 My approach has often been to sort of have a dialectic, if you were, if you like, between the sort of studies of urbanization and uneven geographical development on the one hand and the kind of understanding of theory on the other hand. And my tendency is to say if the theory doesn't help me understand any of that then maybe that's a piece of theory that's not really worth it. On the other hand I've been remarkably surprised at how much of Marx has been incredibly useful and helpful in arriving at the interpretations of those phenomena. So there's been a long journey on this with also trying to publish things that showed that coming from a Marxist perspective you can have things to say about imperialism or neoliberalism and what's going on in cities and urbanization. So that has been one part of what I do and I thought I'd like to use this opportunity to share a few of the insights that I've had over the years. But coupled also with something that I started to do about 18 months ago and I think actually I have a hard time explaining to myself why I did it apart from the fact that it seemed that since the whole world had gone insane I might just as well sort of go off and do my own little insane project because it didn't seem like I could do anything about some of the insane things that were going on and are still going on on a day by day basis. Not only in this country but pretty much everywhere. And so I thought I'd take a good hard look at Marx's value theory. And this came about a bit by accident and I was at Birkbeck Symposium on Critical Theory and I was on a panel with Zizek of all people and I said something about you know maybe it's time we looked at value theory again and he said yes you should do it why aren't you doing it. Of course by now he would have written three books about it and I was with him again about a couple of months ago and he says where is this stuff on value theory. I said well you know I mean I don't write as fast as you you know. But I got into it and it seemed to me kind of a very stupid thing to do and you feel you know the world's collapsing all around you while wrestling with some kind of obscure kind of piece of Marxist thinking and it seemed to me I was being very very stupid and I felt quite idiotic with myself. But as often happens in these things things started to come out of it and after a bit some new insights came out of it and so part of what I'm doing right now is sort of emerging from that into a more general sense of understanding. And then I thought I'd write about the value theory and as often happens in these things it got longer and longer and longer and I was with my publisher friend in Oxford in the summer and he looked at me and he said you know you should just write something that's you know kind of simple about ideas about what it is you're doing and you know how to do that so why don't you do it. So since then I've been doing that and what's going on right now is very much a product of doing exactly that. And then all of a sudden weirdly it turns out that September of 2017 is the 150th anniversary of the publication of Volume 1 of Marxist Capital and suddenly being deluged with all these invitations we've got to do something to commemorate all of this so I thought well you know maybe I should get ahead of the game and start commemorating it a year before and at least prepare the way and I hope that next September we can actually get together some conversations about the significance of that publication. I may of course in the process of these talks preempt much of which what I really want to say. So this week I want to look at the question of Marx's concept of capital and the one I favour and I think Marx favours is to define it as value in motion. What this then requires is that I talk a little bit about both what we mean by value and what is the motion. Marx himself of course in doing his critique of classical political economy hoped to come up with some idea of what the laws of motion of capital would look like but if you can talk about the laws of motion then the definition of capital as being about motion is I think a very obvious connection. So value. Now value is a very complicated idea in Marx and therefore it's not something that I'm going to actually try to unravel at this point but I do have to start somewhere and the definition I start with is value for Marx is the social labour we do for others as mediated through commodity production through price fixing markets. Now that's a bit of a mouthful of a definition but I think what it signals is that the exchange that goes on between participants in the market economy is an exchange based upon the labour time they have utilized in the production of whatever commodity that they are taking to market and what Marx does is to say if you're in a barter situation in effect there will be as many measures of value as there are commodities to exchange that in effect if you produce shirts and I'm producing shoes I would measure the value of my shoes in terms of your shirts and you would do the same thing the other way around and therefore there would be a cacophony of value all over the place in a barter situation in multiple barters but then Marx says you know I'm really interested in how value evolves in a situation where exchange becomes normalized as a social act and the only way you can set up myriad exchanges between all sorts of different commodities and millions of people producing thousands if not millions of commodities is to have one commodity which actually becomes the measure of value in that commodity is of course the money commodity so what Marx does is to suggest that the rise of the money commodity tells the transformation of all those multiple values into a single notion of value so that as commodity exchange becomes more and more generalized and more and more universal so a universal notion of value starts to crystallize out alongside of it so now this relationship between value and money is I think a very important one and it's one that is often forgotten in what follows because value for Marx is a social relation and social relations are immaterial take something like power I mean how do you actually find the atoms or molecules of power you can't do it and nevertheless you wouldn't say well because you can't find the molecules of it doesn't exist you kind of say no this is important but it's immaterial and Marx actually defines value as a social relation which is immaterial but objective and the parallel he uses is gravity and when she says you know you can dissect a stone as much as you like but you can't find atoms of gravity in a stone the stone has a relationship with other stones and gravity is that relation and the same thing applies to commodities you can't dissect a commodity and find atoms of value inside of it you can't break it open and say here they are you can only find out what the value is through its relation with other commodities and eventually with the money so it's immaterial but objective as he calls it the objective side of it is taken care of by the money money is a very firm material representation of the social relation and the material representation of that social relation is something that is I think again going to be very significant throughout Marx's work because the material that Marx calls money the material he says is not value and money is actually an expression or a representation of value and that therefore you always have to bear in mind that representations of something like value are maybe accurate in certain dimensions but nearly always misrepresent in others I tend to use geographical examples because I come from a geographical background it's a bit like map projections you know there are all these different map projections you can't say well actually there's only one globe but the representation of the globe often misleads at the same time as it represents and we're going to have that same problem with money and that's a crucial issue to discuss contemporary because what's happening to money vis-a-vis value is that they have got it's a complicated relation between the thing that represents money and that represents