The Economics of Capitalism (1966)

Report from the October 11th 1966 issue of the Hackney Gazette

S.P.G.B. lecture at Hackney

"The post-war illusion of permanent affluence has been shattered. The failure of capitalist economists to cope with Capitalism's problems, the possibility of another great world economic crisis demands renewed interest in Marxian economics, which alone explains Capitalism's devious workings." declared Mr. S. Goldstein, lecturing recently, at Hackney Trades Hall to the Socialist Party of Great Britain's Hackney Branch.

Karl Marx's penetrating analysis of Capitalism, he continued, is today of even greater consequnce than in his own day because Capitalism now prevails throughout the whole world, including Russia and China.

Marx regarded Capitalism as a phase of Man's economic development, in which the labour-power of wage-workers is bought by the capitalist class to produce commodities. A commodity is a useful thing produced, not for personal consumption by the owner, but for exchange or sale with the intention of realising a profit. All commodities, he claimed, have a common, inherent social quality by which they can be measured against each other in exchange. This quality is Value, which consists of the human labour contained in each commodity. The Magnitude of Value is measured by the amount of socially necessary labour-time embodied in the commodity that is the amount of abstract human labour, mental and physical, measured by time "required to produce an article under the normal conditions of production and with the average degree of skill and intensity prevalent at the time." The quantity of one commodity which is exchanged for another is called the latter's Exchange Value.

Marx distinguished various historical forms of Exchange Value, namely: Accidental Form, in which one commodity simply exchanged for another: Expanded Form, in which the value of one commodity is expressed in the form of many others; General Form, in which the value of many commodities are expressed in the form of one commodity, the universal equivalent; and Money Form, in which a metal becomes the universal equivalent  and circulates as coin. The Value of a commodity expressed in money is its Price.

Since Marx's time, said the lecturer, paper notes have replaced gold as currency, but they still symbolise it, the Pound note today representing about one-twelfth ounce of gold.

Marx's outstanding contribution to economics is this Theory of Surplus Value, which explains the capitalist exploitation of labour. Labour-power, he showed, is also a commodity. Its Value being the socially necessary labour-time embodied in the worker's necessities of life required to replace it. Wages, the price of labour-power, are there therefore generally equivalent to the worker's keep.

Labour-power, however, when expended as Labour, produces commodities with greater value than the wages paid for it. Thus the worker produces the Value equivalent to his wages, part of the day, and the rest of the day, produces for his employer. Value surplus to his own needs, i.e. "Surplus Value," which the employer obtains free. The rent, interest and profit of the various sections of the capitalist class is derived from this during the process of circulation from manufacturer to consumer.

"Surplus Value is the primary motive of production in Capitalism." concluded Mr. Goldstein. "Its production leads to industrial strife and crises and its realisation on the world market to international conflict and war.

"The Principles of the S.P.G.B. are based firmly on the scientific work of Marx and Engels in the spheres of economics, history and politics. A thorough understanding of Socialist principles by workers will preserve them from past illusions and convince them that the only solution of their problems is to replace Capitalism by classless, moneyless World Socialism, based on production, not for profit, but solely for use."