Date: Mon, 14 Sep 1998 19:42:51 +0100 (BST)
Subject: Re: AUT: More on Brenner



I wrote this some weeks ago and the enclosed is still in draft form; I
hope though that some, especially those invovled in the 'Brenner' issue,
find it at least of interest.


Notes on Competition and Capitalist Crises

Werner Bonefeld


Introduction

At the time of writing these Notes, history appears to be accelerating.
The so-called Asian crisis, particularly the Japanese crisis, and the
disaster in Russia show with brutal force that the long drawn out crisis
of capitalist accumulation has reached another serious impasse. Where
might it all end?

The paradox of the current crisis seems to be that capital is in crisis
with itself. The explosion of working class militancy in the 1960s ebbed
away during the 1970s, and the working class was dealt a serious blow
during the 1980s. A resurgence of working class militancy in the 1990s
has, on the whole, not materialised. Instead we have witnessed huge wage
reductions, the intensification of work, and the generalisation of low
income for many working class families. Working class advances since the
end of the second world war in terms of conditions, welfare, and wage
levels, appears to have been overturned and new forms of wage-slavery have
not so much re-appeared, for they never disappeared, but have rather been
re-emphasised and generalised across the globe. The working class, in sum,
appears to have been defeated by 'capital'. Yet, capitalism is in deep
crisis. Might it indeed be the case that capital is in crisis with itself,
a crisis not 'caused' by working class struggle but, rather, a crisis in
spite of the historic defeat of labour?

The notion that capital is in crisis, that its crisis continues in spite
of a defeated working class movement was posed, during the 1980s, by Simon
Clarke (1988). George Caffentzis (1998) raises a similar point in his
'From Capitalist Crisis to Proletarian Slavery'. For the USAmerican
proletariat, he argues, that the last two decades amounted to major defeat
with conditions of wage slavery being widespread. Yet, with Moseley (1997)
he suggests that the worst is yet to come. Despite the differences between
the authors, all argue that 'capital' is a social relationship constituted
by and reproduced in and through class struggle. However, might the
circumstance of capitalist crisis in the face of a defeated working class
movement not suggest that working class struggle is ephemeral to the
crisis of capitalist accumulation? In other words, would the continuation
of capitalist crisis in the absence of working class struggle not indicate
that capital is not a social relationship of struggle between capital and
labour?

A recent book-length article by Robert Brenner (1998) takes issue with the
view that capitalist reproduction is constituted in and through class
struggle. For him, 'workers cannot, as a rule, impose a squeeze on
capitalist profitability for very long and thereby cause a real crisis'
(p. 58).  For him, much more important and decisive for the capitalist
trajectory of reproduction and crisis is the 'capital relation', that is
the relationship between capital and capital. He argues, then, that it is
not the class struggle that determines capitalist development but,
instead, capitalist competition. His starting point is the view that
'capitalism tends to develop the productive forces to an unprecedented
degree, and that it tends to do so in a destructive, because unplanned and
competitive, manner (p. 23). He dismisses working class struggle as
irrelevant to the understanding of capitalist crisis. Instead, 'the
employers' offensive must constitute the point of departure for any
attempt to explain the long downturn. For if ever-intensifying assaults on
the working-class economic and political organisations, in the context of
high and growing unemployment, did profoundly weaken labour resistance and
bring about decisive reductions in the growth of workers' private and
social wage, why did profitability fail to recover and the long downturn
continue' (p. 139)?

Brenner's rhetorical question focuses the apparent paradox of the class
struggle approach well. Yet, he seems to shift the focus of the paradox
from 'labour' to 'capital'. Why does 'capital' assault the working class
since working class struggle is not the cause of the crisis? Why, indeed,
should 'capital' seek to reduce wages and intensify work if, as Brenner
argues, it was the 'decline in competitiveness, not the pressure from
labour, that was the "moving part"' of the origins and trajectory of the
crisis (p. 75). Brenner identifies two interacting 'logics' to explain
this point. First, there is the logic of competition that rules the rhythm
of economic growth and economic recession. Second, class struggle is
significant in so far as it effects the fate of national competitiveness.
In short, capital is 'required' to assault labour in order to survive
competitive pressures. However, this attempt at 'survival' implies that
competition gets more and more intense rendering economic crisis deeper
and more and more turbulent, requiring further assaults on labour in the
absence of the lessening of capitalist competition through the default of
producers, bankruptcy and liquidation of assets, and a major devaluation
of existing capital. Brenner, then, 'derives' class struggle from the
logic of capitalist competition. In sum, while working class struggle is
rendered 'ineffective' regarding capitalist crisis, capital 'is forced' to
assault the working class to stay in business. Class struggle, then, is
conceived as a 'struggle from above', a 'capitalist class struggle'
through which individual capitals seek to accommodate competitive
pressures. According to Brenner, the foundation of the capitalist class
struggle is the unplanned nature of capitalist reproduction and it is the
logic of competition that defines so-called laws of economic development.
Class struggle is viewed as a derivative of the logic of competition.

The following Notes are neither intended to 'refute' Brenner's argument
nor to defend the class struggle approach. The latter does not need
defending and I believe others to be much more able to 'refute' Brenner's
account. His article supplies a detailed historical account of the
development of the world economy between 1950 and 1998. I am not concerned
about the accuracy, or otherwise, of his empirical account. Yet, what is
important is his notion of capitalist competition as the cause of
capitalist crisis. In bourgeois theory, competition among capitals is
endorsed as the economic law that governs the economic development of
capitalist world. For this reason, as Weeks puts it, 'competition among
capitals in bourgeois theory appears not only as the vehicle by which
economic laws manifest themselves but also as the origin and cause of
these laws' (Weeks, 1981, p. 154). Within the sphere of exchange, there is
no phenomenon that can be discussed without reference to the theory of
competition. The crisis, then, of capitalist production is rooted in
exchange relations and their disruption generates exogenous shocks on the
so-called production relations. Wherever one looks, be it the financial
press or academic accounts on, for example, globalisation, capitalist
competition is emphasised either in terms of its 'benign' nature or its
'malign' consequences. For liberal thinkers, 'competition' is the means,
function, and law of market economies. Marx, however, did not have a
'theory of competition'. Neither is there, in Marx, a 'theory of crisis'
as opposed to a 'theory of accumulation' or a 'theory of something'. Marx
supplied a critique of political economy, including a conceptualisation of
the category 'competition'. This conceptualisation will be discussed in
the section two.

