Value and Surplus through a Neoliberal Lens: notes towards a new understanding of Marxist economics

Neil Faulkner and Phil Hearse argue that the realities of neoliberal capitalism – of globalised, financialised monopoly-capitalism – necessitate a rethink of basic economic theory.



Capitalism has been transformed in the neoliberal era. In the 45 years since 1975, the process of global capital accumulation has changed in four fundamental ways. First, there has been a massive shift in bulk production from the Global North to the slum mega-cities of the Global South. Second, there has been a massive shift in the locus of exploitation from the point of production to the point of consumption and social reproduction, especially, but far from exclusively, in the Global North. Third, financialised transnational corporations have been completely hegemonic in global processes of accumulation. Fourth, capitalism’s long-term crisis of over-accumulation and under-consumption has found expression in unprecedented levels of government, corporate, and household debt, amounting to a ‘permanent debt economy’, and in various, exceptionally parasitic forms of accumulation.

The empirical realities of neoliberal capitalism call into question one of the central tenets of classical Marxism, namely that surplus-value is created in the production process itself, and that it therefore represents a direct and immediate share in newly-created value; and further to this, that other forms of appropriation, like tax, rent, interest, monopoly prices, etc must be understood as shares in already-existing surplus-value.

Viewed from the vantage-point of early 21st century neoliberal capitalism, where surplus is appropriated at numerous points in overall circuits of capital, this perspective seems untenable. We believe it arises from two theoretical errors: a) Marx’s conflation of the theory of value with the laws of motion (a conflation of two different registers of activity and levels of abstraction); and b) Marx’s failure to analyse adequately the proletarian as both worker and consumer.

This paper is an attempt to rectify these two errors. We stand on the shoulders of a giant. Marx was writing when industrial capitalism was in its infancy, when the factory system was less than a century old; and he was engaged in a polemical struggle with the classical bourgeois economists and their latter-day vulgarisers. Despite his astonishing insight and prescience, he did not have a crystal-ball; his theoretical conclusions were necessarily based on empirical research into the workings of British capitalism in the mid-Victorian era. He identified trends and made predictions, many of which have since been confirmed.

But new realities, giving rise to new observations, have, in our view, now reached that critical point where an existing theoretical paradigm disintegrates and must be replaced with an alternative explanatory model. We must therefore revise Marx’s theory of surplus-value creation if we are to provide firm grounding for: a) the political economy of neoliberal capitalism; and b) an understanding of revolutionary agency in the early 21st century.

This is the first of two planned papers. The second (in preparation) will deal with the question of revolutionary agency. Here we set out our economic theory. The paper is in two parts. In the first, we offer an overview of the empirical evidence that has, in our view, undermined Marx’s argument. In the second, we offer a basic theoretical critique and exposition. The core of our theoretical case is as follows.

Value and value-creation are conceptually distinct from surplus and surplus-appropriation. Value is created by collective human labour and takes the form of total social product. It is characteristic of all human societies that they produce value; it is, indeed, part of the definition of our species, homo sapiens, that we engage in value-producing collective social labour.

Surplus, on the other hand, cannot be created; it is simply a share in value, and therefore can only be appropriated. Marx’s term ‘surplus-value’ encodes a false conflation. Either it is meaningless, mere tautology, if Marx simply means ‘value’, or it is false, if he means that two distinct elements, ‘value’ and ‘surplus-value’, are created simultaneously in the production process.

The core point must be underlined. Value is created by collective human labour and takes the form of total social product. Surplus is appropriated (not created) at different points in circuits of capital through production, distribution, and exchange. Value-creation is explained by the theory of value. Surplus-appropriation is explained by the laws of motion of capital accumulation.

The rest of this paper sets out our reasons for having reached this conclusion.

Part I

Work, consumption, and profit: an empirical survey

Going Global: exploitation at the point of production

During the neoliberal era, the global workforce has roughly trebled in size from 1.2 billion to 3.5 billion people. Of these, the great majority belong to the working class, of whom around one-third is in relatively secure employment, one-third is in precarious employment, and one-third is ‘surplus’, either unemployed or engaged in marginal work in the informal sector. Virtually the whole of the increase in the size of the international working class is located in the Global South, and the relative stagnation of production in the Global North has been matched by huge increases in production in the Global South.

On a world scale, the Global South’s share of total industrial employment has risen very dramatically in the neoliberal era, from 51% in 1980 to 73% in 2008.[1] This has created an impression of ‘BRIIC’, ‘Asian Tiger’, and other newly-developing Global South economies ‘overtaking’ the old industrial economies of the Global North. What is actually happening in terms of global wealth distribution is more complex.

Giant transnational corporations (still mainly centred in the Global North) are completely dominant by virtue of their control over finance, technology, knowledge, supply-chains, and markets. They have outsourced production to a labyrinthine network of sub-contractors, mainly located in the Global South, mainly paying wages way below value. As products move through global supply-chains, profit is creamed off at every stage, and when they reach their final market, there is no remotely rational relationship between factory price and sale price. We have a global valorisation process based on the super-exploitation of a 3-billion-strong global working class in which the bulk of the surplus is appropriated not by the local subcontractors who operate production facilities but by the giant transnational corporations that control the worldwide networks of distribution and exchange. As Cédric Durand explains in Fictitious Capital (2017):

Since the 1990s, the higher profits received by shareholders have increasingly come from the rapid capital accumulation in emerging countries and the profits this generates. Conversely, firms are turning away from investment in the countries of the Global North. This explains their meagre results in terms of growth, employment, and wages.[2]

Several things are noteworthy here. First, there is a massive net transfer of value from the Global South to the Global North. This is true despite: a) the growing importance of transnational corporations originating in the Global South; b) the growing wealth of both the capitalist class and the middle class in the Global South; c) the fact that transnational corporations are increasingly geographically ‘de-anchored’ (thus ‘transnational’ as opposed to ‘multinational’); and d) the fact that capital itself is increasingly financialised and fluid on a global scale.[3]

Second, the effective internationalisation of the ‘reserve army of labour’ – and the huge increase in its size – has had, and continues to have, a sharply depressing effect on wages, both individual and social, in the Global North. Not only is productive investment stagnant, but there is a marked shift from high-wage to low-wage employment.

Third – and most importantly for the argument here – we have a global process of surplus accumulation in which the bulk of the surplus is not appropriated at the point of production. We have countless examples of transnational corporations that are scooping up the bulk of the profit without producing any material goods at all. Take Apple’s iPhones, iPads, and Macs as an example.

