Marx’s Capital at 150

Issue: 156

Nick Moore

A review of Joseph Choonara, A Reader’s Guide to Marx’s Capital (Bookmarks, 2017), £9.99, Fred Moseley, Money and Totality: A Macro-monetary Interpretation of Marx’s Logic in Capital and the end of the Transformation Problem (Haymarket, 2016), £24.99 and Ingo Schmidt and Carlo Fanelli (eds), Reading “Capital” Today: Marx After 150 Years (Pluto Press, 2017), £18.99

Earlier this year Oxfam International reported that just eight men owned as much wealth as the poorest half of the world’s population, that is 3.6 billion people.1 This is a shocking statistic and a much worse situation than Oxfam reported in 2010 where the figure was 388 people rather than the eight in 2017. Among the eight were the expected names of Microsoft founder Bill Gates (net worth: $75 billion), Jeff Bezos, chief executive of Amazon (net worth: $45.2 billion) and Mark Zuckerberg, co-founder of Facebook (net worth: $44.6 billion). Once you get over your rage at this inequality the obvious question is how did this state of affairs arise? You may be tempted to turn to modern day mainstream economics for an explanation. You will be disappointed, although maybe not surprised, to find descriptions, but little by way of adequate explanation.

By contrast, classical political economists such as Adam Smith, David Ricardo and Karl Marx were interested in accounting for the distribution of wealth within society. But it is in Marx that we can find the most persuasive explanation for the massive inequalities in wealth that exist today. Marx built on the works of Smith and Ricardo, in particular by taking their work on the labour theory of value and refashioning it to make it his own. In essence his explanation lies in the production and distribution of value and surplus value within the capitalist system. Hidden within production and veiled by market relations, Marx uncovers capitalist exploitation as the real driver of inequality. He then examines how the fruit of exploitation, surplus value, is shared out among the competing members of the capitalist class.

To understand capitalism there is nothing better than to read what Marx himself wrote in Capital. Unfortunately Capital, volume 1, is not an easy read and only forms the first part of a much larger project that Marx never actually completed. It is in the first volume that you will find Marx’s account of exploitation although you will have to wait until volume 3 to find out how the fruits of exploitation are shared out.

Marx wrote Capital to be read by workers and it is here that Joseph Choonara’s guide can make an impact. The guide developed out of a Capital reading group that Choonara ran at the Bookmarks bookshop in London in 2016-17 and includes a useful structure for running such a group. The 33 chapters in the first volume are grouped into 14 suggested reading group sessions. The guide itself is structured into 33 chapters mirroring the chapters in Capital. This will, I am sure, be helpful to independent readers and groups alike. Choonara acknowledges the limitation of only covering the first volume of Capital:

The three volumes form an interconnected whole and anyone wishing to understand thoroughly Marx’s account of the laws of motion of capitalism must delve into the second and third volumes… Nevertheless, a thorough understanding of the first volume should provide an adequate basis for the later volumes to be explored independently.2

But gaining a thorough understanding of the first volume is no simple matter and Choonara’s guide stands out not just because of its clarity and accessibility but also because of the way he deals with Marx’s method and the crucial concept of value. In Capital Marx does not just offer an analysis of capitalism as an economic system; he also offers a method, a way of understanding the world, that rests firmly on an identification with the working class; Choonara shares this identification.

Value is a difficult but unavoidable concept in Capital. It is helpful to think of value as having three aspects: a substance (abstract labour), a quantity (socially necessary labour time) and a necessary form of appearance (exchange value). The necessary form that value takes is money. Money gives its owner a claim on part of the total labour time of society. Each of these aspects of value: abstract labour, socially necessary labour time and exchange value are difficult and complex concepts in themselves and Choonara leads his reader carefully through difficult terrain.

He notes in the first chapter on the commodity that “‘value’ is not the same as ‘exchange value’… People are often sloppy on this question and they speak purely in terms of ‘use-values’ and ‘exchange-values’. But this is not Marx’s argument”.3 I agree, but would add that this sloppiness has led to whole schools of sloppy thought, such as neo-Ricardian misinterpretations of Marx’s value theory. Although an introductory guide is not the place for an extended discussion of neo-Ricardian errors it is worthwhile pointing out, because such errors are so common and occur in an article in Reading Capital Today, that one of the main errors of the neo-Ricardian school is the identification of value with exchange value where value becomes merely a relative price.