value and that which it's supposed to represent and therefore money can lie money can betray and so I think that this relationship is therefore foundational for Marx and it's very interesting to me that in a lot of Marx's work people start talking about values and then suddenly they start talking about money as if there's nothing wrong with that relationship but in fact there's a lot that can go wrong in that relationship and they have quite completely different qualities and one of the key qualities is that you can't appropriate value because it's immaterial you can't bottle it and keep it in the corner or stick it under the mattress or something like that but you can do that with money so actually what Marx talks about is the capacity of money to actually concentrate a certain kind of form of social power which is appropriable by private persons and in fact the whole kind of notion of class and individual and all the rest of it rests on the fact that social power can be appropriated by private persons and you can't appropriate it directly you can only appropriate its representation so when people chasing money they're chasing the representation when they're chasing the representation what's the relationship between the representation and that which it's seeking to represent so this is something that is foundational for Marx so value then is that social relation but it's a social relation that's in motion and what does it mean to say it's in motion now Marx actually has I think a very interesting way of setting this up and I want to describe that I'm again first however want to use one example of this which comes from somewhere completely different that is an analogy now Marx actually liked to have analogies he was always using them he was doing analogies with Darwin and evolution and crystallography and all the rest of it but the thing that suddenly struck me was why couldn't we come up with as it were a visualization of what Marx is talking about when he's talking about the value in motion and this I did by using this following analogy alright well this is the hydrological cycle and the thing I like about the hydrological cycle is that you know HTO is moving around it's in the ocean it evaporates it takes on this gaseous form and then it condenses and it goes through different transformations it goes through what Marx calls metamorphoses as it moves now has this form it then takes another form and it then moves at different paces in different ways and the way it moves also leads sometimes for the water to be stored in various ways in glaciers and ice caps and it also gets stored underground in water and you can get these flows and get evaporation going on so the movement of the HTO is actually something that is visualized in this way of the hydrological cycle and there was a great little book by a geographer which was written about sort of 18th century which is called the hydrological cycle and the wisdom of God which was about the way in which people started to recognize that there was something called the hydrological cycle which you could actually represent it in this kind of way so this to me then seemed to me a very interesting way because it is a cycle and it keeps on going in perpetuity it is a cycle however that has certain characteristics one is that the main energy for the cycle comes from input of energy from the sun solar energy that is over time is fairly constant except that with the depletion of greenhouse gases more energy is coming in and therefore the cycle is beginning to get pushed a bit harder because there is more energy coming down on the planet earth you are seeing certain things of that sort beginning to happen but by and large it is a cycle and I am going to actually make a big differentiation here between the cycle the hydrological cycle which is a useful sort of tool for thinking about how H2O moves around and how capital moves around and the movement of capital however is different because it is going to end up being a spiral form and there is a big difference between a circle and a spiral and in English we have this expression things spiral out of control and I think spiraling always has a connected to it there is fear that the whole thing is going to lose control whereas the cycle goes round and round and round and you don't lose control this is what Hegel referred to as a difference between bad infinity and a just infinity but the circle goes round and round and the spiral goes whoa so how do we represent this in capital well I sort of came up with a map of it and my good friend Miguel has done a wonderful little diagram of it let me just describe it quite simply which is that let's start the process off with money and the first thing to remark is this that not all money is capital capital is money used in a certain kind of way which means that the circulation of capital can only begin when there is already money in existence so there has to be a monetized economy already existing before capital can begin and what happens with capital beginning is that it takes part of that money and starts to use it in a very specific way what is the specific way in which it uses it it takes the money and it goes into commodity markets and it buys commodities and there are two kinds of commodities it buys one is labor power and the other is means of production now that also means that capital can only work if there is already a labor market a functioning labor market and it cannot work unless there is already a functioning commodity market so the capitalist goes and says there are workers out there who are exchanging their labor for a wage I can hire them there are commodities out there I can buy in terms of energy inputs and cotton or whatever and I can buy all of them if they are there but basically I buy those commodities and I then say alright with a given technology I can put the labor together with the means of production and I can make a new commodity that new commodity is then congealed labor time that is labor time has been embodied in that commodity what Marx calls socially necessary labor time has been embodied in it that is not simply any old labor time it is that labor time which is socially necessary which Marx talks about as being the average labor time which would be required to produce a commodity of that kind so this commodity is then taken out into the marketplace and it is sold for money now notice what has happened to you you started with money you bought commodities you then went into production you then got commodities and you then sold it for money why would somebody who starts with a given amount of money end up with the same amount of money at the end of that process having gone through all that aggravation the answer is there is no incentive or motivation to actually do that at the end then you started out with at the beginning therefore profit seeking becomes absolutely crucial and critical for this form of circulation so that is the first part of the motion but let's go back into that moment of production what is being produced at this moment of production two things are being produced one is a material commodity but the second thing that is being produced is value that is that immaterial so there's a material form which is the commodity and the immaterial social relation which is congealed within the commodity but if you're going to end up with more at the end of the day and you started out with you've not only got to produce value you've got to produce surplus value that has to be more value created during the production process so there's a double process that goes on a material process of producing commodity and a social process producing value and surplus value how do you produce surplus value but Mark says this okay when I entered when the capitalist entered into this marketplace where there's wage laborers the wage laborers had a value what is the value of the wage labor the value of the wage labor says Mark's is equivalent to the value of the commodities needed to reproduce the value of labor power so it will be the value of the bread and the shirts and that which will be needed to produce reproduce labor power at a given standard