Anti-Capitalist Chronicles: Rate and Mass of Growth




Direct Download 

[S1 E13]

Prof. Harvey talks about rate of growth vs. mass of growth, and argues that the latter, often ignored, is actually more significant and deserves careful consideration and analysis. 

This podcast is free, but if you are able and willing, please consider supporting the show on Patreon so that we can continue to make and keep content like this available to all! There are a few other fun perks for patrons as well!  Visit


This transcript has been edited for clarity. 


This is David Harvey, and you're listening to the Anti-Capitalist Chronicles: a podcast that looks at capitalism through a Marxist lens. This podcast is made possible by Democracy At Work.

The first time I taught Marx's Capital was back around 1970, and I taught it every year after that for many many years, but I haven't taught it for about the last five/six years. This year I'm back doing Volume I again, and it's always interesting to come back to that text because the circumstances in which I was teaching it in 1970 are very different from the circumstances of 2019.

For example, the last time, the last class was really beginning on looking at the long chapter in Capital about machinery and modern industry. And in it, Marx comments on how capital, for many years, struggled to develop a technology, which was appropriate to its own development on the basis of late feudal technologies, and particular labor skills and organization of cooperation and the like. And the preceding chapter talks about the manufacturing system, which was in place from about 1650 onwards, up until the Industrial Revolution that led to the creation of the factory system.

So when I was teaching in 1970, we all went through the manufacturing materials as if: "Well, that's historical. Let's get to the real stuff," which is stuff about the factory system, and then you get this fantastic account that Marx makes of what happened with factory labor and how the factory system spread; and how the factory system was not just one machine, it was about a system of machines: machines producing machines, machine technology everywhere, generic forms of technology, like the steam engine, that could be applied in all sorts of different areas. So Marx has this wonderful chapter about this with a lot of materials, of course, called from the factory inspectors reports about conditions of labor, which were accompanying the spread of this factory system, so it seemed like the factory system was what was truly relevant.

But this time through I was thinking to myself, "a lot of young people these days probably wouldn't know very much about what a factory looks like-- they probably wouldn't know a factory laborer. They wouldn't know a unionized factory laborer," which in the 1970's most households would have had some contact with that sort of world and some understanding of it. So in our part of the world, the factory system has disappeared, and then you ask the question, "what has replaced it?"

And what intrigued me this time was that a lot of the things that were being said in the chapter on manufacturing actually resonated as being rather similar to some of the things we are now looking at: precarious labor; the cost of shifting of skills; the attempt by those who command skills to monopolize them and to use them in some way to try to isolate for themselves a privileged position in a workforce; a battle against that by capital, which tries always to proletarianize them so that the monopoly skill disappears.

So in this regard, I was thinking, "How strange?" because there is an element in Marxist thinking which is teleological-- that is, that it seems to be postulated on the idea that there is a trajectory, and that trajectory is unfolding inexorably, and we're moving towards some point. So if you said, "Well, actually things are moving backwards" then this would be very odd from a Marxist perspective.

But I always had some problems with the way in which Marx sets up that teleological angle. He's not deeply committed to it, but it crops up again and again in little ways because even in his time, it was pretty clear that there were many aspects of society where the labor process was not of the factory sort; that non-factory labor organization was often the basis for a factory-form of organization, and that this even continued into what we would consider the "Fordist Period" of a factory labor. For instance, the Japanese automobile industry: very large corporations and factory labor at one level, but on the other hand, when you looked at the supply of all the parts to the auto industry, it was all being done in small workshops with skilled labor and the like.

So I'd always thought that maybe Marx is not quite right in suggesting that factory system would drive out these other forms of labor. And this was also the case when I started to look at labor processes in Second Empire Paris. And instead of seeing the large factories coming in (there were, of course, some that did come in), what you saw was a proliferation, an increase in specific divisions of labor. For instance, around 1850, Paris had a sort of significant artificial flower industry making artificial roses and artificial flowers of all kinds, and by the time you get to about 1855, they've started to specialize in particular flowers. So here you would find artificial roses, and another place you would find artificial daisies, and another place you find other artificial flowers. By the time we get to the 1860's, you find, actually, some of the workshop are specializing in petal production, some of them are specializing in the flower production, some of them are specializing in the leaves. So, in fact, in Second Empire Paris, you don't see a move towards factory labor, but you see an increasing dispersal of the division of labor across these many small enterprises, which were sort of becoming more decentralized rather than centralized.