After being taken through the difficult opening chapters of Capital we are ready to understand capitalist exploitation and the way that workers create more value in production than they receive in terms of a wage. The source of value is labour; the worker sells to the capitalist their capacity to work or what Marx calls “labour power”. This unique commodity can create value. It also creates surplus value because it is not necessary for the capitalist to pay in a wage the full value a worker creates. This surplus value is what goes on to form the basis of profit, interest and rent. The law of value in the hands of Marx, as opposed to Smith and Ricardo, is really the law of value and surplus value as it explains capitalist exploitation and the origins of profit. Throughout the text Choonara reminds us of the continuity of Marx’s thought between the young Marx and the old Marx. This does not mean that Marx did not develop his ideas or change his views over time—he was constantly challenging himself intellectually—but it does mean that there is no fundamental discontinuity between the ideas of the young Marx and those he held in his old age.

While the centrepiece of the first volume is value, surplus value and exploitation it is pitched at the level of capital in general. This means that individual workers stand as representatives of the working class as a whole and individual capitalists as representatives of the capitalist class. It is not always clear that Marx’s theory in the first volume is about the total capital and the total surplus value produced in the economy as a whole, because the theory is usually illustrated in terms of an individual capital or an individual worker. However, the individual capitals in Marx’s examples represent the total social capital of the capitalist class as a whole.

Importantly, therefore, Choonara draws our attention to Marx’s important concept of the collective worker. He says:

We also see here the emergence of a key concept in Marxist political economy, that of the “collective worker”. It is this collective producer who is actually the characteristic direct producer of the capitalist mode of production, and not the independent artisan who we might have been encouraged to think about in the opening chapter when Marx, for illustrative purposes, talked of individual spinners or weavers.4

Mainstream economics has no adequate explanation for inequality because it has no theory of profit. Marx’s theory of exploitation is much more persuasive. However, we need to add to the explanation the distribution of surplus value between capitalists that comes about through the formation of a general rate of profit; this Marx does in the third volume of Capital. The theme of the production of surplus value and its distribution being dealt with in different volumes of Capital is taken up by Fred Moseley in his book Money and Totality: A Macro-Monetary Interpretation of Marx’s Logic in Capital and the End of the Transformation Problem.

Since the publication of Capital Marx’s analysis has come under attack both from supporters of mainstream economics and from those who claim to stand in his tradition. The attack has tended to focus on two key areas. The first is what has come to be known as the “transformation problem” and the second concerns the “law of the tendency of the rate of profit to fall”. Although these two issues are linked, Moseley’s book concentrates on the first.

The transformation problem can be simply stated: the first volume of Capital concerns values whereas the third volume deals with prices of production; as values are measured in labour time and prices of production are measured in money there is a failure on Marx’s part to transform values into prices of production. So there is a “dual system” covering the first and the third volumes of Capital. For mainstream economists this has meant that values and labour time are irrelevant and can be ignored, concentrating instead on the movement of prices. But for Marxists it has meant an inconsistency in Marx’s approach that needs to be addressed. What Moseley sets out to show, in an admirably clear way, is that both the mainstream and the Marxist interpretations of the transformation problem are based on a misunderstanding of Capital and that once Marx’s method is understood the transformation problem ceases to exist. If Moseley is correct then we have come to the end of what he describes as a “long 100-year detour” in Marxist theory.

Moseley argues that Marx’s theory is structured according to two main levels of abstraction: the production of surplus value and the distribution of surplus value. The production of surplus value, analysed in volume 1, is theorised prior to the distribution of surplus value which is analysed in volume 3. This means that the total surplus value in the economy as a whole is determined prior to its division into individual parts. The subject of Marx’s theory is a single system, the actual capitalist economy, not the dual system of his critics. The economy is first analysed at the macro level of the total economy, to determine the total amount of surplus value, and then subsequently at the micro level of individual industries, to determine the division of the total surplus value into individual parts.5 The logical framework of Marx’s theory of the production and distribution of surplus value is the circuit of money capital. This circuit can be expressed symbolically as:


Where M stands for initial money capital, C for commodities, P for production, C for the commodities produced in production and M for a greater sum of money than M. This circuit of money requires a logic of sequential determination as M cannot be determined at the same point in time as M; money must be advanced before it can be recovered. The whole point of capitalist production is for capitalists to end up with more money than they started with. The first volume of Capital is devoted to explaining how money becomes more money through the exploitation of workers and the creation of surplus value.