of living that's going to vary from one place to another and over time but we know roughly what it is and Mark's then kind of says you contract with the laborer to work for say 10 hours a day and you then try to see to it that the laborer produces the equivalent of their value power in 6 hours or whatever the rest of the hours are free to produce the surplus value for the capitalist so this is the theory of surplus value so production is not simply the production of things it's also the production of surplus value so that's the first part of the argument but then you've got to the point where at a certain point you take the commodity to market the value is supposed to be in motion but all you've got is a bunch of widgets on the factory floor there's no motion there and you can't figure it out the only thing you can do is to take your widgets to market and try and make sure you can sell it so you sell it and you hope that you can sell it at a price where that gives you profit and which is equivalent to actually realizing the surplus value now Mark's calls this part of the story realization of value and the language he uses about the production process because it's not simply about production because production is always meant in this double sense material and social he calls it valorization that is the implantation of value within the commodity so the first step then is valorization second step is the realization of the value in the market the realization of the value in the market depends upon there being an effective demand for the commodity the effective demand has two components one is that there has to be once needs and desires for those commodities because if nobody wants needs or desires a particular commodity nobody's going to buy it, it has no value so Mark says value is contingent on there being needs and desires for the commodity value is also contingent on not only people have to once needs and desires they have to have the money to pay for it so it's once needs and desires backed by ability to pay which forms the effective demand so then the question is where is that effective demand coming from we can't really answer that at this point because we now need to take a look at what happens to all of that money which is realized as value well the money that's realized as value is then distributed it goes off into this fear of distribution and the distribution is well partly it goes to wages you pay the workers well the workers then exercise an effective demand because they come back in to buy the wage goods which then you know reproduce them as laborers so that's part of it but then the surplus value is also received by a large number divided between a large number of agents and institutions taxes for example come into play now Mark's never actually wrote about taxes this is very peculiar because he should have done that except when you understand something about what Mark's did and when he did it Mark's never wrote about things that he didn't know a tremendous amount about and we know from the Grundriser that he was going to write a book about the state and civil society and he never got round to it anywhere so since the state and civil society are supported by taxes and tithes and all these kinds of things he didn't write about it so I don't know anything about it so I'm not writing about it I'm leaving it until much later so that's one way part of the surplus and part of the value gets redistributed amongst then it gets distributed amongst at various groups of people the direct producers those who are producing the surplus value get some of it but actually they end up getting what's left over after they've paid off certain others that is they have to pay off the landlord pay off rent they have to pay the merchant so it's profit on merchant capital they have to pay the banks and financiers so there's interest they need to pay so the value and surplus value then gets divided up amongst all of these factions and then part of that division dividing up comes back in the form of effective demand workers get wages and they come back as effective demand segments of the bourgeoisie come back as effective demand and of course the state with its expenditures comes back with effective demand so we get a sort of feedback a loop if you like taking the distributed value and recycling it back in as effective demand but at some point or other also some of that money has to be extracted again from this great seething pool of distributed value in money form and pushed back in to form money capital and go back into the circulation process so this is the circulation kind of process that Marx is describing and it then seems to me that what we need to do is to look more closely at what happens as capital goes through these different moments of metamorphosis as it goes through the process of realization is the point of realization a point where you could possibly see crises forming well obviously this is not the effective demand there and if there's no once needs and desires you're going to get a lot of value which is potentially value created in production which goes nowhere that is you throw it away it becomes waste you know so crises can form because there's an effective demand problem the distribution moment also has some many forms and can the money get back into being valorized again or will it just churn around amongst distributive agents in which banks learn to landlords who then put their money in the banks and banks learn to other banks is there some danger of the value being lost in all that churning that goes on in the field of distribution so this is the general framework that Mark sets up and in the diagram what I do is to suggest that there are actually also some elements from outside I mentioned the free gifts of nature that if you can extract things from nature for nothing you will and in the early stages of capitalism and you extracted a great deal of free goods from nature the same is true of human nature that is the powers and capacities of the laborer are not actually powers and capacities which are simply trained as it were by capital they are there because of cultural configurations and you know the whole history of human societies and things like that so capital actually takes those as free gifts it says I can use the talents and capacities and powers of the laborer for those 10 hours I have them and a lot of that is a free gift of human nature so there are these free elements within the system which are I think terribly terribly important so that is if you like the circulation process as Mark sets it up now how does Mark set about analyzing this and this is I think the interesting point and the thing you have to realize whenever you are reading capital you say what are the three volumes of capital doing well actually Mark lays out what his whole kind of thing is in the following he says in the first volume of capital this the first condition of accumulation is that the capitalist must have contrived to sell the commodities and to reconvert into capital the greater part of the money received from their sale in the following pages that is volume 1 of capital we shall assume that capital passes through its process of circulation in the normal way the detailed analysis of this process will be found in volume 2 not volume 1 the capitalist who produces surplus value is by no means its ultimate proprietor he has to share it afterwards with capitalist who fulfill other functions in social reproduction taken as a whole with the owner of land and with yet other people surplus value is therefore split up into various parts its fragments fall to various categories of person and take on gains made through trade ground rent etc we shall be able to deal with these modified forms of surplus value only in volume 3 on the one hand then we assume here that the capitalist sells the commodities he has produced at their value i.e. there is no problem at all of the realization of the of the value on the other hand as producer, as the owner of the entire surplus value or perhaps better as a representative of all those who will share the booty with him what this means is that volume 1 confines