Brenner's account reinforces the bourgeois view that it is competition
that 'governs', constitutes, and develops the world of capitalism. What,
however, is to be understood by capitalist competition. Is it really the
source of 'all evil'? The Notes assess Brenner's theory of competition in
the section one. However, the aim is not to 'explain' his view but,
rather, to ask what might be understood by 'competition'. The Notes, then,
supply an assessment of 'competition' through the lenses of Brenner's
account. The final section on competition and class struggle concludes the
paper by arguing that the competition between capital and capital
presupposes the class relationship between capital and labour and thus
class struggle.


I =09On Brenner: Capitalist Competition and Capitalist Crisis

For Brenner, capitalism is characterised by exchange relations between
'economic units' (p. 10). These 'depend on the market for everything',
distinguishing capitalism from other modes of production because of its
'relentless and systematic development of the productive forces' (ibid.).
Competition between capital and capital, then, is viewed as the foundation
of capitalist society. 'Individual units, to maintain and improve their
condition, adopt the strategy of maximising their rates of profit by means
of increasing specialisation, accumulating surpluses, adopting the lowest
cost technique, and moving from line to line in response to changes in
demand with respect to supply of goods and services' (ibid.). In addition,
the capitalist economy as a whole 'constitutes a field of natural
selection by means of competition on the market which weeds out those
units that fail to produce a sufficient rate of profit' (ibid.). It is in
and through capitalist competition that the capitalist economy 'improves
the productive forces' (ibid.) and it through competition that capitalism
enters periodic crises.

Over the last quarter century, then, 'profits were squeezed, not so much
by increased upward pressure on costs resulting from the exercise of
increased power by workers, as by increased downward pressure on prices
reflecting intensified international competition leading to over-capacity
and over-production in the market for manufacturers' (p. 95). In other
words, profitability is seen to have fallen 'because producers were unable
to mark up prices over costs sufficiently to maintain their established
rates of returns' (p. 96). This, he argues, leads to capitalist
'over-competition' and depresses the overall manufacturing profitability
because of the effect of over-production on the rate of productive
investement.

For Brenner, then, profitability and productivity falls as a consequence
of capitalist competition. Capitalism's 'unplanned, competitive nature'
renders a balanced, complimentary or mutually reinforcing growth pattern
of the economy difficult. As he sees it, 'the same cost cutting by firms
which creates the potential for aggregate profitability to rise creates
the potential danger for aggregate profitability to fall, leading to
macroeconomic difficulties' (p. 24). Those 'economic units' that improve
labour productivity reduce the cost price of commodities at the expense of
those producers whose cost-price is too high in relation to the
'cost-cutters'. High cost producers, however, will not simply pack it in.
Instead, they will seek to maintain their business, and retain their
market share, either by cutting prices, leading to reduced returns on
their original investment, or by taking cost-cutting measures, increasing
their productivity and so forcing others to 'reply'. In short, 'measures
that individual economic actors are obliged to take to counteract their
own reduced profitability serve to reproduce the problem of reduced
profitability at the aggregate level' (p. 33).

Brenner argues strongly against approaches to capitalist crisis that focus
on the class struggle. He identifies the class struggle approach with the
profit squeeze approach (Glyn/Sutcliffe, 1972), which argued that full
employment in the 1960s allowed workers to increase their wages at the
expense of profits, leading to economic crisis. He quotes Marx (1996, p.
240) to support his rejection of the profit squeeze approach: 'Nothing is
more absurd ... than to explain the fall in the rate of profit by a rise
in the rate of wages, although this may be the case by way of an
exception'. Brenner's dismissal, then, of approaches that emphasis working
class militancy, either in terms of offensive wage bargaining or militant
action at the point of production, appears to leave only the Marxist law
of the Tendency of the Rate of Profit to Fall as a probable alternative to
Brenner's account. Yet, this law stands also dismissed.

For Marx, 'the rate of profit falls, not because labour becomes less
productive, but because it becomes more productive' (Marx, 1969, p. 439)
and 'both the rise in the rate of surplus-value and the fall in the rate
of profit are but specific forms through which growing productivity of
labour is expressed under capitalism' (Marx, 1966, p. 240). Capital, bent
on increasing labour productivity, introduces labour saving machinery
permitting less workers to produce the same amount of commodities. This
development increases the productive power of labour on the basis of a
fall of variable capital in relation to constant capital, leading to a
fall in the rate of profit because the exploitable 'resource' labour has
been reduced in relation to constant capital. Brenner dismisses this
explanation with reference to the counter-tendencies to the tendency of
the rate of profit to fall. For him, the law of the tendency of the rate
of profit to fall is based on the paradoxical assumption that 'capitalists
adopt new techniques that decrease their own rate of profit - and, again,
end up reducing overall productivity' (p. 12, fn. 1). Whatever the
conceptual value of the law of the tendency of the rate of profit to fall
, Brenner's ready dismissal of this law appears to be based on intuitive
insights rather than rigorous analysis. As he sees it, the generalisation
of new production methods cannot reduce the rate of profit. New production
methods increase labour productity and the fruits of this increase are
redistributed amongst competing capitalists.