Apple’s global sales have quadrupled in the last ten years, hitting $260 billion in 2019, earning the company $55 billion in profit that year. But Apple itself manufactures nothing. All material production is outsourced. And there is a huge gap between manufacturing costs and retail prices. Take the iPhone 6s Plus. The manufacturing process involved around 45 different companies in 10 different countries producing some 23 component parts. The total cost of manufacture was $236 per unit; but the iPhone retailed at $749.[4]

There are many other examples of ‘hollow corporations’ (that produce nothing themselves) earning super-profits by outsourcing production to the Global South. In 1996, a pair of Nike basketball shoes retailing at $149.50 in the States cost around $1 to manufacture, using 50 parts made in five countries (China, Indonesia, South Korea, Thailand, and Vietnam). In the same year, the total labour cost of a Barbie doll assembled in China from parts imported from Taiwan, Japan, and the United States amounted to just 3.5% of the $9.99 retail price. In 2004, to take another random illustration, Chinese workers’ wages accounted for only 1.66% of the retail price of a pair of Puma trainers.[5]

Wages and conditions in the sweatshops of the Global South today are comparable in all respects with 1840s Manchester, as described by Engels in his Condition of the Working Class in England. Wages are often below subsistence level. Labour may last as long as 16 hours a day. Workers are accommodated on narrow bunks in tiny dorms, perhaps 12 to a room. The work is typically mindless, repetitive, exhausting, and dangerous, with pay stoppages for chatting and other minor infringements, and bullying, including physical and sexual abuse, widespread.

This disjuncture – between (outsourced) production and (transnational) surplus appropriation – has been glossed as the ‘knowledge economy’ or ‘cognitive capitalism’, where the most valuable assets are intangible things like ‘R&D potential, portfolios of patents, organisation, lists of suppliers and clients, and brand image’.[6] But this captures only part of what is happening. Durand argues – surely correctly – that transnational corporate giants are appropriating surplus profits from their sub-contractors in an unequal exchange; and that this is a dominant feature of modern capitalism.[7] If this is true, it is clearly not the case that surplus-value appropriation can be understood at the level of the individual factory; it has to be analysed at the level of global circuits of capital.

Parasitic Accumulation: exploitation at the point of consumption

To understand the growth of surplus appropriation at the point of consumption, we can start with the measures taken by Thatcher and Reagan in the 1980s to enable the banks to create huge amounts of new money. In this section, we take Britain as our main case-study, the US as a supporting example, and make only occasional reference to the wider world. Needless to say, our intention is to describe global trends through specific examples.

Thatcher’s second (1983) government de-regulated the City of London (with the ‘Big Bang’ of 1986), sharply reducing the proportion of capital that banks had to hold in reserve against lending. Money loaned by banks is typically ‘new’ money, i.e. money they do not actually they have in their accounts but create with a few computer keystrokes. De-regulation led to an orgy of consumer and company borrowing, enabling affluent middle-class lifestyles and a huge housing bubble in the so-called ‘yuppie’ boom of the 1980s and early 1990s.[8] This in turn, in the late 1990s, led to the bubble (and crash), as investment poured into computer and internet companies. In a similar way, in the United States, ‘Reaganomics’ involved huge cuts in corporate taxes and a bank-lending boom that fuelled first the dot-com bubble, then the housing bubble that culminated in the 2008 crash.

Financialisation was intensified by privatisation – Thatcher’s other flagship policy. Public utilities were turned into cash cows for finance-capital, as charges to consumers went through the roof. The sale of social housing dramatically increased private home-ownership, but thereby saddled working-class families with mortgage debt; and in the long run it massively increased the private rental sector, creating another kind of revenue flow to finance-capital.

During the yuppie boom, ownership of credit cards – instruments with exceptionally high rates of interest – sky-rocketed. Ballooning household debt sustained a neoliberal consumer boom and became a source of profit in itself. A society with increasing levels of disposable income in its upper and middling layers was milked by the rising cost of housing, utilities, fares, consumer durables, holidays, health care, social care, etc. The lower layers became increasingly dependent on debt to provide necessities – the rent, weekly shopping, school uniforms, etc.

The whole structure of financialised neoliberalism rests on a mountain of debt. This is not of course ‘real’ money. It is not a share of existing profits or wages. It is ‘new’ money created by banks (in the electronic circuitry of their computers), and it represents a claim on future wealth. It is ‘fictitious capital’.

Thatcherism and Reaganomics elevated finance-capital by creating a ‘permanent debt economy’. Consumers are ripped off at every turn. Credit-card companies take a share with each transaction, typically 2-3%, from the retailer as well as the consumer. Retailers have to pay a range of charges, including paying for hand-held or static terminals, as well as mysterious ‘merchant fees’. Credit-card interest rates are extortionate, typically in the order of 18-20% per annum. Since consumers often cannot pay off their whole accumulated debt, but only a minimum payment each month, their debt is rolled over, becoming ever more unmanageable and expensive. After the 2008 crash, many tried to pay down their credit-card debt, but it was soon soaring again as housing and other costs increased.

Monopoly pricing is another crucial feature of modern accumulation. Few large firms engage in mutually-damaging price competition; they prefer to collude in managing the market to sustain prices and profits. Take the case of mobile phones and internet connection. As it becomes increasingly difficult to function without a smart-phone, the monthly subscription becomes a de facto compulsory regular payment for hundreds of millions of people. What is striking across the range of mobile phones and monthly tariffs available is just how similar (and high) the prices are among different providers.


The housing market in the UK is in an extraordinary state. In most parts of the country the average house costs well over £250,000 and in London over £600,000. While mortgage interest rates are low (around 3%), deposits are phenomenal. In London, on a £600,000+ house, the deposit is likely to be around £70,000. Mortgage lenders suggest that potential buyers borrow the deposit from relatives (i.e. parents), which many do. This represents an immediate transfer of value from families to finance-capital. Mortgage lenders’ websites also give advice to potential borrowers on how to save money – by, for example, cancelling their gym subscriptions or saving on lunch bills by taking sandwiches to work. Mortgage repayments on a £600,000 house are more than £2,000 a month – unaffordable by most workers. This means many essential workers – nurses, paramedics, teachers, firefighters, for example – have to live a long way from where they work to be able to afford housing costs.

The housing market in London is particularly affected by the use of property as an investment tool, a speculative asset, or a money-laundering device – resulting in an astronomical rise in the cost of luxury housing in the city centre, sending ripples down the property chain and outwards across the whole of Greater London.

