On the Relevance of Marx’s Capital for Today

✑ ANDREW J. KLIMAN | 3,226 words
Capital challenges some ideologies that are quite similar to those of our day.

"The grounds on which Capital is typically dismissed as no longer relevant, or of diminished relevance, seem to me not to stand up under scrutiny", Kliman argues, before discussing the "many aspects of the book" that are "of special relevance today". For instance, the critique in Capital of the idea that "the ills of capitalism can be ameliorated by reforming monetary, exchange, and financial relations, while leaving the capitalist mode of production intact".

Andrew Kliman is a professor emeritus of economics at Pace University, author of many books on marxian economics (full CV here) and known for defending Marx's labor theory against claims of inconsistency from mainstream economics (see his book Reclaiming Marx's "Capital": A Refutation of the Myth of Inconsistency (2006)).

Originally published in Spanish as “Sobre la relevancia de El capital de Marx para la actualidad” in Ideas de Izquierda: Revista de Política y Cultura, #18, April 2015. The English version was published in With Sober Senses, on April 17, 2015

How Not to Evaluate Capital

C apitalism has changed markedly during the century and a half since Marx wrote Capital. It is a now a system that engulfs almost the entire globe, and the role of finance has greatly increased during the last few decades. The world, and so much that matters to us as bearers of “multiple and fragmented identities,” seem to bear little resemblance to the stripped-down situation on which volume 1 of Marx’s book dwells––the expansion of capital by means of extraction of workers’ surplus labor in the direct process of production.

It is because of this, of course, that Capital is often dismissed as reductive or no longer relevant––or in need of add-ons and work-arounds. The careers of a sizable number of academics and public intellectuals are built on such projects. But there is less here than meets the eye.

In the first place, the book is entitled Capital for a reason. It’s not entitled Everything You Need to Know about What Takes Place within Capitalism, or even Everything You Need to Know about Capitalism. It focuses specifically on capital––the process in and through which value “self-expands,” or becomes a bigger amount of value. It is about how that self-expansion is produced, how it is reproduced (renewed and repeated), and how the whole process is reflected, imperfectly, in the conventional thinking and concepts of economists and business people. There’s a crucial difference between having a specific focus and being reductive. I don’t think Marx wrote or suggested anywhere that the process of value’s self-expansion is the only thing that matters or that other processes can be reduced to it. It does affect a lot of other things, sometimes in crucial ways––and this is perhaps the main reason that a book on Capital is mistaken for an Everything book––but to recognize the interrelationships is not to reduce these other things to the self-expansion of value.

Of course, there is some sense in which any book with a specific focus “leaves out” or “overlooks” other things, but we don’t normally complain that a cookbook leaves out or overlooks instructions for changing the oil in your car or any analysis of international politics. The charge that Capital “fails” to discuss many aspects of capitalism and what takes place within it seems to me to be similarly inappropriate and unfair.

In the second place, the fact that the world now seems very different from what we are confronted with in Capital simply does not imply that the book has become irrelevant, or even less relevant, than when it was written. The world also seemed very different back when Marx wrote it, and he was acutely aware of the differences. For example, he remarked in volume 2 that“[i]t is typical of the bourgeois horizon, … where business deals fill the whole of people’s minds, to see the foundation of the mode of production in the mode of commerce corresponding to it, rather than the other way around.” He nonetheless insisted that the market relationship between the buyer and seller of labor-power (the capitalist and the worker) “rests fundamentally on the social character of production, not on the mode of commerce; the latter rather derives from the former.”1

The question is therefore not whether capitalism has changed since Marx’s time, or even whether the changes are big and important. The question is: what is the significance of the fact that things look quite different from how Capital presents them? Does this fact count as a legitimate criticism of the book, an indication of theoretical inadequacy?

Marx anticipated this kind of objection, and he responded to it as follows: “the vulgar economist thinks he has made a great discovery when, as against the revelation of the inner interconnection, he proudly claims that in appearance things look different. In fact, he boasts that he holds fast to appearance, and takes it for the ultimate. Why, then, have any science at all?”2 He was not trying to provide a commentary on capitalist society that “held fast to appearance[s]” by describing its components parts and relationships in the way that these “things look” of the surface of society. He was instead engaged in “science”––“revelation of the inner interconnection[s]” among the parts and their apparent relationships.