its attention to that passage from money up until the point of realization on this diagram it's the left hand side of the diagram it just confines itself to that and then says there is no problem about realization distribution doesn't concern me it is of no interest to me and we just assume everything else that goes on everywhere else goes on in quote a normal way that is a way which is completely untroubled by any difficulties whatsoever so volume 1 is solely concerned with the passage from money up until the realization and it is assumed that the realization occurs because everything is going to be sold at its value now what Marx is doing here is abstracting from the total circulation process of capital and putting it under the microscope in volume 1 and what does he see what he sees is that at the moment of valorization occurring in the labor process it's the moment of congealing value and surplus value in the commodity that all of this is occurring under the assumption of a perfectly competitive economic system now here too we have to ask some questions about assumptions Marx actually assumes a perfectly competitive capitalist system that is he assumes Adam Smith was right to formulate his understanding of the economy in the way he did now this is very strange because you think well you really wanted to see Marx kind of departing from Adam Smith not saying I accept the hidden hand of the market I accept the hidden hand of the market of course what he's going to do is to say the hidden hand is the hand of the laborer that's what he does for down the line now the interesting thing about this is that wherever you ask any kind of conventional economist what do they think of Marx's labor theory of value they say oh it's just a mystical kind of thing it just happens now nobody can take that seriously and then you say to them well what about the hidden hand isn't that mystical thing and they go well no that's the market that's the way the market is and you say I don't see it why should I take a market as being a hidden hand and you have a little argument of that kind and it actually turns out of course the hidden hand is just as mystical as Marx's theory of value in fact if not more so because you know Adam Smith does not say who's hidden hand it is whereas Marx is definitely in there saying well it's the hidden hand of labor that you've got to be looking at here and the fact that Adam Smith ignored what was happening to laborers for the most part is part of the critique that he will offer but Marx is still accepting the notion of perfectly functioning markets and he doesn't say why but my own view is simply this that what Marx was actually out to do in volume one of Capital in particular was to deconstruct the utopian vision of free market capitalism that classical world economists were trying to promote in other words he's saying alright let's assume you have your granted all of your assumptions of a perfectly functioning market then what is actually going to happen and of course what happens is that you degrade nature and you get greater and greater levels of inequality so Marx in volume one of Capital sets out to show why Capital is technologically dynamic why in a competitive society the changes are perpetually changing and why there's this tremendous dynamic why absolute surplus value that is extending the length of the working day beyond that needed to reproduce the value of the labor power is then supplemented by reducing the value of labor power by technological innovations that make wage goods cheaper and cheaper and here too you get an accounting which goes on in the value schema of things which is different from what may happen materially for example when technological innovation comes in then the value of the items being produced individual items diminishes and as items become cheaper and cheaper and cheaper if those items are important in determining the value of labor power then you can reduce the value of labor power even though people are getting the same number of items in other words in other words the material standard of living of labor can remain constant while the actual share of value is going down and down and down through technological innovation and this is one of the reasons technological innovation is so favoured in fact you can even get a situation where the material standard of living of the labor can increase at the same time as their share in value production is going down and that of course is what a Walmart economy is about and that's what's been going on for the last 30-40 years the share of labor in total output has gone down and down and down but the material basis of daily life has actually improved so everybody has cell phones now which they didn't have 30 years ago so these again whether you're making the accounting in value terms or material terms keep that always in mind because when somebody comes along says oh well what Marx predicts is kind of the labor is going to be worse off and look they've got cell phones and they've got all these kinds of things you say no Marx wasn't saying they would be materially worse off they might be but they could in fact be materially better off but the share of the value is going down and down and down so what Marx does then is a model if you like of what happens in that valorization process and the model comes to a certain conclusion as to what the consequences would be if the assumptions of that model are correct those are all and then what will happen is the rich will get richer and the poor will get poorer nature will get degraded and she has that wonderful kind of passage I can read you a bit of it in here when he talks about within the capitalist system all methods for raising the social productivity of labor are put into effect at the cost of the individual worker all means of the development of production undergo a dialectical inversion so that they become means of domination and exploitation of the producers they distort the worker into a fragment of a man they degrade him to the level of an appendage of a machine they destroy the actual content of his labor by turning it into torment they alienate from him the intellectual potentialities of the labor process in that same proportion as science is incorporated in it as an independent power they deform the conditions under which he works subject him during the labor process to a despotism more hateful for its meanness they transform his lifetime into working time and drag his wife and child beneath the wheels of the juggernaut of capital but all methods for the production of surplus value are at the same time methods of accumulation and every extension of accumulation becomes conversely a means for the development of these methods it follows therefore that in proportion as capital accumulates the situation of the worker be his payment high or low must grow worse finally the law which always holds the relative surplus population or industrial reserve army in equilibrium with the extent an energy of accumulation rivets the worker to capital more firmly and the wedges of Heifestas it makes the accumulation of misery a necessary condition corresponding to the accumulation of wealth accumulation of wealth at one pole is therefore at the same time accumulation of misery the torment of labor slavery ignorance brutalization and moral degradation at the opposite pole i.e. on the side of the class that produces its own product as capital that's the conclusion of volume one now my point about this is two points I would make about it first there's no question whatsoever that this process that Marx is talking about here is something which recurs again and again within the history of capitalism you can see it of course in the early 19th century factories of Manchester you'll see it right now in Shenzhen you'll see it in Bangladesh you'll see it everywhere so it's obviously the case that there's a certain truth to what Marx is talking about but at the same time there's a lot of evidence that this is not the whole story and people are quite correct when they say well it's not all doom and gloom for the workers actually if you look at something like life expectancy