So the industrial form has always been something which is in motion, and capital is always, in a way, acted to say, "Well, OK; there are different kinds of labor processes and different forms of organization. I'm going to go for the form which is most appropriate and most amenable to the particular style of exploitation in which I am engaged." And one of the reasons why you get this decentralization of labor processes in the neoliberal period is because workers in the factories were organized and unionized. And in order to avoid that, capital thought they'd go to an alternative labor process, which could not be so easily organized.
So all of this is going through my mind when I'm teaching these two chapters on the machinery system and the factory system. And thinking about how capital moves from kind of one structure of exploitation to another, and that if labor becomes very strongly empowered (as it had in the 18th century) through the monopolization of certain skills, then capital would try to break that power, and one of the ways to break it was through the factory system, which, in effect, devalued labor power and de-skilled labor power. But by the time you get to 1970, exactly the opposite problem was there. Labor was employed in the large factories and was well-organized and was exercised in considerable power vis-a-vis capital. So the best in capital could do is to go for another labor system that was decentralized, which couldn't challenge capital in the same way.

And so what we've seen is a lot of dispersal of industrial activity: horizontal forms of organization rather than hierarchical forms of organization. And incidentally, I find it very interesting that that is the predominant move that capital made, but it also turns out that this is the dominant move that has occurred in Left organizing. The Left organizing wants to be decentralized, and it wants to be horizontal, not hierarchical; and the way that, say, the "Fordist Labor Process" was regulated through labor.

Now, all of that points to a very interesting way in which when you read Capital, ideas come to you about what's going on; questions get posed, and these questions are rather critical to look at today. And again, I'm going to use a little example from a reading of Marx to illustrate this point.

There's an interesting feature of any economic system. By and large, economists and policy makers and politicians and financial press and the like are very concerned about the rate of growth. And the rate of growth then becomes absolutely critical for policymaking. But there's another aspect to growth which I think is significant and important but which is largely neglected, and that is the mass of the growth that exists; how much growth has there been, and what are we going to do with the mass that is produced?

Now, this came up to me the other day because I was reading my favorite financial journal, which is the Financial Times, and it reported on a discussion of the Bank of England's study of whether quantitative easing had contributed to inequality. And this is something which I probably mentioned before, but it was a very interesting study because what it showed was that, on average, the bottom 10% of the population in Britain received about [..] £3,000 in aggregate over the period 2007 to about 2010, whereas the very rich (the top 1%) received £325,000 over that period. Now, when you look at that, you would immediately say (as I would say), "Well this shows how quantitative easing benefited the wealthy [more] than it did the poor." And, actually, this was a widespread claim, and I even was surprised to find that the British Prime Minister Theresa May complained that this was what had happened. The report, however, said: "No, that's not the case". That when you look at the rate of change, the £3,000 that the bottom 10% received was a greater proportionate increase than the £325,000 pounds of the very rich which means that actually quantitative easing benefited the poor more than it benefited the rich. And then the report went on to say, "You see? People [...] don't understand [...] properly how to read these things in a way which really tells us what is actually happening."

Now, my point here is that £3000 over six years it's less than £1 a week for the very poor. Now, that doesn't exactly increase anybody's economic and political power, and it doesn't do them much good. I mean, it's a fairly trivial amount, actually. So even though it was proportionately greater, the quantity was largely irrelevant to their lives, whereas for the top 10%, £325,000 is quite relevant, although they will probably (given the amount of money they've already got stashed away) also consider it rather trivial, but it seems to me this a significant contribution to the mass of the wealth that they control and the mass of the wealth that they can use for political, economic, and other purposes to sustain their power.