According to Brenner, it is the competitive nature of capitalism that
gives rise to the 'unintended consequence' of a fall in profitability. For
him, a fall in profit results 'from over-capacity and over-production' (p.
33), and thus results from 'limited markets' as producers are unable to
realise their commodities with an average rates of profit. Over-production
in one line of production generalises itself to other lines of production
by 'generating further downward pressure on the profit rate' as both the
rate of new investment and effective demand declines. The decline in the
growth of investment 'tends to reduce growth of productivity of labour'
(p. 33). In sum, for Brenner, a crisis of productivity has nothing to do
with the exploitation of labour but, rather, with the impact of compeition
on economic growth. A fall in the rate of productivity growth, then, is a
consequence of 'secular problems of profitability' (p. 35). Capitalist
competition forces producers to increase labour productivity 'without
regard for existing investments and their requirements for realization,
with the result that aggregate profitability is squeezed by reduced prices
in the face of downwardly inflexible costs' (p. 24). The generalisation of
the fall in profitability is caused by the decline in the rate of
investment as producers confront saturated markets.

What is the social foundation of Brenner's 'theory of competition'? What
are the 'economic units' competing about? What do they wish to realise and
has been 'over-produced'? According to Brenner, individual capitals
compete to realise their respective 'cost-prices' so as to maintain or
improve their existence as functioning economic units. What is the social
constitution of the 'cost price' and how might it be that the realisation
of the cost-price in exchange provides capital with a profit? The
conceptualisation of capitalist development in terms of the competitive
relationship between capital and capital espouses, as will be discced in
the following section, the dogma of vulgar economic thought. For Marx, the
dividing line between classic political economy and vulgar economic
thought was whether the question of the genesis of surplus value was
raised. From the standpoint of 'competition' this question is a
non-question since capital is perceived as a self-relation. The social
constitution of this relation cannot be determined: The answer to the
question what is 'capital' is already presupposed: capital is capital and
vice versa!

Brenner's argument, however, develops from a different perspective to that
of economic thought. In his own view, he makes an argument from within the
Marxist tradition and he charges those on the left who advocate working
class militant wage bargaining or working class resistance on the
shop-floor as adopting a 'social Malthusian account'. Those who argue in
favour of the tendency of the rate of profit to fall as the law of
capitalist crisis are also dismissed as 'social Malthusians' (p. 11).
Brenner is, of course right, to argue that Malthus, and much more
importantly David Ricardo, 'saw an inevitable tendency to stagnation or
crisis as resulting from apparently inexorable tendency to falling labour
productivity in agriculture' (pp. 10-11). For Malthus, 'crisis' is a
consequence of the 'natural' contradiction between the alleged human
endeavour of unlimited reproduction and the limited increase of food
stuff. In short, he sees the crisis as something that is produced by the
proletariat, and not by the 'capitalist system of production'. The
proletariat is at fault because it is too uncivilised in its sexual
conduct; it is, in short, too horny (cf. Bloch, 1959, p. 542). With the
population growing, poorer and poorer soil has to brought into
cultivation, leading to a profit squeeze because, with rents rising,
subsistence wages had to increase as food became more costly.

In addition, Malthus argued that a crisis is caused by underconsumption,
leading to the disruption of the relations between production and
consumption - consumption, that is, by the landowning class that is
charged with absorbing the surpluses to avoid overproduction. Brenner, of
course, does not charge the political left with this sort of
Malthusianism. His charge of 'social Malthusianism' focuses on those
approches that see 'falling labour productivity' as a source of capitalist
crisis. Nevertheless, there is an ambiguity in Brenner's account on
economic crisis. Over-production and under-consumption are two sides of
the same coin. Brenner's theory of competition stresses that competition
is crisis-ridden because it leads to over-production and over-capacity. Is
it really the case, against the background of increased poverty over the
last two decades, that there is no demand for want of a better phrase,
'the necessities of life', including some luxuary items such as, for
example, very good cycles so that the unemployed have the means to find
employment by getting on their bike? Or is it the case that overproduction
is related to the limited opportunities of capital to realise surplus
value by converting, through exchange, commodities into money capital at a
level conducive to the progressive accumulation of capital? Brenner
appears to agree that this is indeed the case. Yet, if this were to be his
argument, his theory of competition would have to be deepened into an
analysis of the labour theory of value. The existence of market relations,
of buyers and sellers, can not be understood through the mere existence of
market relations. Why is capitalist society a society of exchange
relations between buyers and sellers of commodities? Are there buyers and
sellers, is there a labour market, because, as Brenner argues, of
capitalism's 'unplanned and competitive nature'? Or might the existence of
the labour market have to do with the circumstance that human productive
practice is constituted in terms of a labouring commodity? The category of
capitalist competition and therewith the 'unplanned nature of capitalism'
presupposes the constitution of labour in terms of a wage labouring
commodity.

In other words, the 'deepending of the theory of competition' would
require the abandonment of competition as the central theoretical focus
for the conceptualisation of capitalist crisis. Instead, the focus would
have to fall on the contradictory constitution of capitalist social
relations and that is the class antagonism between capital and labour.
According to Marx, the class relations are not determined through the
source of revenue accrued by distinct economic groups. Rather, the class
relationship is constituted by the relations of property: the ownership of
the means of production, on the one hand, and the free labourer, on the
other. Capital does not produce profit. Rather, it the exploitation of
labour that produces value, rendering the worker the producer of
'capitalist income' and of her own 'wage'. The struggle, then, between
capital and labour is founded on the struggle over exploitation, including
of course the conditions of exploitation.

The profit-squezze approach that Brenner rejects is not so much influenced
by Malthus, as Brenner suggests, but, instead, offers a revised version of
Ricardo's labour theory of value. According to Ricardo, the value of a
commodity is determined by the quantity of labour required for its
production. For him, then, the substance of value is the labour embodied
in a commodity. For Ricardo 'competition could not reduce the rate of
profit' and he argued instead that the rate of profit falls as a 'result
of the rise in wages'. Wage are seen to rise because of the 'diminishing
fertility of the soil with the growing population' (Clarke, 1994, p. 209).
The fall in the rate of profit is thus 'explained by the increase in the
value of labour power that results from the decline in the productivity of
agriculture' (ibid. p. 211). Hence Brenner rejects Ricardo for the same
reason as he rejects Malthus. Both are rejected because they view the fall
of labour productivity in agriculture as the cause of economic crisis. For
Brenner, approaches that are based on the notion of 'declining
productivity' or a 'wage squeeze on profits' merely advocate a crisis
theory that belongs essentially to pre-capitalist agricultural societies.