many parts of the world life expectancy is far far higher now and then of course it was in the 19th century and that applies to the working class as well even though workers are far lower life expectancy we academics and priests and judges and people like that so something else is going on and something else that's going on comes from the fact that if you drop Marx's assumptions that everything's okay with realisation if you drop the assumptions that nothing matters in the distribution then maybe you would construct a different story so volume one of capital then just works on that part of the story and it works on it as if there is no problem elsewhere volume two of capital works as he says he's going to do works on realisation actually there's a lot in volume which is about effective demand and what happens with effective demand and of course one of the difficulties of talking about this from Marx's circles as soon as you say that people start to say to you oh you're Keynesian you're not Marxist I said no no actually Marx came up with this before Keynes and if anything Keynes was a little bit of a Marxist in that he followed volume two and was influenced secretly by volume two of capital and he was actually he never read himself but he had other people it's like when you get graduate students to read all the nasty stuff you don't want to read and they tell you what so Keynes had people like that around and told him what was in volume two and he was like oh yeah okay so this is a so the question of realisation then becomes absolutely critical and volume two does a number of things one is Marx starts to talk in volume two about the whole circulation process and says well let's look at this whole circulation process from the standpoint of what happens at the money point what happens at the commodity point what happens at the production point in other words Marx says let's disaggregate this whole circulation process and look at it from the standpoint of money commodity and production and what do we see we see actually that there are different things which may be going on depending upon where you start if you simply hold money and you're only interested in increasing your money and you wouldn't necessarily want to be bothered yourself with production you'd lend it to somebody else let them do the production and they can pay me interest or something like that as long as I get my surplus at the end of the day my distributive share I'll do that so the standpoint of money the whole kind of what you have to go through in production is an inconvenience it's an inconvenience between money and money plus profit and it's a nuisance and let somebody else deal with that the direct producer on the other hand says realisation is a problem and also getting the money back is a problem and of course the merchant capitalist who holds the commodity says everything is a problem apart from my bit and I just want the producer to give me the stuff so I can sell it and all the rest of it so there are three different perspectives but what you then says well in a real situation a proper capitalist entrepreneur would actually be combining those three different roles and Marx always talks about roles rather than persons and he says the capitalist industrial because unfortunately he uses the word industrial but the capitalist producer really has to be a good money manager a good producer and a good merchant and we all have known of examples where people are brilliant as producers but they can't figure out the money side of things and they go bankrupt or they can't figure out the merchant side of things and go bankrupt now this of course is going to be the foundation for explaining why it is that capital breaks up into factions like ok there's a producer who just passes on to the merchant and let them take care of the merchant thing and somebody else like the banks and so on assemble all the money and give you the money and so they're the ones who do the money side of things but also it turns out of course that value in those different states has different material possibilities the one I always want to look at and it's very important is geographical mobility the most mobile form of capital is of course money it's what I call the butterfly form of capital that can fit around land anywhere and fit off again commodity is less mobile than money but still depending upon the nature of the commodity is variably mobile production is the least mobile so if we're going to talk about globalization which form of capital would you want to put at the top of the pile well obviously money, finance who liberated finance capital and what did it do in the 1970s and why did finance capital become hegemonic in other words there's a whole set of questions there that you can immediately approach actually just by sort of looking at thinking about those three different roles and capacities and powers and possibilities that exist in those three different roles so Marx looks at that but then he kind of says well actually I've got to start looking at the effective demand where is it coming from, how does capital circulate and volume 2 is very much concerned with something else which is how fast you go around the circulation process it's a really great analysis of speed up why is the capitalist so interested in speed up because if you're going around this process and it takes you three years to get around it you get one bout of profit coming out of it you can get around it in three minutes obviously the faster you move the more you can get and if I'm in competition with you and I go faster than you so speed up has been an absolute crucial element in what is going on in the history of capitalism and actually if you start to look at that technological innovation and ask how many technological innovations are about speed up and what are the consequences of speed up well Marx doesn't actually think these through too well for example one of the consequences of speed up in production this has got to be speed up in consumption that is you've got to start manipulating once needs and desires and this is where the mad men come in and all that sort of stuff and fashion comes in and all these sorts of things and planned obsolescence comes in and capital starts to make things that fall apart after three years or become out obsolescent after two years so the whole thing shifts towards kind of a consumer world which is actually speeding up as well in other words the phenomena of speed up in our society again in my lifetime is absolutely incredible I mean I came from an academic culture where if you produced two books in a lifetime you were considered a bit too ambitious now of course if you haven't produced a book every two years people think you died so you kind of so anyway the turnover time of everything just crazy and it's part of the insanity of the world right now it's got to a point of acceleration and of course what you're seeing through all of these kinds of artificial intelligence and all these things and what's going on in stock markets and nanosecond and microsecond trading and all these sort of things is kind of speed up speed up well the logic of that is all actually sort of set out in volume two of capital and then Marx obviously wasn't going to predict all of these sorts of things it's clear that the question of speed up is turnover time is crucial and it's not only the turnover time of how long it's in the market but the production time how long does it take you to produce something you start to interfere in all sorts of things so that hogs that used to have litters once a year now have them three times a year they've even managed to engineer lobsters so they get bigger faster than you know I mean all that salmon you think is organic it's actually sort of speed it up you know so there's a whole world going on here that Marx is getting with and kind of saying well that also is putting certain pressures on effective demand and how effective demand is expressed and the money has to flow faster as well and how do you then get technologies of money so we have very low transaction costs which move very fast and so you get electronic monies