So increasing numbers of people, especially younger people, cannot afford to buy houses and are forced into the private rental sector. In London, the average monthly rent on a property is around £1,600. Average take-home pay for those in a ‘permanent’ job in London is around £2,000; but of course there are many who earn below the average, and this is to take no account of workers on zero-hours contracts, short-term contracts, and in part-time jobs.

The proportion of rent-to-income shows why millions of people are effectively bankrupt. Or, to put it another way, they have to live on credit. Constantly in danger of failing to meet their credit-card bills, they are then hit by late-payment or unauthorised-overdraft charges. Or they have to go to pay-day lenders, with usurious rates of interest.[9] Loan sharks are the unacceptable face of finance-capital, but they are enabled by the more ‘acceptable’ operators.

The response of many young people to the housing crisis is to share a flat with one or two friends, in still very expensive and overcrowded accommodation. In both the private-ownership and private-rented sectors there are multiple add-on charges, especially for lease-holders. In many properties, including housing-association properties, so-called ‘service charges’ can amount to thousands each year. In addition, there are all the utility charges – like gas, electricity, and water, which, since privatisation, have gone from modest charges to substantial ones. Then there are monthly council-tax payments, that may or may not be included in rents. These are not simply to finance rubbish collection or social services, but to repay interest on loans from financial institutions, a permanent drain on nearly all local authorities. Since the Thatcher government introduced competitive-tendering rules for local authority services, private contractors have put the squeeze on both the workers they employ (previously unionised in-house labour) and the local councils that end up in their debt.

The massive increases in housing charges typical of the neoliberal era have created sharp changes in many inner-city neighbourhoods. This ‘gentrification’ is a worldwide process. It has generated numerous defensive neighbourhood struggles as communities fight the eviction of local people and the destruction of community facilities. In the formerly mainly working-class Brooklyn area of New York, average rent stands at 90% of average income, so working-class people are being driven out, small businesses can no longer afford to stay, and the area is taken over by the middle class and chains like Starbucks and McDonalds. San Francisco is another classic example of this process, because gentrification is magnified by thousands of workers at hi-tech companies like Google and Apple, just 20 miles away down the Santa Clara Valley. Their mainly young workers, all earning in excess of $100,000 a year (and most of them much more), want to live in San Francisco and not down the valley, where communities hardly exist and facilities are few.


Transport is a key opportunity for surplus appropriation by finance-capital, particularly in Britain. The decay of the transport infrastructure, especially the Overground railway network and the London Tube system, has created an ongoing efficiency crisis. Successive governments have attempted to remedy this on the Tube by private-public partnership, i.e. huge borrowing from private finance-capital, and on the Overground by franchising train operation to private contractors.

The cost to the government of the public-private finance scheme (PPF) on the Tube was more than £10 billion in the first seven years, and will be more than $15 billion over the next 30. Much of this comprises interest payments. This is funded by fare increases. Nationally, British people pay 15% of their income on transport. This is a direct transfer from wages to private rail operators and finance-capital.

The ‘solution’ on the national rail network involved privatising track and stations, with the creation of a new independent company, Network Rail. While privatisation did see significant upgrading of infrastructure and rolling stock, doing this while generating the profits demanded by investors resulted in the highest train fares in the world, substandard services, and businesses permanently on the verge of bankruptcy.

Train operators demanded government bailouts (i.e. guarantees for their profits), while commuters and other passengers faced deteriorating services and astronomic prices. As examples, a London-to-Birmingham (about 100 miles) annual season ticket costs more than £5,000, London-to-Brighton (47 miles) £4,600, and St Albans-to-London (a mere 20 miles) a staggering £4,800.

Health and social care

The finance-capital machine hoovering up value from the working class and sections of the middle class marches ever onwards in health and social care. The National Health Service was set up under the banner of ‘free at the point of need’, but today this is far from true as more and more ‘elective’ procedures are provided only privately, or at the end of huge waiting lists that compel people in pain to seek private treatment.

The cost of the ‘private finance initiative’ in the NHS is expected to reach an eventual total of £53 billion by mid-century, a massive return on £8 billion worth of investments. A guaranteed return of £20 billion is actually written into the contracts. Large NHS trusts are typically paying £1 million a month in interest repayments.


Social care is now almost entirely privatised, with only the very poorest getting substantial local-authority help. It is an instrument for transferring huge sums from families to private capital. Since the average stay in a care home is less than two years, it is in effect a tax on dying.

The average cost of care homes is now about £35,000 a year, with elderly people in London paying more than £40,000. Many people will sell their houses to pay for this, and only the very poorest get local-authority help with payments. Many care homes are owned by big private contractors; Care UK, for example, the country’s second largest provider, is owned by Boots.

Every effort is made to minimise costs, particularly the cost of care workers, who typically earn only the National Minimum Wage for a job that is challenging, draining, often distressing, and requires many personal skills to do well. Care-home owners are only too happy to take on college students on work experience who come cost-free.

Shopping malls and retail sales

Goods from the Global South are particularly prone to the predations of the non-producing firms that deliver them to consumers in the Global North. Michel Chossudovsky points out that:

The retail price of goods from the Third World is often ten times higher than the price at which the commodity was imported. A corresponding ‘value added’ is than artificially created within the service economy of the rich countries without any material production taking place … In other words, the bulk of the earnings of primary producers is appropriated by merchants, intermediaries, wholesalers, and retailers.[10]

Finance-capital takes a huge rake-off from many retail sales through its control of shopping malls, which charge huge rents. For example, the cost of a shirt bought at a shopping mall department store will contain an element paid to the capitalist who made it in Bangladesh (only a small fraction of which goes to the workers), another to the transporters, another to the company whose brand name the item bears, and another to the retailer. But the largest single amount is probably the portion paid as rent. In addition to base rents, retailers often have to pay a portion of their take, typically around 7%.

Shopping malls in the UK are generally owned by financial institutions and property companies. In the summer of 2020, INTU, the holding company that owned many of the largest malls – like Lakeside and Manchester’s Trafford Centre – collapsed due to the Covid pandemic. It turned out that the company’s main creditors, in effect its owners, were big financial institutions like Barclays. Taking a long view about the likely outcome of the pandemic, big financial institutions swooped to take control of individual malls. The Trafford Centre was taken over by the Canada Pension Plan Investment Board. Lakeside has been taken over by Global Mutual.

The shift in retailing, noted by everyone during the pandemic, is of course towards online shopping. Amazon and the like play a similar role to giant shopping malls. They are the focus of huge amounts of retail activity and take a huge cut.

