondly, the the acquiring of more improved and specialised equipment for the different processes. Production was greatly increased, which necessitated more extensive markets. Manufacturers realised that industrial development was dependent upon markets. The question of markets has always been a fundamental one in industrial progress. Improved machinery and production on a larger scale drove the manufacturer to extend his field from the locality to the nation, and further improvements made more extended markets an absolute necessity. With the entrance of our commodities into the world’s markets competition became more intense, and the question of costs became more important ; but during the nineteenth century, the average employer, in his efforts to lower costs, centralised his attention upon buildings, equipment, machinery, and methods. Near the close of the century a few more enterprising employers had their attention attracted to the human element, the most important in production, and this attraction is the beginning of a new science of business, the science of efficiency, which is a secure and sound foundation for further growth and greater industrial progress.”

And on page 5 we read :

“Manufacturers were amazed at the extent of the wastes which were found in their plants. Wastes of material, time and energy were found everywhere. A prominent manufacturer declared that they were getting only about 50 per cent. of the ability of workmen in their factory. Another stated that few shops produced more than 60 per cent. of the work that it would be possible for them to produce with the same working force and the same physical equipment. The chief problem which arose was how to eliminate these wastes. How can an industrial country hampered with the presence of wastes compete with one with wastes partially or wholly eliminated ? It is impossible ; it is a dollar and cents proposition, and when manufacturers realise this they will pay heed to the conditions existing in their plants, and make endeavours to eliminate as much waste as possible.”

Mr. Brisco recognises that markets are necessary, but since all countries cannot acquire them he thinks that the next best thing to do is to cheapen cost of production and undersell competitors. He thinks he scores with “labour” efficiency, apparently forgetting that other competitors can adopt the same methods.

In quoting him again Socialists will readily see the piquancy of the following passage. On page 8 he writes :

“Labour should be conserved, directed, and given just and fair remuneration. Efficiency demands this, and as soon as business men realise that exploitation does not pay, and that efficiency does, the relations between employers and employees will be less antagonistic, and both will find it to their advantage to work for their common interests.”

Yes, don’t exploit your workmen, Mister business man, but fairly rob him !

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What is then the lesson the we can derive from the foregoing ? We see that the masters who control out lives and existences are merely forced, by the conditions that obtain in society, to act in certain directions whether it be the proclaiming and organising of war or shooting down defenceless strikers struggling for an existence.

The only way out for the workers is to understand the nature of present-day society and its effects upon themselves. They will then realise the necessity of a change of society where wealth functions as capital, i.e., where wealth functions for the profit of the few at the expense of the rest of society, for a society which shall have as its basis the production and distribution of wealth for the needs and requirements of society. In a word, the workers will realise that Socialism alone can save themselves and civilisation.

They will further realise that to attain Socialism they must organise as a political body, with the conscious aim of being at all times and occasions hostile to the capitalist class and their representatives.

They will not then betray working-class principles as the skunks of the B.S.P. and freaks of the I.L.P. do, but will unflinchingly uphold those principles, as the Socialist Party of Great Britain does, until working-class political su¬premacy and the emancipation of the proletariat shall have been attained.

L. M.

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