suddenly and then the question arises like I started out by saying what's the relationship between these new forms of electronic monies that are occurring all over the place and value alright isn't it possible that they're so out of you know control as it were in relationship to value production that they're going off in this direction and then nobody knows what it's all about because we've abandoned the material form of representation which was gold and silver we've abandoned the metallic base and now we're adding just zeros to the money supply as Federal Reserve sort of does quantitative easing or something of that kind so these sorts of issues are very much set up in Volume 2 of Capital but then there's something weird about Volume 2 of Capital Marx in order to study this process of realisation assumes there is no technological change the whole of Volume 2 rules out any discussion of technological change well technological change is the foundation of Volume 1 and you say okay so he says now I assume that's all there's no technological, zero technological change and I also assume something else in the same way in Volume 1 he assumes that everything exchanges at its value in Volume 2 he also says I assume everything exchanges at its value but that assumption has a different purpose in Volume 2 he in effect says I assume that demand and supply are in equilibrium I assume that the value produced is equivalent to the effective demand I make that assumption that is I make the assumption that everything is in equilibrium I then ask what are the conditions under which such an equilibrium could be established otherwise you work backwards from the equilibrium to say what is it that could possibly give you that equilibrium and he finds actually a macroeconomic situation in which things have to be calibrated very very finely such that those things could be in equilibrium and in fact the only point of which technological change really comes into Volume 2 is that he finds the only way the equilibrium can be established is by a particular twist in technological mix now what this says in macroeconomic terms is that there can be a macroeconomic growth path which is stable and trouble free provided that there is a pattern of technological change of a very very particular sort now Marx doesn't make the argument but it's obvious to me that when you look at the technological change that would be required to keep everything in equilibrium and you look at the crazy forces of technological change which are let loose in Volume 1 of Capital which are described in the Communist Manifesto of it there's absolutely no way in hell you can ever be in equilibrium you never can get to that equilibrium path so there are inevitably what we now call crises of disproportionality that is the whole thing is going to get very much out of equilibrium the only way to bring it back into equilibrium is to have a crisis and so Marx starts to say ok the role of crisis is because you've got outside of equilibrium reestablishes equilibrium by doing what destroying capital you have to destroy bunches of capital here, there and everywhere in order to get yourself back so crisis and devaluation are part of the answer which comes out of Volume 2 the other thing is that he could only get to that understanding in a situation where there was no technological change if he introduced technological change into it for the reasons I've already suggested the whole thing goes hey why the whole thing but nevertheless you can read Volume 2 and say alright well this is telling me something it's telling me stuff about speed up it's telling me stuff about turnover time it's telling me all of these kinds of things about you know but it's not the whole story any more than Volume 1 the whole story it's a different story the analogy often used about this is to say well let's suppose we're looking in on a square and you're over there and I'm over here and I describe what I see very objectively and you describe what you see very objectively we have two completely different descriptions both of them are true but they're from different standpoints what Marx does in Volume 1 is have a standpoint tell you what he sees in Volume 2 he also tells you what he sees the trouble is that Volume 2 was never completed so there's a lot of things there hanging out you're not quite sure what to make of them and it becomes difficult but the standpoint is very clear and he says that is going to be his standpoint in this kind of commentary in Volume 1 that in Volume 2 I'm going to deal with that problem and to some degree with that problem in Volume 2 now in Volume 3 he assumes no problem at all about what's going on in Volume 1 no problem at all about what's going on in Volume 2 and starts to isolate and look out what's going on in Volume 3 that is let's look at distribution but again he looks at distribution in a very peculiar way instead of kind of saying all these distributions he asks just one very simple elementary question we know that before capital started to circulate as industrial capital in the way that I'm describing here before that happened there were landowners and landlords and there was a form of landed property which is claiming a lot of whatever surplus has been produced we also know that there were bankers and financiers and we also know there were merchant capitalists who were raging around the world and buying cheap and selling beer so those are what he calls the anti-diluvian forms of capital that existed before industrial capital became significant now what Marx does not want to do is to say to the degree that in this advanced capitalist society rent interest profit on merchants capital are still important to the degree that's true we have to show why industrial capitalists who are making the value and the surplus value tolerate such factions we have to therefore explain what the logic is of having financiers and bankers landlords and merchant capitalists taking a part of the value and the surplus value and what part should they take so that's the question he seeks to ask now this actually is a very interesting exercise it's a theoretical exercise and again it comes back to he wants to ask the question what does a perfectly functioning capitalist society look like in a perfectly functioning capitalist society landlord would only take that part in rent which is really due to what their function is merchant capitalists would only take that part of the world which deals with their function and bankers likewise so that's his that's his argument and that's his thrust now this is very different of course what a real life capitalist society would look like that is Marx does not consider what would happen if the financial system became so big that you had all these institutions which are essentially oligopolistic and which are too big to fail and all the rest of it and therefore can wield power over everything that's going on around them he doesn't consider that is something much more modest and I think it's a worthwhile exercise to go through because you get away from a tendency which exists on the left which is to regard all of those other factions as parasites totally useless parasites Marx is no there's a reason why land rent of a certain sort is important there's a reason why the role of the banker is significant and important and there's a reason why merchant capitalists are important just to take the merchant capitalists Marx's argument about them was you know individual capitalists have difficulty marketing their particular product you know wouldn't it be better if a range of different products were all put together in one place and you had a kind of a market the merchant capitalist in a department store supermarket or something of that kind so that everybody who's shopping can go and just go and they can get all of the different things there instead of going to the supplier here supplier there, supplier elsewhere in a complicated society you need the merchant capitalist to come in so Marx says and the merchant capitalist also shortens the turnover time for the industrial capitalist because the industrial capitalist can get their product can pass it