CHAPTER VI.
THE CAPITALIST CYCLE OF PRODUCTION
AND ITS BASIC ELEMENTS.
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As we have seen in the previous chapter, the appropriation of land was one of the essential conditions for the development of the capitalist system. All the land became the property of a minority and of the Crown. This appropriation was the main origin of the accumulation of capital. The majority of people were left without any land therefore they were left without the means of supporting themselves. They had to find employment for wages wherever they could find it.
In theory it could be said that Capitalism is a socioeconomic system in which those people who own capital, by employing the labour of those who do not, produce commodities and services which they sell for a profit in the market of Human society.
The capitalists compete against one another in the production and in the sale of the commodities. Those who are successful in selling their products will make a profit which they may use as they please. But, to become more competitive and to survive in the market, they must use a part of their profits to increase their working capital to improve production.
Capital, to produce any profit must be invested. Idle capital is not worth any more than the ink on a ledger.
This seems to be a simplistic explanation of the capitalist system of production; but, in reality, the most complex situation, when broken down in its component parts, can be reduced to similar simple terms. The reason is that every situation derives from the same simple laws that we will try to examine in this part of the discussion. Of course, there are different forms of Capitalism in the World. These have been determined by different environments and different historical and cultural backgrounds; but if we keep these factors in mind, we will find that the laws and mechanism of the system are much the same.
Let's look separately at the different elements in the spiral of capitalist production.
Capital is the first element, end we have discussed some of its main aspects in the previous chapter.
Then we have labour power, without which capital cannot live. In the process of capitalist production, labour is considered like any other commodity; but it is also a Human being who can be forced to the labour market only by incentives or by necessity. This is the main reason why we cannot separate the study of economics from the study of History and sociology, and this is why our present 'dry rationalist' economic experts in the service of our blindly selfish business class are making such a mess of our society.
Another element is the competition between capitalists to lower the cost of production. This is the dynamic element which does not allow them to stop or rest in their expansion, their search for new methods of production and new markets; Continuous expansion and development that in the end must eventually lead to saturation.
Then we have the commodities and labour markets.
And, finally, we have profit. This is the most important element for the capitalists in the spiral of production. It is the main motivation and purpose of all their activities, and without profit most capitalists would rather let society to disintegrate; all their patriotism would quickly evaporate.
Each one of these elements has its own particular nature and force.
Capital and private property contain the essence of capitalist strength. In labour is deep rooted the antagonism of alienation, and the latent power of the majority of society. Competition is the dynamic spring of expansion and the force which determines both the creation and the destruction of wealth. In individual personal profit are the seeds of ruthlessness, greed and short sightedness. The interaction of these forces in the process of production and in the markets of society produces definite trends and contradictions which are natural to the system. These forces direct the development of capitalist economy and society; they cannot be controlled or suppressed for long. They always manage to surface and direct the course of the economy, independently from the wishes of society in general or of those who seem to be in control.
We could say that in the capitalist system there are elements that could be considered to be almost mechanical: these function in a predictable way. They form the main part of the mechanism of the system with definite laws and logic, the market and competition are two such elements.
Profit and labour power are different from them in the sense that they are closely related to Human beings. In this respect they tend to follow a twisted path: their reactions are more difficult to foresee because, although they are motivated by the instinct of survival, they are affected by our Human passions and our ignorance, with all their variations of prejudice and fear. Therefore, we should start by examining the features of the capitalist market, the stage towards which all activities gravitate.