M, the initial money capital advanced, is a combination of constant capital and variable capital and refers to actual quantities of money capital advanced to purchase means of production and labour power. This quantity of money tends:

To be equal to the prices of production of the means of production and means of subsistence, although prices of production cannot be explained in Volume I, because prices of production have to do with the distribution of surplus value, and before the distribution of surplus value can be explained, the total amount of surplus value to be distributed must first be determined—this being the main task of Volume I.6

The crucial point is that the quantities of money capital advanced to purchase means of production and labour power in the capitalist economy are the same in volume 1 and volume 3; they are taken as given. The only difference is that in volume 3 the individual industry quantities of constant capital and variable capital advanced are also taken as given, in addition to the total constant and variable capital that was taken as given in volume 1. In the single system that Marx analyses there is just one set of quantities of constant and variable capital that are first analysed at the aggregate level and then later at the level of individual industries. Constant capital and variable capital are the same actual quantities of money capital at both levels of abstraction. The quantities of money are in reality the prices of production of the constant and variable capital.7 The difference between value in volume 1 and price of production in volume 3 is between the surplus value produced in a given industry and the average rate of profit collected in that industry. Marx’s two aggregate equalities, total value = total price of production and total surplus value = total profit, are always simultaneously true. Marx did not fail to transform the inputs of constant capital from values to prices of production because no transformation is necessary in Marx’s theory. It is worth noting here that market prices are not dealt with in the three volumes of Capital. Market prices are theorised at a lower level of abstraction, one not dealt with in the three volumes of Capital.

A common misinterpretation of volume 1 is that it is only about labour times, not money or prices, and that Marx’s theory deals with money and prices only in volume 3. Quantities of constant and variable capital are seen as referring to quantities of labour embodied in the means of production and means of subsistence. The transformation problem is then conceived as a transformation of individual labour values to individual prices of production. Moseley argues that this is a fundamental misinterpretation of volume 1; it loses sight of the essential monetary nature of capital, where money is the necessary form of appearance of abstract labour. Quantities of money represent and are determined by quantities of labour time.8

The most fundamental aspect of the distribution of surplus value in volume 3 is the equalisation of the rate of profit across industries and the determination of prices of production. Marx had to show how his labour theory of value, unlike Ricardo’s, could be reconciled with the empirical tendency towards an equal rate of profit across industries. The main point of the concept of prices of production is to explain how Marx’s labour theory of value is compatible with this tendency towards equalisation. For Marx, the price of production in each industry is determined by the sum of constant and variable capital consumed in the industry and the average rate of profit for the industry which in turn is determined by the product of the general rate of profit and the total capital invested in the industry.

The general rate of profit is determined prior to prices of production. It is determined at the aggregate level and then presupposed at the level of individual industries. It is as if all of the surplus value goes into a common pool and is then shared out in proportion to the size of the capital invested. The general rate of profit is itself determined by the ratio of the total annual surplus value to the stock of capital invested. In this way the total surplus value produced in the economy as a whole is distributed across individual industries according to the relative proportion of capital invested in each industry and then into industrial profit, commercial profit, interest and rent.

The result of this redistribution of surplus value is that the profit received in each industry is in general not equal to the surplus value produced in that industry: “The average profit included in the price of each commodity…will in general not be equal to the amount of surplus value actually contained in that commodity, and hence the price of production of each commodity will in general not be equal to the value or proportional to the labour time required to produce it”.9

The form of surplus value, profit, at the level of competition obscures the origin of surplus value: unpaid labour time. Each form of surplus value appears to mainstream economists to have its own separate independent source (interest from capital, rent from land, etc). Marx’s theory is necessary to uncover the hidden real source of these forms of surplus value.