However, Brenner's own account depends to some degree on Ricardian
insights. For example, individual capitalists compete to realise 'their'
respective cost-prices and capitals seek to maintain markets by lowering
'their' respective prices. In the absence of Marx's theory of value in
Brenner's account, this view can only mean that 'each' individual capital
produces 'its' own rate of profit and 'its' own commodity 'price'. All
these individual rates of profit and commodity prices are thus brought
together on the market through capitalist competition where capitalists
seek to realise 'their' respective cost prices. Some producers will have
to accept lower prices because other producers have managed to cut 'their'
costs by increasing 'their' productivity and because of this are able to
command a greater share of the market at the expense of high-cost
producers. In other words, for Brenner, the market price of commodities is
not 'regulated' by the socially necessary labour time required to produce
the commodities. Rather, each capital has its own cost-price and
competition regulates the selling price, that is the market price of
commodities. In other words, the market price is, for Brenner, determined
by capitalist competition. The Ricardian element of this account is that
each producer brings 'its' own price to the market, as if the price is
embodied in the commodity.

Furthermore, Brenner argues that those producers with high cost prices
will not simply pack it in but will try to realise the 'average rate of
return on their circulating capital' (p. 26). The differentiation between
fixed capital and circulating capital is, of course, most important; and
it was Ricardo who developed this differentiation. Unlike circulating
capital, fixed capital - the bricks, mortar and machinery of the
production process - takes much longer to transmit their value onto the
products of labour. In contrast, the value of circulating capital, that is
labour power and raw materials, is transmitted by labour onto the
commodity at once during the labour process. The categories of fixed and
circulating capital are important insofar as they indicate the different
speeds in the circulation of values. There is thus no doubt that, in one
sector of production, new techniques of exploitation introduced by, for
example, capitalist A will have a major effect on capitalist B. B's
investment in fixed capital has been devalued, has morally depreciated,
and capitalist B will not get his money's worth on his fixed capital. B's
'production methods' have devalued because the more productive producer
has reduced the socially necessary labour time required for the production
the same commodity. This labour time has been changed at the expense of
the capitalist producing with the 'old', now 'devalued', fixed capital.
However, in distinction to Brenner, it is neither fixed capital nor
circulating capital that produces surplus value and therewith profit. For
Marx, it is labour that produces value and, in the course of the labour
process, transmits the value of the means of production onto the products
of labour. The fundamental categories, then, are constant and variable
capital. Brenner seems to identity fixed and circulating capital with
constant and variable capital. His notion, then, that capitalists with
less effective, that is fixed capital with a higher 'product cost price',
will try to retain market shares by gaining the average rate of profit on
circulating capital does make little sense. Capital does not exploit raw
material; it exploits labour. Raw material does not produce profits; it
the exploitation of labour that produces surplus value and thus profit.

To recap, Brenner's theory of competition suggests that it is
'competition' that produces the market price of commodities and that it is
the competitive nature of capitalism that produces over-capacity and
over-production. According to him, the rate of productivity growth
declines because of a fall in profitability and profitability declines
because of over-production. Over-production reduces the rate of
investment, leading to a decline in the rate of productivity growth. In
the tradition of political economy, this view was espoused by Adam Smith
who 'explained the fall in the rate of profit as the result of increasing
competition between capitalists for scarce investment outlets' (Clarke,
1994, p. 209). As Brenner argues, 'under capitalist social property
relations, the generalisation of the individual norm of profitability
maximalization combined with the pressure of competitiveness on a
system-wide scale tends to bring about the growth of the productive forces
and overall productivity' (p. 24). In an ideal-typical world, the result
of this process will be that 'both the rate and mass of profit rise'
(ibid.). However, the world of capital does not follow some grand plan.
Capitalism is defined by its competitive nature. Thus, problems arise. The
basic problem, for Brenner, is that the increase in profitability and
productivity is associated with realisation problems. In an ideal world,
'where firms can predict what their competitors will do and perfectly
adjust, cost-cutting technical changes pose no problem' (ibid.). This, for
him, is the 'benign' side of Smith's notion of the invisible hand (cf. p.
23). In an ideal world, high-cost firms would 'leave the line', or be
persuaded to pack it in, leaving their previous market shares to the more
dynamic, cost-cutting, producers.

Ideal-typically, then, a crisis of over-production would be, as Schumpeter
saw it, be resolved through a 'creative destruction' of capital and it is
this 'creative destruction' that 'makes capitalism even more productive'
(p. 26). Alas, Schumpeter 'underestimated the potentially destructive side
of his creative destruction' (ibid.). As Brenner sees it, 'firms which
sustained reduced profitability as a result of the introduction of
lower-cost and lower-priced goods by cost-cutters in their line cannot be
assumed to respond by more or less immediately leaving the line; this is
because it is rational for them to remain in the line so long as the new,
lowered price allows them at least to make the average rate of return on
their circulating capital - that is, the additional investment in labour
power, raw materials and semi-finished goods that is required to put their
fixed capital into motion' (p. 26). High-cost producers will thus try to
intensify labour. However, 'to attribute part of the squeeze on profits to
capital's inability to force labour to adjust to a fall in profitability
=2E.. is not the same thing as to attribute that fall directly to an
increase in pressure from labour' (p. 75). Profitability fell 'only
because producers were unable to mark up prices over costs sufficiently to
maintain their established rates of return' (p. 96). The price of a
commodity, then, is determined by competition. In sum, 'profits were
squeezed, not so much by increased upward pressure on costs resulting from
the exercise of increased power by workers, as by increased downward
pressure on prices reflecting intensified international competition
leading to over-capacity and over-production in the market for
manufacturers' (p. 95).