Digital platforms and streaming services

E-commerce is a classic site of value appropriation at the point of consumption. It overlaps with its online cousin, streaming services, on such platforms as the music site Spotify and the movie site Netflix. The two best known e-commerce sites are Amazon and its Chinese counterpart Alibaba, which runs a number of associated sites.

Amazon is unique in having a business model that enables it to be a retailer in its own right, through its network of giant warehouses, and an intermediary between smaller sellers and consumers. The latter part of its business enables it to offer a range of goods that it does not have to store, as well as enabling it to offer second-hand goods.

Amazon’s value appropriation is never at the point of production, except through Amazon-financed movies on its Amazon Prime platform, which competes directly with Netflix. Only a small minority of Amazon Prime movies are made or financed by Amazon; most are bought-in movies and TV series. The same is true of Netflix.

But the balance is changing as the financial giants move into movie production. For example, the 2018 Oscar- and Bafta-winning movie Roma was financed by Netflix and shown in only a small number of cinemas. British cinema chain Vue objected to the film’s Bafta award, claiming that its small number of cinema outings were designed solely to qualify it for awards – in reality, they claimed, it was a made-for-television movie.

Of course, neither Amazon nor Netflix actually makes films; they just finance them. In doing this, they join a long list of finance companies (with names like ‘Tri-Star Movies’) that do not make films but simply invest in them.

The Amazon business model has cleverly merged e-commerce with streaming services. If you subscribe to Amazon Prime, you become a member of the movie subscription site and get privileges with products you order online, like next-day delivery.

Streaming via subscription services is one of the Holy Grails of e-commerce, because it enables a regular revenue flow. Spotify is a music streaming mega-giant, along with competitors Deezer and Apple Music. Artists not on Spotify and similar platforms have difficulty becoming known, but the amount paid for each play is miniscule. Spotify does not disclose how much it pays per play, but it is a tiny fraction of a dollar. One artist was paid £4,900 for a million plays, which works out at half a penny per play.

Revenue flows into Spotify from its roughly £15-a-month subscriptions and from the paid advertising that non-subscribers have to listen to every 30 minutes. Once again, Spotify is a corporation that accumulates value from a product that it does not create; it is simply a mechanism for the realisation of value. This hijacking of the music industry by a new kind of parasitic capital has made recorded music virtually unprofitable for the artists who make it. They have to rely on other revenue sources such as concerts and festivals, and regard their recorded music as advertising for those performances – which is why musicians have taken such a hit during the Covid-19 pandemic. Spotify is using its near-monopoly position (challenged only by Amazon Prime’s Alexa service) to accumulate value from both producers and consumers.

Google, together with its subsidiary YouTube, is, of course, an e-commerce and streaming monster. The Google search engine earns vast amounts through advertising, which mainly revolves around pay-per-click services, in which producers pay to have their products pushed up the list of products the search engine displays to consumers. YouTube is increasingly becoming a subscription-based music and movie site, using its apparently free-to-post service for amateur video makers as a hook to grab those who will pay for more sophisticated fare.

Soccer and concerts

In 2016, the home furnishing giant IKEA claimed that ‘peak stuff’ had probably passed, as consumers moved away from material goods to ‘experiential’ goods like holidays, sports events, concerts, health spas, and participating in extreme sports. Boredom with material stuff probably does not affect people in the Global South and poor people in the Global North to any great degree. But for the middle classes and better-paid workers, there are only so many sofas and kitchen utensils one household can use.

Experiential consumption is a significant focus for value accumulation, mobilising what are in effect monopoly products. For example, there is only one Arsenal or Manchester United, and the companies that own these clubs can therefore charge exorbitant prices to spectators and TV companies alike. Season tickets for the big clubs are rarely below £800 and prices for non-season-ticket-holders can be upwards of £100 per game. In effect, Premier League football is not available to lower-income fans.

Nonetheless, despite the excessive prices to watch games live, the real money comes into the Premier League via television, with Sky and BT paying between £4 and £5 billion in total to broadcast football seasons. Such vast amounts are paid to grab large chunks of the audience for TV subscription services, which themselves command a vast amount of the premium programming content. Priced out of live football, hard-core fans are forced to watch on Sky or BT.

As Spotify and Deetzer streaming services make music unprofitable for musicians, live music becomes a key value earner, with big sums flowing towards the top end. The Rolling Stones’ 2018 concert at the London Stadium cost between £90 and £440 per ticket. Pre-pandemic tickets for Miley Cyrus concerts typically cost up to £150. Even American guitarist Joe Bonamassa, with just a few hundred thousand fans, can command concert-ticket prices of £70 to £200.

These concert prices having nothing to do with the value of the socially necessary labour involved in their staging. They are the prices commanded by price-setting monopolists. In the market for Rolling Stones tickets, there is only one Rolling Stones.

Luxury goods and celebrity ‘merch’

The extreme concentration of wealth among the super-rich and the affluent middle classes has promoted a surge in luxury production. Luxury goods are almost by definition monopoly goods whose price has nothing to do with the socially necessary labour time embodied in them, nor indeed with production costs at all. Of course, luxury goods are synonymous with high quality, and therefore an apparently higher cost of production. But in truth, the price of luxury goods is determined first and foremost by the label. You can, for example, buy near-identical copies of Cartier or Breitling watches in street markets from Mexico City to Bangkok for $50, but you pay $3,000 dollars for ‘the real thing’ – despite the fact that the latter has exactly the same internal mechanism.

Even if luxury items are of good quality, the disproportion in their price compared with non-luxury goods has little to do with the additional costs. The fetishisation of commodities is at its most extreme with luxury fashion houses touting handbags, jewellery, shoes, etc. Paying hundreds of pounds for a handbag is quite common in the affluent middle classes, and as much as £5 million might be paid for a bespoke item by the seriously rich.

There is a trickle-down effect. The ‘designerisation’ of an increasing range of goods involves ordinary clothes and other items being decorated with designer labels and their prices hiked. This takes two forms. On the one hand, there are cheaper or low-end designer labels, and then there are ‘mass luxury’ offerings from top-end designer brands. Top-end brands, so-called ‘super-designers’, include Dior, Balenciaga, Fendi, Hermès, Chanel, Valentino, Roberto Cavalli, Gucci, Burberry, and perhaps two dozen others. At the low end are brands like Tommy Hilfiger, Gant, Diesel, and TJ Max. In between are mass-market ‘designer’ goods from companies like Tom Ford, Armani, and Gaultier.