The value of commodities is a complicated concept but the necessary form of appearance of value is in terms of prices and money. A key assumption in Marx’s labour theory of value is that new value (money) produced in the current period in the economy as a whole is proportional to the quantity of socially necessary labour time employed in the economy as a whole:10

The individual commodity is treated as an “aliquot part” of the total commodity produced by a given capital, rather than an “autonomous article”, which means that the price of an individual commodity is not determined by the labour time required to produce this commodity (as with simple commodities), but is instead determined as a fractional part of the total price of all the commodities produced by a given capital.11

To support his interpretation Moseley reviews the textual evidence not only in the final published version of Capital but also in the three draft versions: the Grundrisse, the Manuscript of 1861-63 and the Manuscript of 1864-65. There is an impressive amount of textual evidence to support his macro-monetary interpretation. The evidence is strong when it comes to supporting the two levels of abstraction and the prior determination of total surplus value; less so in relation to the initial givens, although it is difficult to see an alternative interpretation. Having said this, in my view, Moseley does tend to want to leave discussion of competition to volume 3 of Capital. However, the situation is more complex as competition plays a role in volume 1, in, for example, the formation of socially necessary labour time and the process of accumulation.

Moseley then turns his attention to other interpretations of the transformation problem. The pre-1945 “solutions” of Ladislaus von Bortkiewicz (1906) and Paul Sweezy (1942) are considered as the key representatives of what Moseley calls the “standard interpretation”. They both share a dual-system approach. In the value system commodities exchange at their values, while in the price system commodities exchange at their prices of production. They both argued that, in his theory of prices of production, Marx assumed that inputs are purchased at their values. But it is impossible for inputs to exchange at values and outputs to exchange at prices of production, because the inputs to some industries are the outputs to others. Bortkiewicz then “corrects” Marx’s theory of prices of production through the use of simultaneous equations. Post-1945 “solutions” begin with the Sraffian “correction” (named after Piero Sraffa) which replaces Marx’s theory with an entirely different theory based on physical quantities and simultaneous determination of input prices, output prices and the rate of profit. As Moseley says, “the cure very definitely kills the patient, even though the patient is not even sick!” The Sraffian correction was followed from the 1980s onwards by Anwar Shaikh’s Iterative Interpretation, the New Interpretation of Duncan Foley and Gérard Duménil, the Temporal Single System Interpretation (TSSI) of Andrew Kliman and Ted McGlone, The Rethinking Marxism Interpretation of Richard Wolff, Bruce Roberts and Antonio Callari and the Organic Composition of Capital Interpretation of Ben Fine and Alfredo Saad-Filho.

Moseley is generous in the way he acknowledges the important contributions that these theories have made in the development of Marxist theory. Of particular interest, however, are his differences with KIiman, who provided a refutation of the alleged inconsistencies in Capital in the path-breaking 2007 book Reclaiming Marx’s Capital.12 The TSSI and the Macro-Monetary interpretation share much in common. Both reject the dual system in favour of a single system interpretation; both also reject simultaneous determination of input prices and output prices basing their approaches, instead, on temporal or sequential determination.

For Moseley, however, there are two important disagreements with the TSSI. First, Moseley argues that prices of production are long-run centre of gravity prices that change only if the productivity of labour or real wages change. The TSSI, on the other hand, interprets prices of production as short-run prices that change from period to period, even though the productivity of labour and wages remain constant. Moseley argues that unless his definition is accepted then total price cannot equal total value and total profit cannot equal total surplus value. This undermines the TSSI and leads to the rate of profit being determined by physical quantities.13 Second, Moseley argues that we should use current costs not historic costs when measuring constant capital used in calculating the rate of profit. If the price of equipment and other means of production change after production starts, then the values of the commodity can be changed to reflect the current cost of means of production, not the original cost. The TSSI view is that historic costs must be used for constant and variable capital after production has commenced, and that anything else is a distortion of Marx’s measure of profitability.