Competition, then, is not only a 'benign' force that makes capitalism a
highly 'productive system'. Competition is also a malign, destructive
power. As Brenner emphasises, ideal-typically capitalism is a most
productive system - it is only because of its unplanned, competitive
nature that the 'capitalist economy' is crisis-ridden and destructive.
Brenner, then, endorses Adam Smith who 'had argued that the fall in the
rate of profit was the result of a secular tendency to the overproduction
of capital in relation to the limited opportunities for investments, so
that increased competition between capitalists reduced prices, and so
reduced the rate of profit' (Clarke, 1994, p. 210). Brenner makes a
similar point when he says that 'a sufficient theory of crisis must
explain not only why what individuals and collectivises do in pursuit of
their interest leads to an aggregate pattern of production and
distribution in which profitability is undermined, thereby reducing the
capacity and incentive to invest. It must also explain why that same
pattern leads producers to take remedial action that fails to bring about
an adjustment and ends up exacerbating the difficulties of the initial
situation' (p. 23). Remedial action is taken because - quite rationally -
high cost producers seek to obtain average rates of profits on their
'circulating capital' in the face of huge amounts of fixed capital that
has been rendered 'less cost effective' by the innovating 'low cost'
producer.

Where, for Brenner, might the constitution of capitalist relations of
property be found? Is capitalism merely founded on the self-interest of
individual capitals and their limitation in the face of 'many capitals'?
What governs the relationship between capital and capital? His answer to
these questions is overtly Smithian. We have already quoted him as saying
that capitalist competition supplies dynamic to the capitalist system by
ever increasing the productive forces. This 'benign' idea of competition,
for Brenner, does not lack its other side: the origin and cause of
capitalist crises is determined by the competitive nature of capital.
Capitalist reproduction is organised through and governed by competition
and the outcomes of competition might either be benign (increase in
productivity) or malign (crisis). Since capitalism is 'unplanned', the
interaction between capital and capital produces either prosperity or
potentially disastrous economic downturns. In order to understand both
aspects of the law of competition, Brenner urges that 'we therefore need a
theory of a malign invisible hand to go along with Adam Smith's benign
one' (p. 23). In short, the social constitution of capitalist competition
is beyond reason: it resides in invisible spaces and, because of its
invisibility, is beyond control, judgement and human transformative power.
All that can be done is to describe the trajectory of the hard hitting
hand of the invisible .

II=09On Marx's Concept of Competition

Brenner's theory of competition is predicated on individual capital
production decisions. Each individual capital has its own cost-price and
seeks to realise the 'average rate of profit on capital stock' (p. 6).
However, 'because investors are unable to predict or control the market,
they must, as a rule, rely on the realised rate of profit to estimate the
expected rate of profit and, on that basis, to decide how to allocate
their funds' (ibid.). What is to be understood by cost price? In Brenner's
account, it seems, that the cost-price is nothing more than the total sum
of investments made by individual capitalists during a specific production
cycle and, in addition, the 'average rate of profit' that is calculated on
the basis of the previous cycle of production. The selling price, then, of
a commodity is arrived at by bookkeeping with the final market price being
determined through competition over market shares.

From=20the vantage point of 'competition', the individual capitalist has, of
course, always 'the world-market before him, compares, and must constantly
compare, his own cost-prices with the market-prices at home, and
throughout the world' (Marx, 1966, p. 336). As Marx saw it, capital has
constantly to compress necessary labour-time, the constitutive side of
surplus labour-time, so as to multiply the productive power of labour in
order to preserve the existing value of capital through progressive
accumulation. 'Fanatically bent on making value expand itself, [the
personified capitalist] ruthlessly forces the human race to produce for
production's sake', increasing 'the mass of human beings exploited by him'
(Marx, 1983, p. 555). Brenner, then, is correct in pointing out that
competitive pressure forces the individual capitals to confront their
respective labour forces. However, 'the relation of every capitalist to
his own workers is the relationship as such of capital and labour, the
essential relationship' (Marx, 1973, p. 420). It is this essential
relationship between capital and labour, the class relationship, that
constitutes the foundation of the capitalist relations of competition. In
other words, the competitive relation between capital and capital is
founded on the separation of labour from its means. 'The means of
production become capital only in so far as they have become separated
from labourer and confront labour as an independent power' (Marx, 1963, p.
408). This argument suggests that, pace Brenner, the understanding of the
relations of capital to capital can not be conceptualised in abstraction
from class relations, and that is the class struggle. The class relation,
in other words, is the essential relation; competition, in this way,
posits the class relations in a mode of being denied. There is no doubt
that capital appears as a mere thing and not as a social relationship
between capital and labour. For Marx, the appearance of capital as a thing
is captured by the concept of competition. The apparent thinghood of
capital and the concept of competition belong together as different
expressions of the same fetishised world that the commodity presents.

According to Marx's critique of political economy, the existence [Dasein]
of capital is that of the relationship of capital to another capital, that
is as some-thing which 'repels itself, is many capitals mutually quite
indifferent to one another' (Marx, 1973, p. 421). In this sense,
competition amounts to no more 'than the inner nature of capital, its
essential character, appearing in and realised as the reciprocal
interaction of many capitals with one another, the inner tendency as
external necessity' (ibid., p. 414). In other words, competition obscures
the understanding of the capitalist exploitation of labour and it does so
because competition presupposes the existence of value but does not show
'the determination of value' (Marx, 1966, p. 208). It is, however, the
determination of value which 'dominates the movement of production; and
the values that lie beneath the prices of production' (ibid.). In short,
competition does not show the determination of value by socially necessary
labour-time and does not reveal that profit is the form of surplus value
pumped out of social labour. In the theory of competition, then, profit
merely appears as the return on capital investment. Profit appears to be
the revenue of capital, in the same way as the wage appears merely as the
revenue of the worker. In short, 'everything appears reversed in
competition' (Marx, 1966, p. 209) .