The use of designer labels to extract more money from consumers can be witnessed inside a big department store like Selfridges. There are no non-branded clothes here, only goods sold through designer ‘concessions’. Then there is a section for ‘super-designers’ into which only the top brands are allowed. The division is also on view at London’s two giant ‘Westfield’ shopping arcades, which both have a ‘super-designer’ section called ‘The Village’.

The photo-sharing platforms Instagram and Snapchat are in many ways advertising portals for luxury goods, mainly effected through direct celebrity recommendations (‘look at my new handbag’) or through celebrities wearing garments or using particular products. This overlaps with the sale of celebrity merchandise (‘merch’) which even relatively minor celebrities – particularly musicians – can sell at public events and online. Go to the website of Miley Cyrus, a singer with millions of fans, and you can find everything from key-rings to water-bottles sold at hugely inflated prices because they have the star’s name on them. Again, these sales bend the focus of accumulation towards the point of consumption.

The well-known cases of Paris Hilton and Kim Kardashian highlight the role of celebrities in boosting frenzied consumerism. In both these cases, the celebrities involved do not actually do anything except sell things, through programmes like ‘Kim Kardashian Closet’. Simply being a ‘celebrity’ – however devoid of talent or achievement – has become a profession in itself in the topsy-turvy world of neoliberal consumer capitalism.

At the invention of modern celebrity culture in the 1930s movie industry, the profiles of leading actors were boosted through studio-sponsored gossip magazines. Here ‘the stars’ promoted sales of the product they helped create – star-studded movies. Now, celebrity has zoomed past product endorsement to become an industry in its own right. Celebrities have become products. Hundreds of magazines worldwide, dozens of TV programmes, and numerous newspaper columns and websites depend on the endless generation of new minor celebrities, often the stars of TV ‘reality’ shows. Hundreds of journalists and photographers (‘paparazzi’) subsist on copy about, or photographs of, celebrities. The value accumulated is through magazine and newspaper sales, TV subscriptions, website visits and subscriptions, and of course the purchase of the products the celebrities promote.

It might be thought that interest in celebrity culture would decline as people struggled with poverty and the pandemic. The evidence from the United States during the Great Depression suggests otherwise. In the 1930s, fascination with the details of the private lives of fabulously rich film-stars, many of them invented, became a sort of compensatory dream-world for people suffering the drudgery of unemployment and poverty. This is a modern version of the ‘bread and circuses’ offered to the poor of Ancient Rome – only without the bread.

This is one aspect of the ‘society of the spectacle’ theorised by Guy Debord in his 1967 book. Steven Best and Douglas Kellner wrote of neoliberalism’s spectacles:

Individuals in the society of spectacle constitute themselves in terms of celebrity image, look, and style. Media celebrities are the icons and role models, the stuff of dreams whom the dreamers of the spectacle emulate and adulate. But these are precisely the ideals of a consumer society whose models promote the accumulation of capital by defining personality in terms of image, forcing one into the clutches and clichés of the fashion, cosmetic, and style industries. Mesmerised by the spectacle, subjects move farther from their immediate emotional reality and desires, and closer to the domination of bureaucratically controlled consumption… The world of the spectacle thus becomes the ‘real’ world of excitement, pleasure, and meaning, whereas everyday life is devalued and insignificant by contrast. Within the abstract society of the spectacle, the image thus becomes the highest form of commodity reification …[11]

Part II

A new Marxist economic theory

Surplus Appropriation without Value Creation

We see capitalism’s long-term crisis of over-accumulation as the very core of the political economy of neoliberalism.[12] Overloaded with capital unable to find profitable outlet in productive investment, the system resorts to a range of pathological and parasitic forms of accumulation. These (overlapping) forms include:

  • Accumulation through relocation and outsourcing of production to low-wage facilities, especially in the Global South, by ‘hollow’ transnational corporations which appropriate the bulk of the surplus through control over finance, technology, knowledge, supply-chains, and markets.
  • Accumulation through debt. The exponential explosion in debt and speculation during the neoliberal era involves the entire economy – governments, corporations, and households – though much of it is anchored in real-estate markets.
  • Accumulation through rent – in particular, exponentially rising rents for housing.
  • Accumulation through privatisation of the commons. This has taken the form of: a) ‘windfall’ gains to private capital when existing public assets are sold off; b) ongoing flows to private capital in the form of state payments for the provision of public services; and c) ongoing flows to private capital in the form of (rising) charges for public services that were previously free or subsidised.
  • Accumulation through state taxes. Though this overlaps with privatisation of the commons, it extends far beyond it; in particular, it takes the form of militarised accumulation, with vast and rising state expenditures on armies, police, prisons, borders, security, and surveillance.
  • Accumulation through monopoly pricing. The development of monopoly forms of capitalism – in which a handful of giant transnational corporations dominate and manage each market – has allowed capital to become more ‘price-maker’ than ‘price-taker’. Consumers are routinely overcharged for everything from bananas to computers.
  • Accumulation through alienated consumption. Workers/consumers are subjected to a massive, relentless, and ever more targeted and invasive ‘sales effort’, increasingly dominated by online messaging. This includes: rising levels of consumption of ‘experiential’ goods through online subscription/streaming services or overpriced live events; rising levels of consumption of ‘designer’ and other goods promoted by ‘celebrities’ and ‘spectacles’; and rising levels of consumption of goods delivered through the post by online retail monopolists. This is sustained by huge levels of household debt; which, of course, is itself commodified. The hollowing out of society, with rising levels of atomisation and alienation, has created perfect conditions for a pandemic of neurotic consumerism, colossal waste, and ecological disaster.
  • Accumulation through digitalisation. Hot on the heels of the first phase of digitalisation (‘Third Industrial Revolution’) is a second phase of digitalisation (‘Fourth Industrial Revolution’) which threatens another huge swathe of the world’s workers with technological unemployment. The corporate tech giants, which already make gargantuan profits with minimal labour, are hardwired into every form of modern accumulation and are facilitating a transformative shift to increasingly labour-lite production.

Critical to an understanding of this modern form of financialised capitalism and the permanent debt economy is: a) the scale of surplus appropriation that now occurs not in production, but in circulation; b) the extent to which the locus of exploitation has shifted from the proletarian as worker to the proletarian as consumer/debtor; c) the dependence of the system on mountainous accumulations of debt (‘fictitious capital’); and d) the chronic vulnerability of the system to speculative bubbles and crashes. The rupture between real values and monetary values has reached astronomical levels. As William I Robinson illustrates:

To put the relation between stock and derivative markets into perspective, by late 2008, the size of the world stock market was estimated at about $37 trillion, while the total world derivatives market had climbed to an unfathomable $791 trillion, eleven times the size of the entire world economy. Fast-forward to 2017, and gross world product or the total value of goods and services produced worldwide, stood at some $75 trillion, whereas currency speculation alone amounted to $5.3 trillion a day that year and the global derivatives market was estimated at a mind-boggling $1.2 quadrillion.[13]

The aspect of this that primarily concerns us here is the theoretical hopelessness of any attempt to situate the process of surplus appropriation – as opposed to value creation – in production. In the neoliberal era, the gulf between these two processes, surplus appropriation and value creation, has become so wide that Marx’s traditional approach breaks down; his paradigm can no longer sustain the massive weight of contrary empirical evidence.