Moseley claims that all other interpretations of the transformation problem ultimately make the same mistake:

They all, for one reason or another, abandon Marx’s theory of the rate of profit and instead determine the rate of profit as it is determined in Sraffian theory—by physical quantities of inputs and outputs—rather than by the surplus labour of workers and the quantities of money capital advanced at the beginning of the circuit of capital. Marx’s theory of total surplus value plays no role in their interpretation of the rate of profit.14

By contrast, Moseley argues, he is able to show that Marx’s theory of the rate of profit is logically consistent and complete.15

To my mind Moseley makes a strong case for the macro-monetary interpretation of Marx’s logic in Capital. Despite there still being issues that need further investigation and ironing out, the broad outline of the macro-monetary interpretation is persuasive.

Moseley concludes by emphasising the impressive explanatory powers of Capital, especially compared to mainstream economic theories. Marx’s theory is able to explain many features of capitalist society:

the necessity of money as a general equivalent of commodities, conflicts between capitalist and workers over wages, over the length of the working day, and over the intensity of workers’ labour, endogenous technical change, increasing concentration of capital, increasing income inequality, trends and fluctuations in the rate of profit over time and endogenous causes of economic crises.16

It is an impressive list. One of the endorsements on the back cover of the book says that “this book may well overcome the obsession with the transformation problem once and for all, moving debates about Marx’s theory onto more fruitful paths”. Let us hope this turns out to be the case.

In contrast to the first two books, which focus on Capital, Pluto Press have published a collection of ten wide-ranging essays in Reading Capital Today that reflect on Capital’s legacy. The sheer scope of the book, which includes essays on value, ecology, gender, class struggle, labour and communism make the job of the reviewer difficult. It is impossible, in a short review, to give credit where credit is due and to take up all the points that provoke discussion or disagreement. Instead I will comment on a few of the chapters that attracted my attention.

In one of the articles Prabhat Patnaik argues that the Labour Theory of Value (LTV) is often assumed to explain the relative prices between numerous non-monetary commodities in terms of the money commodity. For Patnaik this interpretation is largely erroneous. In his view, the LTV is largely concerned with the relative exchange ratio between the money commodity, on the one hand, and the world of non-money commodities taken together, on the other. The LTV holds that there is a price determining meta-rule without which even the relative prices of commodities cannot be determined. For Patnaik the LTV is concerned primarily with the investigation of this meta-rule. Well, with respect, I disagree. In my view the LTV in the hands of Marx is a theory of value and surplus value; it is concerned primarily with explaining capitalist exploitation and the creation of value and surplus value and not explaining relative exchange ratios. The meta-rules, if we want to call them that, in Capital are total value = total price and total surplus value = total profit. Patnaik also appears to believe that a fundamental conflict in capitalism revealed by the LTV is that rising wages will squeeze profits. There is no mention of the tendency of the rate of profit to fall. Patnaik presents his essay as a break with a Ricardian interpretation of value, which in some ways it is. He accepts that commodities priced in money reflect the socially necessary labour time involved in the whole economy, but the focus on using the LTV to explain relative exchange ratios and a profit squeeze theory of crisis shows that the break is only partial at best.

There is an interesting and welcome chapter by William A Pelz on the inter-relationship between Capital and the First International. Marx was no ivory tower academic. During the writing of Capital Marx continued to be actively involved in building working class political organisation and in particular the International Workingmen’s Association which later became known as the First International. Marx wanted Capital to be read, in particular by members of the International. In a letter to Ludwig Kugelmann, Marx asks him to pressure the German Socialist leader Wilhelm Liebknecht to “do his duty to draw attention to my book at workers’ meetings”. Through the First International Marx was involved in providing solidarity with the north against slavery in the American Civil War, with Irish workers who were fighting for national self-determination on the basis that “no nation that enslaves another can be free” and with the Paris Commune in 1871. This essay emphasises the importance of both Capital and the First International to Marx’s struggle to win workers to the idea of internationalism and working class self-activity.

In an interesting and thought provoking essay, Peter Gose and Justin Paulson examine the various laws of motion identified in Capital. The authors distinguish between six meanings of the word “law” in Capital. So, for example, there is law as simple causality or natural law, law as logical necessity, law as historically conditioned necessity and law as dialectical tendency as in the law of the tendency of the rate of profit to fall. This is fertile ground for further exploration. In a chapter entitled “Capital and the Labour Process”, Paul Thompson and Chris Smith critique theories of so-called cognitive capitalism and show the continuing relevance of Marx’s writings on the labour process. It is a timely and useful critique of arguments popularised by Paul Mason in his book PostCapitalism. Reading Capital Today certainly contains some interesting and thought provoking essays, but the wide-ranging nature of the contributions, in my view, detracts from, rather than enhances, the book.