Now, what this means is that, in effect, a low rate can produce a very large mass if there's enough of it. In other words, put it this way: would you rather have a 10% rate of return on $100 or a 5% rate of return on $10M? Now, clearly the 5% rate of return on $10M is gonna outweigh, immensely, the rate. So we should be thinking more seriously about the mass as a way in which inequality can be developed at the same time as it can appear as if inequality is being reduced. Now, there are some areas in which this sort of question becomes significant. For example, outside of the normal channels, take something like the issue of global warming. While it's clearly important that we intervene in the rate of increase of carbon emissions, (and that is a very important political question) there is another political question, which is, "What do we do about the mass of concentration of greenhouse gases currently already in the atmosphere?" That, it seems to me, is the immediate severe problem that we should be looking at and that looking simply at the rate of increase is not going to help you with that. So there are situations in which the mass becomes very much more significant.

Now, I mention all of this because when you go to the financial press and all the rest of it, you find very little discussion of the mass and the quantity and the consequences of the mass. And interestingly, amongst Marxist economists there's also a fetishization of the rate and very little consideration in any detail of the mass, and this comes out very much with a famous discussion that Marx had about the falling rate of profit. Now, this is something that is proposed in Volume III of Capital. It was something that became a very important statement that really framed a lot of Marxist thinking about crisis formation, which is that there is a tendency of the rate of profit to fall; that that tendency is actually embedded within the capitalist dynamic because it's about the application of labour saving innovations in the labour process; and that application comes out of competition between individual capitalist firms for what Marx called "relative surplus-value"-- which really means a firm with a superior technology is always in a position to sell at the social average while it's producing below the social average and, therefore, get an excess profit. And the competition for that excess profit drives technological innovation. If I have a superior technology, I get the extra profit, and you don't. So what you do is you innovate, and trump my superior technology by getting a super superior technology of your own, and then I have to catch up to you.

So part of the dynamism of capital is this competition for a technological advantage, but the competition for technological advantage is constantly economizing on labor and raising the productivity of labour. And by raising the productivity of labour, you are, of course, reducing the value which is absolutely an aggregate available. So in a sense, that competition per "relative surplus-value" produces a class consequence, which is that there's less value and surplus value to go around, and there is, therefore, this tendency for the rate of profit to fall-- that was the argument that is being made.

Now, this argument is laid out in Volume III of Capital, and the Volume III of Capital most of us use is the one that Engles edited, and Engles edited in a certain way. And it's important to do to acknowledge the tremendous work that Engles did but of course he couldn't do that tremendous work without shaping some things which may or may not have been consistent with Marx's intent. And that problem comes up in the text in the following way: Marx wrote about this problem of the falling rate of profit in one long chapter, which is really a notebook, and it's not even shaped as a chapter; it's just a sort of a continuous argument about how to understand this phenomenon that he's focusing on.

What he does is to lay out the following profit argument that I just put forth, and he's very pleased with himself that he's done it, and then what he does is that he starts to say, "Well, this is a starting point for us to look at some more very general questions." Engles divided this chapter into three component parts: the first is called "The Falling Rate of Profit", second is "Countervailing Influences", and the third is "Contradictions in the Law", and Engles made it seem as if the law was the central thing and everything else was modifications of the law in practice. So you come out of it thinking "The law is really what it's about", but actually, when you're reading the notebooks, it appears that Marx has something else to say, and I'm just going to read you some of the comments that come from these these notebooks because they are really fascinating to follow.

In effect, far from being a countervailing force, the increasing mass that is involved here is in fact part of a joint product. Marx puts it this way: that within the capitalist mode of production, [...] he says, "Despite the enormous decline in the general rate of profit, the number of workers employed by capital, i.e., the absolute mass of labour set in motion by it, hence the absolute mass of the surplus labor absorbed, hence the mass of surplus value it produces, hence the absolute magnitude or mass of the profit produced by it; that mass can, therefore, grow and progressively so, despite the progressive fall in the rate of profit. This not only can, but must be the case, of the basis for the capitalist mode of production."