Profiting without Producing: the hegemony of transnational finance-capital

In the introduction, we identified four major developments in the world economy during the neoliberal era. In discussing the first and second of these developments in detail – the shift in bulk production to the Global South and the relative shift to exploitation at the point of consumption/social reproduction – we have touched on the third and fourth, namely, the dominance of transnational finance-capital and the emergence of a permanent debt economy and parasitic forms of accumulation. Here, we briefly sum up the latter two processes of ‘financialisation’.

Financialisation takes three main forms:

  • Financial corporations and the ‘financial services industry’ now account for a much larger proportion of total capital investment and profit.
  • Industrial corporations have massively increased their participation in financial investment (at the expense of productive investment).
  • Financial corporations (and ‘financialised’ industrial corporations) are far more heavily involved in the ownership and control of productive assets.

We offered statistical evidence in the preceding section for the exponential growth of financial trading and fictitious capital during the neoliberal era. This is reflected in the prodigious growth of finance as a proportion of total economic activity. US finance, for example, is estimated to have roughly trebled its share of national GDP between 1950 and 2010, and to have increased its share of total corporate profits from 15% to around 50%.[14] Durand estimates that, in the eleven rich countries for which relevant stock-market data is available, the proportion of fictitious capital in national GDPs increased by a factor of 2.5 between 1979 and 2014.[15]

This growth of the financial sector is anchored in rising levels of government, corporate, and household debt. Total US debt, for example, grew from 1.5 times national output in the early 1980s to nearly 3.5 times in 2007.[16] Thanks to massive state bailouts to recapitalise bankrupt banks following the financial crash of 2008, debt levels have since soared even higher. Total world debt was estimated at around $173 trillion (280% of global GDP) at the time of the crash. It is now around $250 trillion (320% of global GDP).[17] We have an accumulation of fictitious capital swirling in a vortex of speculation and resting on a foundation of debt. And, as we have seen, the tentacles of this parasitic finance-capital now extend into every crevice of the real economy.

Marx’s Argument

Marx argues that surplus-value is created in the production process itself. He offers a detailed analysis, especially in the first volume of Capital, of the way in which capitalists purchase labour-power (‘variable capital’), supply it with means of production (‘constant capital’), and derive profit (‘surplus-value’) from the difference between the cost of labour-power (paid out in wages) and the value of the new/living labour actually performed.

We believe this argument to be incorrect. Before explaining why, we should make the following points.

First, Marx was writing at an early stage in the development of industrial capitalism, at a time when most enterprises were relatively small, when many capitalists were active in each market, and when, therefore, competition was intense. Capitalists were compelled to reinvest a large proportion of their profits in their own enterprises if they were to remain competitive. Their own surplus-value was their main investment fund.

Second (and despite the foregoing), Marx was perfectly well aware – how could be not be? – that surplus appropriation took place not only in the process of production, but also during wider processes of circulation. His work is littered with references to rent on land, interest on loans, state taxes, etc; and with explanations of the way in which the surplus-value generated in production was supposedly shared with landowners, bankers, public functionaries, etc.

Third, from 1850 onwards, Marx’s work involved a sustained intellectual engagement with the classical bourgeois economists. In general, he was correcting their errors and building on their insights, so as to develop a scientific theory of the laws of capitalist development. In particular, he was at pains to demonstrate that labour was the source of all value; that value could not be created in exchange; that profit could not be the legitimate reward of ‘entrepreneurship’; that profit, rent, and wages were not the respective rewards of different ‘factors of production’; and so on.

But, we argue – from the vantage-point provided by the last 150 years of capitalist development – he was in error when, in effect, he conflated value and surplus; or more precisely, the labour theory of value and the laws of motion of the capitalist system. The term ‘surplus-value’ fossilises this conflation and obscures the fact that value creation and surplus appropriation are distinct processes which occur, as it were, in different registers; in theoretical terms, at different levels of abstraction.

In short, the labour theory of value (which is correct: all value is created by labour) has to be separated from the laws of motion of capital accumulation (i.e. the laws that govern circuits of capital, and the way in which those circuits determine wages, prices, and profits, and thus the distribution of value between and within social classes).

The consequence of not separating the two – of insisting that surplus is created in the production process – has given rise to some devilish theoretical contortions since in an effort to adhere to the letter of Marx’s argument in Capital. Suffice to say that the distinction between ‘productive’ and ‘unproductive’ labour, the so-called ‘transformation’ problem (which concerns the relationship between values and prices), and the ‘equalisation of profit’ problem (which concerns flows of capital between more and less profitable forms of investment) largely disappear once we have corrected the original error.

Theory of Value and Laws of Motion

A central tenet of Marxism is the dialectical unity of the whole of social reality. Because the world capitalist system is a single contradictory whole, because there is a global division of labour, global movements of goods, and global circuits of capital, and because the world economy is a perpetual motion with billions of working parts, it is quite wrong to reduce surplus appropriation to what is happening in a single factory.

Marx himself often uses formulations such as ‘abstract social labour’, ‘total social capital’, ‘the total capital value in process’, ‘the total annual commodity product’, ‘total circulation process’, and ‘the social capital and surplus-value or surplus product produced by this’. He sometimes tells us: that ‘industrial capital [is] a self-moving totality’; that there is a ‘unified process of circulation and production’; that ‘the individual capitals are only independently functioning components of the total social capital’; and that ‘the total movement of the social capital is equal to the algrebraic sum of the movements of the individual capitals’.[18]

We are not the first to notice a contradiction within Marx between a ‘macro-economic’ and a ‘micro-economic’ theory of value-creation.[19] In the light of all of the empirical data summarised above, we feel bound to underline this and insist that the labour theory of value does not explain the value of the output of an individual enterprise so much as the value of the total social product created by collective human labour. It explains the origin and nature of value in general, not the distribution of that value, or, more precisely, the distribution of titles to a share in that value, between and within social classes, and most especially between different units of capital.