The whole social process of capitalist reproduction appears as a social
synthesis based on the competitive interaction between individual
capitals. The synthesis appears as if it were the product of 'capitalist
competition' where capital repells and attracts each other on the market.
However, the thinghood of capital is the form in and through which social
labour obtains as capitalist production. However, capitals do not compete,
repel each other in competition or attract each other in exchange, for the
realisation of 'its' average rate of profit. It competes with each other
to realise surplus value in the form of profit produced by social labour.
Value is not embodied in individual commodities. The value of a commodity
is determined by the socially necessary labour time required to produce
commodities. In other words, individual capitals compete for a share in
total social value. Hence, individual capitals compete with each other for
the realisation of the social value that labour was compelled to produce
under the command of capital as whole. Competition, then, is an 'external
necessity for the individual capital' (Marx, 1973, p. 651); a requirement,
in other words, that corresponds to its 'historic nature' (ibid.).
Competition, then, is not something that manifests the origin and cause of
economic laws. Nor is it merely something that exists external to the
exploitation of labour. Competition is rather the form through which the
essential relationship between capital and labour appears, that is through
which the class relation between capital and labour manifests itself as a
relationship between the things themselves, between capital and capital.

Brenner's theory of competition, then, explains the development of the
world economy through the lenses of a reified world. 'But all science
would be superfluous if the outward appearance and the essence of things
directly coincided' (Marx, 1966, p. 817). For Brenner, essence and
appearance coincide: for him, competition is both the essence and
appearance of capitalism. Yet, it is the difference between essence and
appearance that constitutes 'science'. The category of competition, the
phenomenal form of competition, makes the essential relationship between
capital and labour invisible, and, indeed, shows the direct opposite of
that relation, forms the basis of the mystification of the capitalist mode
of production. This mystification that the category of 'competition'
presents, suggests that the 'value of products' has a different foundation
than 'labour'. For example, Brenner identifies capital with profit and
wage labour with labour. This means that variable capital is identified
with the value produced by labour. Consequently, those value components of
the commodity that exist in addition to the value component represented by
variable capital, have to be generated by other things such as fixed
capital or raw materials. Hence, his emphasise on the capitalist endeavour
to gain an average rate of profit on 'circulating capital'. Hence also his
insistence that competition creates market prices and his conception of
the cost-price of production in terms of an immanent price of the product.
Brenner, in other words, fails to conceptualise the relations of
exploitation, of surplus value production. He focuses, instead, on
competition as the immediate and direct proof of the general laws of
capitalist social relations (cf. Marx, 1969, p. 106)

Marx's critique of political economy presents a rigorous demystification
of the appearance of value as a 'thing' whose components are generated by
forces other than human productive labour. In addition, Marx emphasises
that the prices of individual commodities have to be different from
'their' values. 'The equalisation of the surplus-values in different
spheres of production does not affect the absolute size of this total
surplus-value but merely alters its distribution among the different
spheres of production. The determination of this surplus-value itself,
however, only arises out of the determination of value by labour-time.
Without this, the average profit is the average of nothing, pure fancy.
And it could then equally well be 1,000 per cent or 10 per cent' (Marx,
1969, p. 190). The difference between the market price and value concerns
the determination, in exchange, of the amount of value that has been
realised by individual capitalists in terms of price. The individual
market price of a commodity might thus be quite different from the 'value'
that the individual commodity appears to present. Yet, 'the total profit
will be equal to the total surplus-value which all these capitals yield,
for instance, during one year. If on did not take the definition of value
as the basis, the average profit, and therefore also the cost-process,
would be purely imaginry and untenable' (ibid.). In sum, without the
determination of social value in terms of socially necessary labour time,
the value of commodities would be without foundation, a mere 'sign'.

The distribution of total social value in terms of realised market prices
between different individual capitalists is mediated through competition.
In other words, it is not competition that determines the market prices.
Competition 'does not bring about the market-value or the market-price by
the equalisation of profits within a particular sphere of production ...
On the contrary, competition here equalises the different individuals
values to the same, equal, undifferentiated market-value, by permitting
differences between individual profits, profits of individual capitalists,
and their deviations from the average rate of profit in the sphere' (Marx,
1972, p. 206). In short, the determination of value through socially
necessary labour time is decisive. Those capitalists that exploit 'their'
labour force less effective than others, will gain a rate of profit lower
than the average rate, and conversely, those that pump out labour more
effectively, will gain a rate of profit higher than the average rate.
Thus, competition does not determine the 'market-price' but merely
distributes social value to the individual capitalists according to the
effectiveness of their exploitation of labour within the limits of
socially necessary labour time on a global scale. There is no such thing
as 'individual value'; there is only a 'social value' which is determined
by the amount of socially necessary labour time required for the
production of commodities in a specific sphere of production. In addition,
competition can 'level out profits in the different spheres of production
=2E.. but it cannot lower the general rate of profit' (Marx, 1969, p. 438).
Competition, in short, does not determine 'prices'.

In conclusion, Marx's theory of value defetishises what bourgeoisie theory
endorses as the invisible hand and its cunning of reason. The category
'competition' presupposes the conceptualisation of the social constitution
of value. This conceptualisation reveals the circumstance that the
self-relation of capital to capital is founded on the class relationship
between capital and labour. A theory of competition, then, presumes the
class relationship between capital and labour 'out of existence' and
replaces it by a focus on capital as an objective thing that competes
against itself over the realisation of market prices that derive from
competition itself. The understanding of social labour as the producer of
value reveals that capitalist competition does neither create 'economic
laws' nor determine market prices. Competition merely mediates the class
struggle over exploitation; better: competition imposes upon capitals the
constitution of their existence, that is the exploitation of labour for
the sake of exploitation by capital as a whole. The next section concludes
the argument by suggesting that 'competition' presupposes a
conceptualisation of the class struggle.