In light of this aim, it seems wholly inappropriate to me to evaluate the book in terms of how closely it conforms to how things look––for instance, in terms of whether the business deals and financial markets that dominate the economic news and the minds of the bourgeoisie also dominate the book.  It needs to be evaluated instead in terms of how successfully it reveals the inner connections.

Thus, the grounds on which Capital is typically dismissed as no longer relevant, or of diminished relevance, seem to me not to stand up under scrutiny. But this negative argument does not by itself mean that the book does remain relevant; positive arguments also need to be provided. A short piece like this one clearly cannot do justice to the issue. I will therefore limit myself to brief comments on just a few of the many aspects of the book that seem to me to be of special relevance today.

Critique of other Left Tendencies 

Capital challenges some ideologies that are quite similar to those of our day.  On the one hand, it combats the perspective of bourgeois political economy according to which “there has been history, but there is no longer any,” as Marx sarcastically put it.3In recent decades, this perspective was brought back to life in the form of Margaret Thatcher’s mantra, “there is no alternative.” Capital thus speaks directly to a chief concern of popular movements of the last decade and a half, which have declared that “another world is possible,” by helping to clarify what must be changed in order to transcend capitalism.

But the book also combats the political economy of Pierre-Joseph Proudhon and other leftists who claimed that the ills of capitalism can be ameliorated by reforming monetary, exchange, and financial relations, while leaving the capitalist mode of production intact. This dimension of Capital has become newly relevant in recent years, especially in light of efforts to prevent the next economic crisis by reforming the financial system.

When it is taken to be only a critique of bourgeois political economy, not a critique of Proudhonist political economy as well, some of Capital becomes inscrutable or even pointless.  Consider section 3 of the first chapter, on “the value-form.” This section contains an intricate dialectical derivation of money from the commodity form, but what is the point?  Marx is emphatic that this derivation is crucial––“we have to perform a task … we have to show … we have to trace”4––but why? The answer, I believe, is that he is showing that monetary exchange is only a consequence, and an inevitable consequence, of commodity production. As long as commodity production remains, so must money and the social ills associated with it. “It is necessary to see this clearly in order to avoid setting impossible tasks, and in order to know the limits [of] monetary reforms and transformations of circulation [commodity exchange].”5 Marx compares the Proudhonist desire to abolish money while “perpetuat[ing] the production of commodities” to a desire to “abolish the Pope while leaving Catholicism in existence.”6 Neither thing is possible.

The fact that Capital is (among other things) a critique of other left tendencies’ proposed solutions to the problems of capitalism is often suppressed. Those who issue the continual calls to unite around common actions, programs, or lowest-common-denominator ideas often regard the specificity of Marx’s ideas as distracting from or interfering with their aims. Even when they seem to regard him favorably, Marx is turned into an icon who said very little that is distinctive and nothing that is “threatening.” Others want to attach his name to perspectives and projects that have more in common with the tendencies he fought than with his own ideas. Marx himself, however, continually fought for his specific ideas within the movement, especially once Capital was published and available for all to study. Marx, library In 1875, the “Marxist” (Eisenach) and Lassallean political parties in Germany united on the basis of the Gotha Programme. Marx’s critique of this Programme complains again and again that its positions and demands fail to measure up to the theoretical conclusions worked out in Capital. This was no academic exercise. He opposed the unification of the parties precisely because he found the Programme’s ideas wrong and inadequate. In particular, its call for “fair distribution” of income was strikingly similar to the Proudhonist perspective he had battled for several decades, in that it sought to fix income inequality while leaving present-day production relations intact, which Marx considered impossible. He would not let the desire for unity interfere with the need to understand the world correctly in order to change it effectively.

Personifications of Capital 

In the preface to the first edition of volume 1 of Capital, Marx remarked that, although “I do not by any means depict the capitalist and the landlord in rosy colors,” neither does he demonize them and blame them for the defects of the capitalist system: “[I]ndividuals are dealt with here only in so far as they are the personifications of economic categories, the bearers of particular class-relations and interests. My standpoint, … can less than any other make the individual responsible for relations whose creature he remains, socially speaking.”7 Later, he referred to “a social mechanism in which he [the capitalist] is merely a cog. … [C]ompetition subordinates every individual capitalist to the immanent laws of capitalist production, as external and coercive laws.”8 They behave in the way they behave because this is how they have to behave in order to remain capitalists instead of bankrupt ex-capitalists.