Value predates capitalism. Value has been created by collective human labour since the dawn of time. Value was the basis of existence of hunter-gatherer bands, the first farming settlements, ancient Roman cities, and the feudal villages of the Middle Ages. This, of course, was well understood by Marx, who distinguished between the ‘use-value’ (present in all societies) and the ‘exchange-value’ (peculiar to capitalism) embodied in the commodity. Marx’s error was to collapse the concept of value (the wealth created by all forms of collective human labour) into the contradictory commodity form it assumes under capitalism (which, because it now contains exchange-value as well as use-value, must conform to the laws of motion of capital accumulation).

Marx’s working assumption that capitalists make profit only out of the variable capital/living labour-power/newly created value in their own workplaces has to be false unless it can be assumed that all exchange is equal, i.e. that equivalent exchanges for equivalent, throughout the entire system. But this is not the case. Nor does the division between capitals correspond in any straightforward way to, as it were, ‘natural frontiers’ in the production process. When, for example, Apple pays numerous sub-contractors to manufacture the component parts of its iPhones, and when it then pays other sub-contractors to assemble, package, transport, and store these iPhones, are we dealing with a single circuit of capital or countless circuits, and how are we to define the points at which surplus-value is actually created – as opposed to the points at which surplus pure-and-simple is appropriated?

This is to speak only of the process of production and distribution. A further layer of complexity arises as soon as we consider exchange; more specifically, when we review the implications of the relative shift in the locus of exploitation from production to consumption.

We might begin here with a general observation. Capital depends upon the existence of a class of propertyless labourers. But the emphasis in this regard is usually on the proletariat’s need to sell its labour-power in order to obtain means of subsistence, forcing it to work for capital in return for wages. No less significant, however, is that capital also requires workers to use their wages to buy consumption goods on the market. The proletariat is essential to capitalism both as producer and as consumer. Capitalism can develop only when there is both a) a class of dispossessed peasants/propertyless labourers who have no alternative but to sell their labour-power, and b) a class of consumers without access to their own means of subsistence who must therefore purchase their necessities in a commercial market.[20]

The proletariat, in short, is a class of workers and consumers. The worker-consumer is subject to a double imperative: she must sell her labour-power to capital because she lacks both her own means of production and her own means of subsistence. As Marx himself put it: ‘the conditions for the realisation of labour-power, i.e. means of subsistence and means of production, are separated, as the property of another, from the possessor of labour-power’.[21] Capital therefore depends upon, is created by, the proletariat in two senses: it provides both the living labour-power for production and the mass consumption for realisation.

This observation should be the starting-point for any serious engagement with the current economic and social crisis. The global process of proletarianisation has been ongoing for about 250 years. Only now does it appear to be nearing completion, with the fast-approaching final disappearance of peasant communities in a world increasingly dominated by agribusiness, rural wage-labour, and the mega-urbanisation that Mike Davis calls ‘a planet of slums’. When we consider the condition of the international working class, we see a broad division into three main categories: a third in more or less permanent/secure jobs; a third in more casual/precarious jobs; and a third who can be classed as ‘surplus humanity’, subsisting somehow in the informal economy on the margins of the system, the great majority (but by no means all) in the slums of the Global South.

Let us call these three groups: core workers, precarious workers, and surplus workers. Each group, including families, comprises more than two billion people. This is an existential tragedy without precedent in human history: a mass of suffering on a scale never seen before. It is the living proof of our central argument that capitalism faces a permanent, deepening, insoluble crisis of over-accumulation and under-consumption – a growing rupture between the imperatives of capital accumulation and human need. This rupture is apparent in all four of the major developments we identified at the beginning of this paper: the shift of production to the Global South; the shift towards exploitation at the point of consumption; the dominance of finance-capital; and the permanent debt economy.

Over-accumulation and Under-consumption

The taproot of our argument is the theory of monopoly-capitalism which has been developing since the late 19th century. The argument can be traced back to Rudolf Hilferding’s Finance Capital (1910), Rosa Luxemburg’s The Accumulation of Capital (1913), Nikolai Bukharin’s Imperialism and World Economy (1915), Vladimir Lenin’s Imperialism: the highest stage of capitalism (1916). These theorists were grappling with the implications of profound changes in the character of world capitalism between 1873 and 1914, including the rise of monopolies and cartels, a tight nexus between the state, big banks, and giant firms, the export of capital, imperialist expansion, rising arms production, and eventually world war.

A generation later came a more fully worked-out economic theory. Both Marxist and Keynesian economists broke with mainstream classical economics to argue that monopoly transformed the way in which the system worked. Notable contributions were Edward Chamberlin’s The Theory of Monopolistic Competition (1933), Joan Robinson’s The Economics of Imperfect Competition (1933), Michal Kalecki’s Theory of Economic Dynamics (1952), and Joseph Steindl’s Maturity and Stagnation in American Capitalism (1952). Most important, however, was the work of Paul Sweezy, with The Theory of Capitalist Development (1942), then, with Paul Baran, Monopoly Capital (1966), and finally, with Harry Magdoff, Stagnation and the Financial Explosion (1987).

These and other works, including more recent work by John Bellamy Foster and colleagues associated with Monthly Review, and by William I Robinson, represent a developing research paradigm within which we are happy to situate ourselves. The nub of the argument is as follows.

Long-term processes of what Marx called ‘the centralisation and concentration of capital’ give rise to ‘monopoly-capitalism’ (and nowadays ‘globalised, financialised monopoly-capitalism’), in which each sector of the economy is dominated by a small number of giant corporations that collude to manage the market. Monopolies are: a) risk averse due to the size of investments and reduced competitive pressure; b) able to collaborate/collude to manage price, output, and investment; c) able to create wants/demand through ‘the sales effort’; d) concerned to limit expansion to avoid market glut and price falls; e) exclude new entrants/competitors; f) compete not on price but through sales effort; and g) seek to raise profits by lowering unit costs (seeking cheaper labour). They use market/monopoly power to manage the market rather than respond to it. The effect of this is to entrench capitalism’s inherent tendency towards over-accumulation (of capital) and under-consumption (by labour).[22]

Sweezy was building on Marx. It is important to stress this. More than one explanation of crisis is to be found in Marx, but nowhere is there a fully developed theory, because his plan to present one was never fulfilled: Capital is an unfinished work. We will have more to say about this below in relation to the ‘tendency of the rate of profit to fall’ theory of crisis. Here, we wish to draw attention to the fact that a version of the over-accumulation/under-consumption theory of crisis is to be found in Marx. We will offer two clear examples, the first from Capital, Vol II, the second from Capital, Vol III:

The epochs in which capitalist production exerts all its forces are always periods of over-production, because the forces of production can never be utilised beyond the point at which surplus-value can be not only produced but also realised; but the sale of commodities, the realisation of the commodity capital and hence also of the surplus-value, is limited not only by the consumption requirements of society in general, but by the consumption requirements of a society in which the great majority are poor and must always remain poor.