III Conclusion: Competition and Class Struggle

For the critique of political economy, the bourgois ideas of capitalist
reproduction through the relations of 'demand and supply' is quite
insufficient for the understanding of capitalist reproduction and its
crises. Brenner recognises this when he criticises approaches that see the
bargaining power of labour in the late 1960s as the cause of the crisis.
However, his rejection of what he terms the 'supply-side' approach to
crisis is made on the basis of the same 'standpoint': his approach offers
no more than a reformulation of the dogma of 'supply and demand' from the
perspective of capitalist competition. Both perspectives render the
essential relations invisible and, indeed, show the direct opposition of
that relation. The supply side argument that the crisis was caused by wage
pressure does not recognise that the expression '"price of labour" is just
as irrational as a yellow logarithm' (Marx, 1966, p. 818). In the
expression price of labour or '"value of labour", the idea of value is not
only completely obliterated, but acturally reversed. It is an expression
as imaginary as the value of the earth. These imaginary expressions arise,
however, from the relations of production themselves. They are categories
for the phenomenal forms of essential relations' (Marx, 1983, p. 503). The
same assessment holds, as the previous section has argued, for the
phenomenological form of competition. In other words, Brenner's rejects a
'phenomenological' explanation of crisis and replaces it by the equally
'phenomenological' explanation that the notion of capitalist competition
presents. Both, 'price of labour' and 'competition' disguise that labour
is value producing. This value-producing human social actvity posits the
essential relation between labour and the conditions of labour; the
conditions of labour are those of capital. The expropriation of the means
of production from social labour power posits capital not only as the
owner of these means: 'Capital is capital only as non-labour' (Marx, 1973,
p. 288).

The understanding of labour as the producer of value should not be
confused with the distribution of the value extracted from labour amongst
the categories of 'profit', 'wage', 'interest', and 'rent'. Were one to
analyse capitalist reproduction, and its crisis, from the perspective of
the distribution of 'value' amongst the different forms of social income,
the understanding of labour as the source of value would indeed be
obliterated. Capitalist reproduction, and its crisis, would then have to
be analysed through the competitive relationships between these
categories, with depressed wages 'in the home market' requiring 'export
led growth', leading to intensified capitalist competition over limited
markets for 'effective' demand, and suppressing profitability because of
'overproduction'. This is Brenner's scenario. Yet, Marx's stresses time
and time again that, 'if labour coincides with wage-labour, so does the
particular social form in which the conditions of labour confront labour
coincide with their material existence' (Marx, 1966, p. 825). However,
'the formal independence of these conditions of labour in relation to
labour, the unique form of this independence with respect to wage-labour,
is then a property inseparable from them as things' (ibid.). The
understanding, then, of crisis in terms of 'wage-labour' exerting
'wage-pressure' on profits or in terms of 'capitalist-competition'
reinforcing 'low-cost pressure' on profitibality, mystifies rather than
reveals the constitution of capitalist social reproduction.

Bourgois theory has no understanding of the circumstance that social
categories such as 'wage-labour', 'profit', 'competition' are the modes of
existence, 'forms of apperance', of essential relations. Although these
categories are readily understandable as existing reality (daseiende
Realit=8At), as constituted forms, the question about the constitution, or
genesis, of these forms is quietly forgotten and obscured by existing
reality. In short, the phenomenological forms are regarded 'as immediate
and direct proof or exposition of the general laws' (Marx, 1969, p. 106).
As a consequence, a theory 'capitalist competition' reinforces the
'objective', reified character of capital as a thing-in-itself that
competes with itself over something that cannot be determined. Brenner
does not tackle the genesis of 'value' and merely assumes the existence of
value. In short, his account presumes that a theory of value is in fact a
theory of capitalist competition. Brenner's dismissal of the class
struggle approach is based on the understanding the relationship between
capital and labour in terms of the wage relation. As a consequence, labour
as the substance of value is excluded theoretically and class struggle
obtains merely in terms of a national or 'company' working class which
employers either confront to maintain profitability on their 'circulating
capital' or outflank by moving production to low-cost areas. The
'injustice', then, of capitalism derives from capitalist 'competition' and
not from the constitution of capitalist relations of private property, a
property that capital can only preserve in and through the exploitation of
labour.

There is no doubt that 'crisis' manifests itself in 'cut-throat'
capitalist competition over 'limited markets' for the realisation of
average rates of profit. There seems, then, to be a breakdown of the
relations between demand and supply, between buying and selling. Bourgois
thought approches 'crisis' with reference to competition. Competition is
either not as 'free' as it ought to be or too unfettered and thus in need
of restriction through, for example, protectionist measures. Brenner, of
course, sees, and emphasises, the social injustice that capitalist
competition imposeses on wage labour. Yet, the injustice is merely a
consequence of the unplanned, competitive, nature of capital. He seems to
argue that, if only capitalism could be 'planned', social injustices might
be rectified for the better. Would capital, in a 'planned capitalism', not
have to exploit 'labour'? Does capitalism merely generate 'injustice'
because it is 'unplanned'? Is it merely the capitalist competition that
leads to overproduction and thus a breakdown in the relations of supply
and demand, percipitating over-competition and resulting in a fall in
overall profitability?

For Marx, a breakdown in 'supply and demand' indicates the abstract form
of crisis. 'Supply and demand', 'purchase and sale', 'belong together, the
independence of the two correlated aspects can only show itself forcibly,
as a destructive process. It is just the crisis in which they assert their
unity, the unity of the different aspects. The independence which these
two linked and complimentary phases assume in relation to each other is
forcibly destroyed' (Marx, 1969, p. 500). Their unity asserts itself in
their separation. Marx seems to argue here that the relations between
supply and demand is inseparably linked to the relations of production and
consumption and that this relationship constitutes the contradiction
beween the unfettered development of the productive forces, on the one
hand, and the fettered, the constrained development of consumption.
However, the separation between purchase and sale, between production and
consumption, do not 'explain ... the actual occurence' of crisis. 'They do
not explain why the phases of the process come into such conflict that
their inner unity can only assert itself through a crisis, through a
violent process. This separation appears in the crisis; it is the
elementary form of the crisis. To explain the crisis on the basis of this,
its elementary form, is to explain the existence of the crisis by
describing its most abstract form, that is to say, to explain the crisis
by the crisis' (Marx, 1969, p. 502). What needs to be explained, in other
words, is why members of society relate to, and meet, each other as
sellers and buyers on the market in general and the labour market in
particular. What, in other words, constitutes the atomisation of social
relations in terms of buyers and sellers?