I think this standpoint is especially pertinent today, when events like the recent global economic crisis and other defects of capitalism are regularly attributed to capitalists’ greed and to the “neoliberal” drive to dismantle all obstacles that stand in the way of allowing the rich to become ever-richer. The subtext is clearly that the defects of the present system can be fixed by replacing the current personifications of capital with an anti-neoliberal regime that has a different set of priorities.

What gets dismissed or ignored here are Marx’s arguments that the people who happen to be running the system at any particular moment are not really in control of the situation. What are really in control are the “laws of capitalist production.” Individual personifications of capital––and this includes atypical personifications such as individual state capitals and worker-run enterprises––must submit to these laws or relinquish their “control.” The most important law is the “law of value,” the determination of value by labor-time. It compels a business, whoever owns or “controls” it, to minimize costs in order to remain competitive, and therefore to lay off inefficient or unnecessary workers, speed up production, have unsafe working conditions, produce for profit instead of producing for need, and so on. If you are in a capitalist system, you cannot just issue a directive to produce for need, or a directive to refrain from laying off workers. Cutting costs is the key to survival. Putting different people with different priorities in “control” does not undo this law or the other laws of capitalist production. But the defects of the system will persist until these laws are undone.

The Transformation of Values into Prices of Production

In the third volume of Capital, Marx does, finally, deal with the “real world”––the forms in which the categories and relations he has analyzed “appear[s] on the surface of society, in the actions of different capitals on one another, i.e. in competition, and in the everyday consciousness of the agents of production themselves.”9 For instance, instead of just speaking of “the capitalist” and the “surplus-value” he extracts from “the worker,” Marx deals with industrial capitalists, merchants, financiers, and landlords, as distinct groups with distinct interests and distinct kinds of income: industrial profit, commercial profit, interest, and rent. Even if capitalism is still not described in its full concrete complexity, we are worlds away from volume 1 and its focus on the direct production process.

Yet Marx shows that this more “realistic,” less “reductive,” vantage point does not change the conclusions he had arrived at in the first two volumes. As Raya Dunayevkaya astutely remarked,

"what is the grand result of learning all the facts of life? How have they changed the laws that arise from the strict process of production which the academic economists call ‘abstract’? Not at all. Not at all. At the end … of it all, Marx takes us back to that on which it is based: production of value and surplus value. He shows us that in the final analysis the sum of all prices is equal to the sum of all values. Where the worker has created nothing, the capitalist manipulator can get nothing. Profit, even as surplus value, comes not from “ownership” but from production. …

Nothing fundamental has changed; nothing whatever.”10

Chapter 9 of volume 3 is where Marx discusses the transformation of values into prices of production and the transformation of surplus-value into “average profit.” Because of the long-standing myth that his account has been proven logically inconsistent, as well as the technical, mathematical character of the alleged proofs of inconsistency and of the bewildering array of so-called “solutions” to “the transformation problem”––i.e., efforts to “correct” the alleged inconsistency––the topic is frequently mocked and dismissed as abstruse and unimportant. Yet this chapter is crucially significant, because it is here, above all, where Marx re-confirms some of the most important conclusions he arrived at earlier in Capital.

Individual firms can and do sell their products for more than their real value, and they can consequently rake in more profit than the surplus-value they created. Yet in his account of the transformation in chapter 9, Marx shows that in the economy as a whole, the total price of all the products is just equal to their total value. Accordingly, the total profit is just equal to the total surplus-value extracted from the workers in the direct process of production, and the economy-wide rate of profit is––despite all the discrepancies between prices and values and between profits and surplus-values––just the total surplus-value per dollar of invested capital. “Nothing fundamental has changed.”

In volume 2, Marx cautioned that

"it is necessary to avoid falling into the habits of bourgeois economics, as imitated by Proudhon, that is to avoid looking at things as if a society based on the capitalist mode of production lost its specific historical and economic character when considered en bloc, as a totality. This is not the case at all. What we have to deal with is the collective capitalist."11

This is the method of chapter 9 of volume 3 as well. Although, in the main, this volume deals with capitalists in their competition with one another and with the competing interests of different fractions of the capitalist class, chapter 9 abstracts from competition and the multiplicity of capitals. It returns to the vantage point of capital versus labor that figured so prominently in volume 1’s discussion of the direct process of production––except that the agents are now not “the capitalist” and “the worker,” but the collective capitalist and the collective worker. Marx supposes “that the five different capital investments in the above example, I-V, belong to one and the same person.” Whether this person’s accounts recorded profit where it was actually extracted from the workers, or attributed the profit to each investment in proportion to its size, the “total price of commodities I-V would … be the same as their total value. … And in the same manner [this is the case] for the commodities produced in society as a whole.”12Whether ownership is collective or atomized, the result is the same.