So, far from being a countervailing force as Engles entitled, this outcome is a joint product. "The same laws," says Marx, "produce both a growing absolute mass of profit, which the social capital appropriates and a falling rate of profit." And now, this poses Marx with a problem: "How then should we present this double-edged law..." So it's not a law-- it's a double-edged law. "...of a decline in the rate of profit coupled with a simultaneous increase in the absolute mass of profit arising from the same causes?" This is like the top 1% getting a lot more in the way of value. So how are we going to present this? "The same reasons", he said, "that produce an absolute decline in surplus value and, hence, profit bring about a growth in the mass of the surplus labor, surplus value, and, therefore, profit produced and appropriated by the social capital. How", he says, "can this be explained? What is it dependent on? On what conditions are involved in this apparent contradiction?"

So what Marx, himself, is saying is that we have here a very central contradiction: that the rate of profit may be falling but the mass of profit may be rising, and under those conditions that then tells us something very critical about the nature of a capitalist mode of production. And you could actually turn this to reverse. A couple of weeks back, was a little article again in the Financial Times in which it said, "There's been a falling rate of growth in China over the last six months or so, and there's a great deal of nervousness in financial markets. This is absolutely going to cause some real serious global problems." So if you [asked] "What [is] a potential source of instability in the global capitalist system right now?", many people would say, "Well, China is a potential source of serious recession, maybe even depression", but it seems the Chinese have not been terribly concerned about it.

And so somebody who'd been in China was asking people, "Why are you not concerned about this?", and the answer came back was very easy. It was this: that actually right now what the Chinese were concerned about was labour absorption. They wanted to create 10 million jobs a year-- 10 million. And that's of course a lot compared to 300,000 in this country. We're talking a lot of jobs to be created in any one year, but the Chinese could could actually generate 10 million jobs on a much lower rate of growth than was possible back in 1990, when they had a very high rate of growth around 12% or more, but it was still very hard out of 12% to generate 10 million jobs, but with the aim of 10 million jobs right now they could go for a 6% rate of growth and have no trouble, and they could get 10 million jobs. And so as far as they were concerned as policymakers they got the number of jobs they wanted because they now had a sufficient base where a lower rate of growth could produce the 10 million jobs they needed.

So they were not bothered, and, therefore, they were not taking action to change the growth rate because they didn't need to give them their policy objectives. And here, too, we see a situation in which you would expect the larger the economy the lower the growth rate would have to be, but it's fascinating to see Trump going around saying, "We've got to have 4% growth!", and he swore when he was on his way into power that, "Yeah we'll soon have 4% growth". Of course, we have low growth rates, but we haven't seen a great deal of disruption, and that says something about the fact that some of the things which are required and needed society are being supplied with only a very modest rate of growth. A high rate of growth would pose another kind of problem.

For example, if you doubled the output of automobiles because of the productivity in the automotive industry... you're going to have twice the number of automobiles on the street. And if you did that globally, what would that do to global warming? So in other words, we really have to take very seriously the question of the mass. We can take it in a positive way as in the Chinese case of absorbing labor or in the negative way, which would be contributing to global warming because even though the growth rate is low, the growth rate is low on an automobile industry that's very large and that growth rate applies to the automobile industry; that means a vast number of new cars on the road, which increases the mass of carbon emissions, which... the mass becomes worse and worse!

So we ought to be really very concerned about the relationship between rates and masses, which is not generally considered in the in the literature. When it is, as in the Bank of England case, it turns out that, by and large, working on rates instead of working on masses, it's very convenient for the upper classes; that there was a class bias (in the way in which economists and all the rest of it are approaching the world) in which, well, we are concerned about the rate, and you can have a higher rate, and will tell you you're better off but in terms of the mass, it's one cup of coffee a week, whereas I'm gonna get a good vacation in the Bahamas. So this is the world, it seems to me, that we need to to be very aware of.

Thank you for joining me today. You've been listening to David Harvey's Anti-Capitalist Chronicles: a Democracy At Work production. A special thank you to the wonderful Patreon community for supporting this project.


Transcript by Victor Vulovic

The original content of this program is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 United States License. Please attribute legal copies of this work to Some of the work(s) that this program incorporates, however, may be separately licensed. For further information or additional permissions, contact us.


Customized by

Longleaf Digital