on to the merchant capitalist and says okay give me money but they pass it on at a discounted rate that is the total value of the product is only realized by the merchant but the merchant first pays off the producer a proportion of the value so they split the two and you know like I said people who know very good at making things but are not very good at the marketing stuff well you've got specialist market people out there now who specialize in selling stuff and getting it to move faster and through by influencing taste and fashion and all those kinds of things specialize in manipulating the market and all kinds of ways so the role of the merchant capitalist is absolutely critical for the proper functioning of an advanced capitalist society I think that's again I think a significant finding in Marx's point he does the same thing with landlords and he does the same thing with bankers and financiers so this is a I think a reasonable kind of exercise but again what I would want to say to use this that when you're reading capital you always have to be careful to know which volume you are in and what is being assumed and what is not because otherwise somebody will read you what I read to you and say that's the truth that Marx prevailed and we stand or fall by whether this is the case well here is what he said in volume 2 which doesn't have a clear conclusion as volume 1 has but there are elements of it and one of the elements is this and you'll see it how different it is from what I read to you just now about volume 1 contradiction in the capitalist mode of production the workers are important for the market as buyers of commodities but as sellers of their commodity labour power capitalist society has a tendency to restrict them to their minimum price further contradiction the periods in which capitalist production exerts all its forces regularly show themselves to be periods of overproduction because the limit to the application of the productive powers is not simply the production of value but also its realisation however the sale of commodities the realisation of commodity capital and thus of surplus value as well is restricted not by the consumer needs of society in general but by the consumer needs of society in which the great majority are always poor and must always remain poor that is if you follow the volume 1 prescription and that's the way capital worked you would end up with a very very weak effective demand and capitalist would have a lot of difficulty selling their product so there's going to be pressures to try to raise wage rates to try to increase them this is what Henry Ford did when he said okay we need to actually have a working class that has enough money to buy the products that we make so we go for a five dollar eight hour a day and that of course is part of the logic of why Keynes would kind of say one of the ways in which you start to actually do things is to play around with the effective demand now this then leads to maybe two or three very important features the first point is this that Marx often talked about his desire to create a model of capitalist society which was modelling it as a totality what that would require would of course be putting all of these three volumes of capital together volumes 1, 2 and 3 even in their incomplete forms Marx never tried to do that he never got to the point where he felt he understood the stuff in volume 2 well enough or the stuff in volume 3 well enough to be able to kind of say alright now let's look at the totality but I want to argue to you that in reading Marx's capital you've always got to have this idea of the totality in mind and ask yourself the question what is it that you're reading in volume 3 where does it lie in relationship to this totality that is having the visualisation of what the totality of the circulation process is about is extremely helpful to help when you read and understand what it is you're reading and what it is you're not reading and why you should not draw certain inferences from what you're reading on the basis of you know its positionality in the totality so having some idea of the totality and that's what I'm trying to do with this is to create a version of the totality of the circulation process the second point is to ask where's the driving force in this in the hydrological cycle the driving force is the input of energy from the sun well we've seen one of the driving forces one of the driving forces is the fact as we've mentioned that nobody in their right mind starting off with a certain amount of money would end up going through all this business just to end up with the same amount of money therefore profit seeking is a terribly important driving force but does that mean that effective demand is not a driving force once needs and desires are not a driving force now you can either say once needs and desires are simply creations of capital which to large degree they are or you can kind of say once needs and desires in society have a very complex history and they actually put their own pressures on what it is that shall be an acceptable commodity and why is it that we take certain commodities and we don't want this to be even in the value theory in the value system at all why would we take something like education and say take it out don't have it as part of the value that is do something you know provide it free good why don't we do that so there's a lot of consumer choice involved here and the moment of realisation is the moment of political activism which parallels the activism that goes on in the valorisation process now Marx is very fond of talking about the activism that attaches to the valorisation process class struggle in the workplace they're not so happy talking about action, political action around the question of realisation when in fact the question of realisation is important because a lot of value is actually extracted at the point of of realisation give you an example you know, which you've all heard about hedge funds take over a pharmaceutical company raise the price of the drug from $15 a pill to $750 a pill I mean this is something that's happening at the moment of realisation and it's not as if there's been any big changes in the production system or anything like that this is simply a gimmick that's used look what's happened in housing all the hedge funds go in and buy up foreclosed housing and start to rent it out and actually the politics that goes on at the point of realisation is a very critical politics and a lot of it of course concerns daily life in the city and I'm always talking about the politics of realisation as being foundational for looking at the nature of social struggles going on in cities struggles over housing healthcare against price gouging against the telephone companies I mean everything but this is all the politics of realisation the reason Marxists don't like it is because at the point of realisation the worker no longer is a worker at the point of realisation Marx is very clear the worker is simply a buyer and at the point of realisation is relations between buyers and sellers and since it's not about class capitalist class and working class Marx is saying no no that's not where the real action is but of course if you take the totality and this is the point about it if you take the totality then that is indeed one of the points where there is a huge amount of social struggle going on and that huge amount of social struggle is very much about the embeddedness of what is happening at that point in this total circulation process and that therefore an anti-capitalist struggle has to locate its struggles not only at the point of production and the point of valorisation it has to locate also at the point of realisation and recognise that the second the third point I would make is this with respect to distribution I said you know Marx actually worked things out saying what's the logic of having these people around in a society dominated by industrial capitalists and he came up with very good answers but on that basis we also have to recognise that those groups form power blocks which actually exercise immense power and in fact the situation arises