For Marx, then, what gave capitalism its “specific historical and economic character” is its mode of production. Whether this mode of production appears in the form of a competitive society of atomized owners, or a collectivized society in which the total capital “belongs to one and the same person,” its essence is unchanged. Thus, as he himself stressed, a main purpose of the chapter 9 transformation, and of volume 3 as a whole, was to show that competition and multiple ownership do not alter the laws of value and surplus-value..13 They only alter the forms in which the laws appear; in society as a whole they continue to hold exactly as he had developed them in volume 1.

Marx’s Theory of Capitalist Crisis 

The conclusions Marx arrived at in chapter 9 of volume 3 are also crucially important to his “law of the tendential fall in the rate of profit” and to his theory of capitalist economic crisis, which is rooted in this law. In The Failure of Capitalist Production and elsewhere, I have argued that the decades-long fall in US corporations’ rate of profit was an underlying and indirect––though nonetheless important––cause of the Great Recession and its prolonged aftermath, and that almost all of the fall in their rate of profit can be attributed to the fact that growth of capital investment outpaced growth of employment, just as Marx’s law states.

Chapter 9 is the centerpiece of part 2 of the third volume. The very next part is devoted to the law of the tendential fall in the rate of profit and the associated theory of crisis––and for good reason. Marx could not have derived the law prior to the demonstration in chapter 9. He shows that “the rate of profit” tends to fall because of labor-saving technological change. But he is able to show this only because “the rate of profit” in question is unaffected by the many discrepancies between prices and values and between profits and surplus-values. It is the rate of profit of the collective capitalist (or the capitalist class as a whole), and this rate of profit is––as he showed in chapter 9––nothing other than the total surplus-value per dollar of invested capital. In other words, the law of the tendential fall in the rate of profit is rooted in a key result of volume 1, as re-confirmed in chapter 9 of volume 3: profit cannot be greater than the surplus-value created by the workers’ surplus labor. As Marx noted in a preparatory manuscript:

"We have seen that [the rate of profit] is different for the individual capital [from] the ratio of the surplus value to the total amount of the capital advanced. But it was also shown that considering the … total capital of the capitalist class, the average rate of profit is nothing other than the total surplus value related to and calculated on this total capital …. Here, therefore, we once again stand on firm ground, where, without entering into the competition of the many capitals, we can derive the general law directly from the general nature of capital as so far developed. This law, and it is the most important law of political economy, is that the rate of profit has a tendency to fall with the progress of capitalist production."14 


1 Karl Marx, Capital: A Critique of Political Economy; vol. 2, chap. 4; p. 196 of Penguin edition.

2 Letter to Ludwig Kugelmann, July 11, 1868.

3 Karl Marx, Capital, vol. 1; chap. 1, note 35; p. 175 of Penguin edition.

4 ibid.; chap. 1, section 3; p. 139 of Penguin edition.

5 Karl Marx, 1973. GrundrisseFoundations of the Critique of Political Economy. New York: Vintage Books, p. 145.

6 Karl Marx, Capital, vol. 1; chap. 2, note 4; p. 181 of Penguin edition.

7 ibid.; p. 92 of Penguin edition.

8 ibid.; chap. 24, section 3; p. 739 of Penguin edition.

9 Karl Marx, Capital, vol. 3, chap. 1; p. 117 of Penguin edition.

10 Raya Dunayevskaya, 2000. Marxism and Freedom: From 1776 until today. Amherst, NY: Humanity Books, p. 141.

11 Karl Marx, Capital, vol. 2, chap. 20, section 8; p. 509 of Penguin edition.

12 Karl Marx, Capital, vol. 3; chap. 9; p. 259 of Penguin edition.

13 ibid., chap. 49; pp. 984-5 of Penguin edition.

14 Economic manuscript of 1861-1863. Karl Marx, 1991. Karl Marx, Frederick Engels: Collected Works, Vol. 33, p. 104. New York: International Publishers.


"Karl Marx I: The Briefest Sketch of my Father’s Life" and "Karl Marx II: An Analysis of my Father’s Chief Work", by Eleanor Marx (1883). Two articles by Karl’s daughter Eleanor, providing a short biography of Karl’s life and an analysis of his theory of value and profit, published shortly after his death in 1883 in Progress.


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