In recent years there has been a revival of interest in Marx’s writings created in part by the anti-capitalist movement of the late 1990s, the economic crisis of 2007 and the following long depression. Whenever you get a crisis within the system the old ideas of explaining society are thrown into question and there is a search for ways of explaining the world as people are experiencing it. These three books all contribute in their own way to that revival of interest in Marx’s Capital 150 years after it was originally published.

Nick Moore is a long-standing member of the SWP living in north London. He is a teacher of Mathematics at a Sixth Form College.


1 Kramers, 2017.

2 Choonara, 2017, p10.

3 Choonara, 2017, p22.

4 Choonara, 2017, p103.

5 What Moseley means here by macro and micro is very different from what is meant in mainstream economics. In Marx macroeconomics and microeconomics concern different levels of abstraction; macro is about the production of total surplus value and total profit whereas micro is about the division of the total surplus into individual parts. In mainstream economics macroeconomics is the study of whole economic systems with no theory of profit and microeconomics concerns the behaviour of individual consumers and firms.

6 Moseley, 2016, p8.

7 This is not always clear in volume 1 of Capital as Marx cannot explain prices of production until he gets to volume 3 and the general rate of profit; however, value can only express itself in its money form which is price.

8 Moseley argues that the commodity money has neither a value nor a price of production because price is an objective measure of the value of commodities and gold cannot be an objective measure of its own value so that no transformation is possible. Further he argues that surplus value cannot be redistributed in or out of the gold industry because surplus value in the gold industry is a definite quantity of gold, without a value or a price of production. The profit received in the gold industry is always equal to the surplus value produced in that industry. As there is no redistribution of surplus value in or out of the gold industry, the price of production of all other commodities cannot be affected. The total price of all other commodities equals total value no matter what the composition of capital in the gold industry. For a very clear explanation and excellent discussion of this see Moseley, 2016, chapter 5, “Money Has No Price: Marx’s Theory of Money and the Transformation Problem”.

9 Moseley, 2016, p94.

10 This proportionality factor has been called the monetary expression of labour time or the MELT for short. It is the money value produced per hour of abstract labour and converts a quantity of abstract labour in all industries into a quantity of money produced by current labour. The MELT has to do with the production of value, not the distribution of value and surplus value. It is a puzzle to me why there is no discussion of the MELT, or a similar concept, in Marx’s writings. Why did he leave this crucial variable to be assumed?

11 Moseley, 2016, p141.

12 Kliman, 2006.

13 Kliman responds to this accusation by arguing that Moseley’s prices of production can also change even if the productivity of labour and wages do not. He also argues that there is no quantitative difference between Moseley’s equilibrium rate of profit and the equilibrium rate of profit calculated using physical quantities. Kliman’s criticisms of Moseley can be found at and Moseley’s replies at

14 Moseley, 2016, p394.

15 I am not yet convinced about Moseley’s definition of the organic composition of capital (OCC). He argues the value composition of capital (VCC) is defined as the ratio of constant capital to variable capital in value (money) terms and that the OCC is defined as the VCC with the additional stipulation that the variable capital in the denominator serves as an index of the number of workers employed.

16 Moseley, 2016, p396.


Choonara, Joseph, 2017, A Reader’s Guide to Marx’s Capital (Bookmarks).

Kliman, Andrew, 2006, Reclaiming Marx’s “Capital”: A Refutation of the Myth of Inconsistency (Lexington Books).

Kramers, Melanie, 2017, “Eight People Own Same Wealth as Half the World”, Oxfam (16 January),

Moseley, Fred, 2016, Money and Totality: A Macro-monetary Interpretation of Marx’s Logic in Capital and the End of the Transformation Problem (Haymarket).

Schmidt, Ingo, and Carlo Fanelli (eds), 2017, Reading “Capital” Today: Marx After 150 Years (Pluto Press).