where the merchant capitalists that Marx assumed only took the discounted value of the surplus value the merchant capitalists are actually realising much more of the surplus value now than the direct producers Walmart doesn't produce much value it markets it but it takes an enormous amount of value the value is produced in workshops in China and all that kind of thing so it's produced elsewhere and it's realised somewhere else Apple these computers made in Shenzhen has about a 3% rate of profit Apple has a 28% rate of profit that is the merchant capitalists they're taking a lot and then you look at the finance capitalists and then you look at the volunteers and all this kind of stuff and you kind of say my god they're taking the whole damn lot and in fact the direct producers are not doing much not getting much at all so we've got to be prepared not to sort of sit there with Marx's definition I think it was a useful exercise to explain why these people are there why you can't get rid of them why you can't nationalise them out of existence or something like that but it's very difficult to then sort of assume that they're just going to sit there and take what they're supposed to take in a perfectly functioning economy and you can see immediately that an economy can get extremely lopsided in the realm of distribution that actually bankers look and say well okay we have money where are we going to invest it are we going to invest it in production or are we going to invest it in those people over there who are engaging in land speculation the rate of return on land speculation is much higher than it is in production let's put it in land speculation in other words there's a lot of unproductive investment going on and so again there are all these sorts of issues which I think are significant and finally I'd like to make this point about it you can ask me what is the what is what's the value of having something like this what's the political value of it well it just helps you locate a little bit some ideas and proposals that are around you for example Bernie Sanders campaign argued for a $15 minimum wage more recently Black Lives Matter has argued for basic income initially oriented to black communities but it's been very hard to imagine it without it becoming actually universal what does this do put it in this map say where does this sit this is like increasing the effective demand and the theory of it is if people have more money because of higher minimum wage if people have more money because they've got a basic income then they can improve their conditions of reproduction of labour power that is you can get it around the back down to this corner of reproduction of labour power they can improve their lives substantially because they will have that extra effective demand now that assumes that nobody is going to rip them off at the point of realisation okay who else is in favour of a basic income Silicon Valley Silicon Valley knows that its innovations are going to put everybody out of work they also know if everybody is out of work they are not going to have any money they are not going to buy what they are selling so Silicon Valley is also very interested in a basic income now that doesn't mean I'm against basic income I'm kind of mildly in favour but my point is this that actually unless you get hold of the politics of realisation the basic income raising the minimum wage and all this kind of stuff will get you anywhere in terms of actually getting down to improving the conditions the reproduction of the population it's not going to get there because you are going to be ripped off en route and you might ask politically is it better to actually say alright we want to have legislation which strictly forbids any hedge fund from doing anything and taking over any pharmaceutical company in this kind of stuff you are going to do something like that take all of that out are we going to do the same about foreclosed housing being bought up by you know are there things we can do somewhere else but my point here is that having a map of this kind and then thinking about how you insert you know what to do here there and everywhere in it you kind of say alright well there are things that can be said here important things that can be said so I think this is really useful again not in the sense that somehow or other you plug it in and you get out of answers but it helps you sort of think through what is going on in terms of the circulation of capital in general and it's very important that we resurrect the notion of the totality and understand and that's why I want to stick with this it's a total framework of this circulation which is important now you can start to add things in in terms of the drivers I said ok effective demand can be a driver another big driver is actually the fact that banks end up with a lot of money and they actually create money so when you go to the distribution thing there is another driver and Marx actually when he gets to the banks can't start saying they're the ones who are really pushing accumulation they've got money and they want to make more money and therefore they go charging down this kind of thing of reinvestment trying to push as much as they can and the banks in pushing as much as they can to valorisation suddenly realise they've got a fund realisation so you can put a link through here which connects the banks and the financiers as an interest to both valorisation and realisation because that's what goes on in housing markets financiers they finance the developer to build housing and the same financiers sometimes buy finance consumers to buy that housing I mean this is a perfect circle which is of course a perfect situation for asset you know bubbles and the like so there's a driver there but where is it driving everything too and what about so by thinking through this and sort of just looking at it playing around and adding things to it taking things away and the rest of it is you can start to actually imagine thinking through a whole set of very interesting relationships but it's in the context of the totality and I think that's the point I'm trying to make that Marx when he's talking about the totality he's talking about something very powerful and very significant he never unfortunately went along to try to demonstrate what it looked like what I'm trying to do is to still out of you know my reading of Capital and theories of surplus value and all the rest of it in Grundry's some kind of general framework consistent with what he was talking about then use it to try to explain what he was talking about where why volume one is only dealing with this and volume two with that and why they're so contradictory to each other in terms of the sorts of conclusions they're posturing the way I would want to see us approach the text and text of Marx's Capital that having a broad sense having an intuition if you like of what this is all about and what Marx is trying to do I just think he's profoundly helpful because with Marx there's always a woods for the trees kind of problem but by having something like this clearly in mind I think it's just helpful to push it to the level where you can understand not only things going on around us but also you know what the intellectual history is of these kinds of formulations that Marx set out and one of the things that can be done I think is to raise the question how well of Marx it's actually represented by much of this totality there is a tendency within Marxism and within those who articulate Marxism to favour Volume 1 because it's a beautiful book but the totality is something else there's a tendency to think that the distribution is just distribution and that's the end of the story actually it's not, it's the end of the story but it's also the beginning of another story and by actually seeing what happens and this is what I want to talk about in future lectures because there are many other aspects of this which I haven't got to yet which are really I think important for trying to understand not only Marx but understand the nature of what capital is about both the concept and the book so let me leave it there thank you very much