The existence of sellers and buyers presupposes the constitution of
capitalist society and that is the class antagonism between capital and
labour, an antagonism where the means of production are posited as capital
and where human productive power is rendered a labouring commodity.
Individuals 'produce in and for society as social individuals. Yet, at the
same time, their production appears as a mere means of objectifying their
individuality. Because they are neither subsumed in a natural community
nor, on the other hand, is the community subsumed to them as a conscious
community, the independent subjects are confronted by the existence of an
equally independent, accidental, reified thing. This is the condition of
their existence as private persons in a social context' (Marx, 1974, p.
909, my translation) Furthermore, the 'social character of the private
individual is determined by the social context of their existence' (ibid.,
pp. 991-11, my translation). In other words, the class relation does not
just posit the means of production as capital but also, and as a
consequence, renders the social individual an individualised individual
whose social existence appears to derive from the relations between the
things themselves. Another way of putting this is to say that the
relations between supply and demand, between purchase and sale, are
fetishised forms in and through which the class relationship between
capital and labour exists in a mode of being denied. However, to explain
the development of fetish forms through the existence of fetish forms is
to explain fetishism through fetishism. As crisis cannot be explained
through crisis, capitalist competition can not be explained through
competition. Neither, and for the same reason, can crisis be explained
through competition.

As Clarke puts it, 'the driving force of production is not consumption,
but the production and appropriation of a surplus value. The barriers to
accumulation are not to be found in any contradiction between production
and consumption, but in the contradiction inherent in the production and
realisation of surplus value' (Clarke, 1994, p. 180). The essential point,
then, is that 'crisis is ultimately one or another expression of the
tendency to develop the forces of production without limit, and the
subordination of production to the valorisation of capital' (ibid., p.
234). The tendency to develop the 'forces of production without limit' is
imposed upon each individual capital through 'the inner nature of capital'
itself: competition. 'The development of capitalist production makes it
constantly necessary to keep increasing the amount of capital laid out in
a given industrial undertaking, and competition makes the immanent laws of
captialist production to be felt by each individual capitalist, as
external coercive laws. It compels him to keep constantly extending his
capital, in order to preserve it, but extend it he cannot, except by means
of progressive accumulation' (Marx, 1983, p. 555).

Competition, then, is not the 'origin and cause' of economic laws but,
rather, the inner nature of capital. Each individual capital, then, has to
compete to realise itself in exchange. However, the realisation of value
in exchange is not the same as the preservation of capital. Capital can
only preserve itself through the progressive exploitation of labour and
that is through the conversion of realised surplus value into the
progressive accumulation of capital. The reproduction of capital, then,
through progressive accumulation is more than just 'economic
reproduction'. It entails the reproduction of its 'command over alien
labour' (Marx, 1973, p. 330). The retention of the command over labour
'spurs capital into action' to preserve value by expanding it (Marx, 1983,
p. 555). However, value cannot be expanded without limits. The
reproduction of capitalist command over labour requires the conversion of
realised surplus value into production to expand the accumulation of
capital. Such expansion increases the productive power of labour that
develops the capitalist exploitation of labour beyond the 'edge' of the
relations of capital, that is the overaccumulation of capital.

Crisis signals the social limits of capital's incessant exploitation of
labour in production for production's sake. Crisis manifests the
overaccumulation of capital not just in relation to the realisation of
surplus value but, importantly, to the preservation of capital on the
basis of progressive accumulation and that is the progessive exploitation
of labour. Capitalist crisis, then, asserts the presence of labour within
the concept of capital. The other side of the exploitation of labour's
productive power is the crisis of capitalist overaccumulation. Or, as
Bologna (1993, p. 51) put it, overaccumulation is 'the false name which is
given to overexploitation'.

In conclusion, 'competition' presupposes the class relations between
capital and labour and competition is the form in which the crisis of the
capitalist exploitation of labour is experienced by each individual
capitalist. In order to preserve their 'capital', each individual capital
has to intensify labour, force down wages, lay off workers, introduce new
methods of production, seek new markets and new workers in areas where
conditions appear to offer a more docile work force. However, the attempt
to relieve the pressure of competition merely intensifies the
overaccumulation of capital. From capitalist persepctive, the resolution
to crisis, then, involves much more than the intensification of work, the
increase in labour produtivity through the introduction of new means of
production, and the exclusion from production of those whom capital is
forced to disregard as being inessential. It entails the transformation of
the relations between necessary and surplus labour. Such transformation
would involve a destruction of capital on a scale that might well shake
the very foundations of capital. 

Competition, as Clarke (1994) argues convincingly, is merely the
'superficial expression' of the contradiction between the forces of
production and the relations of production. What needs to be made
manifest, then, is that it is the development of labour's productive power
that produces too much value for capital to realise in exchange and that
is for the progressive expansion of capitalist accumulation. It is the
exploitation of labour that generates, in the form of overaccumulation,
the crisis of capitalist reproduction. The limit, then, to capitalist
reproduction is capital itself: the existence of the means of production
as capital posits the limit to capital's incessant quest to preserve its
existence as capital by the progressive expansion of production for the
sake of production. From labour perspective, then, her productive power
produces not only the overaccumulation of capital. The development of her
productive power is also limited by capital. This much is made clear by
capitalist crisis. In short, the crisis of capitalist accumulation asserts
the presence of labour in and against capital. For capital to maintain its
existence, the resolution to its crisis consists in the massive
destruction of productive capacity and the scrapping of labour power, a
power, however, upon which it depends for the production of value. For
labour, her freedom, the free development of her productive power, entails
the transformation of the means of production into means of emancipation.

In conclusion, we owe Brenner a debt, for he has demonstrated the
fundamental importance of class antagonism for the conceptualisation of
capitalist society.




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