The last cause of all real crises always remains the poverty and restricted consumption of the masses as compared to the tendency of capitalist production to develop the productive forces in such a way that only the absolute power of consumption of the entire society would be their limit.[23]

Sweezy’s theoretical achievement (subsequently developed by other theorists in the Monthly Review tradition) was to grasp the implications of monopoly-capitalism in relation to this inherent tendency: that the effect was to make the crisis of over-accumulation/under-consumption a permanent condition, condemning the system to chronic stagnation and increasingly parasitic, anti-social, and dysfunctional forms of capital accumulation. One critical theoretical innovation was his ‘kinked demand-curve’, which demonstrated the built-in monopoly tendency for prices to rise but not to fall.[24] One estimate is that the price mark-up ratio compared with unit labour costs was 1.5 in the late 1940s and 1.75 in the early 2010s: a key measure of the degree of monopoly.[25] Another such broad measure is that, whereas deflation was a 19th-century norm, especially in periods of crisis, inflation was the 20th-century norm.

On the other hand, on the basis of monopoly theory, Sweezy explicitly rejected the alternative ‘tendency of the rate of profit to fall’ (TRPF) explanation of crisis as only applicable to competitive capitalism, where prices might fall as readily as rise. This, he argued, had been replaced by a long-term tendency for the mass of surplus to increase – with all the consequences we have been discussing in this paper.

The TRPF argument originates with Marx. The main discussion appears in Capital III, where he outlines both ‘the law itself’ and various ‘counteracting factors’. This discussion has been made to bear a tremendous weight of subsequent Marxist theorising; a weight it is not capable of carrying. Marx, remember, never completed his theoretical work on capitalist crisis. His notes for Capital III, edited into a publishable text by Engels after his death, have the character of work-in-progress. The argument he advances is as follows. The organic composition of capital rises over time, i.e. the mass of machinery (‘constant capital’) operated by each worker (‘variable capital’) gradually increases. The surplus-producing component of investment (‘living labour’ as opposed to the ‘dead labour’ represented by machines) therefore decreases as a proportion of total investment over time. Therefore the rate of profit has a long-term tendency to fall.

In reality, of course, matters are far more complex, and Marx identified a number of ‘counteracting factors’ that offset the TRPF in practice: more intense exploitation of labour; reduction of wages below their value; cheapening of the elements of constant capital; the relative surplus population; foreign trade; and the increase in share capital.

But this is neither a comprehensive nor wholly coherent list (reflecting its origin in Marx’s notebooks). It lumps together a hotchpotch of factors that operate in different registers. It also relegates processes which are full-blown ‘tendencies’ in their own right to subordinate status as ‘counteracting factors’. Marx, in short, has left us with a theoretical mess, and Engels, his long-time collaborator and posthumous editor, in his understandable eagerness to get Capital III published, never had the time to sort it out.

A basic error has in fact occurred. The rising organic composition of capital in physical terms (the growing mass of machinery), which is an undoubted empirical fact, has been conflated with a rising organic composition of capital in value and price terms, which is an entirely contingent matter. It is contingent because two other things are happening at the same time.

First, the productivity of labour is rising. Because production becomes more mechanised with each new round of investment, each worker ends up producing more. Not only that, but because productivity can be expected to rise in both capital goods and consumer goods industries, the relative cost of labour-power tends to fall, because the basket of consumer goods necessary for social reproduction becomes cheaper. This being so, there is no inherent reason why the organic composition of capital should rise at all in value and price terms. Does a robot on a car assembly line today cost more in relative terms – relative, that is, to the cost of labour – than, say, a spinning jenny in the 1840s? Do the labour-intensive industries of the modern world – think of Glasgow call-centres, Dhaka clothing sweatshops, and Shenzhen electronics factories – imply a shrinking proportion of ‘variable capital’ being expended on ‘living labour’?

Second, the rate of exploitation can rise; indeed, with rising productivity it is perfectly possible for there to be a relative increase in profits over wages, even despite an absolute increase in the purchasing power of wages. Only if workers are exceptionally well organised and combative – only, indeed, if they are actually on the offensive – will wages automatically rise in line with increases in labour productivity. Were this not the case – if all productivity gains were immediately nullified by corresponding increases in the wage bill – the incentive for investment in new, labour-saving technology would be undermined. This means that there is no inherent reason why the organic composition of capital should rise in value and price terms. Capitalists invest in labour-saving machinery precisely with the expectation that wages will not rise commensurately.

All three factors – the rising organic composition of capital, the rising productivity of labour, and the rising rate of exploitation – operate in the same register, viz in the production process where value is generated. There is no general long-term tendency for the rate of profit to fall. Instead, when capitalists invest in new machines, three things happen: the organic composition of capital rises; the productivity of labour rises; and the rate of exploitation rises. None of these three factors has priority over the others; none of them can be regarded as the tendency, with the others merely ‘counteracting factors’.

But this argument, derived from Sweezy, can now be lifted to another level, on the basis that, while value is created in the production process, surplus (the share of value accruing to the capitalist class) is appropriated (sic: not created) in both production and circulation/consumption, and at countless different points in global circuits of accumulation.

This means the whole TRPF argument collapses even more completely, since it assumes that capital appropriates surplus directly and immediately in each separate moment of the production process (assuming, of course, that realisation – sale at value on the market – follows). But this is not the case. And as soon as it is recognised that surplus can be appropriated in the form of taxes, rents, mortgages, monopoly prices, interest on debt, super-exploitation of low-wage workers, etc, the whole argument falls.

The TRFP argument hinges, in other words, on what we are now arguing was a primary error in Marx’s basic theory: to conflate the labour theory of value (which operates only at the highest level of abstraction, when we are thinking about capitalism as a total system) and the laws of motion of capital accumulation (which is the mechanism by which shares in the social product/aggregate value are distributed between and within classes).

Conclusion: Ten Theses

The labour theory of value is only relevant at a very high level of general abstraction. It cannot be used to understand circuits of capital – which is what Marx is mistakenly doing in parts of Capital. The result is considerable confusion. It is not just the effort wasted on the distinction between productive and unproductive labour, the transformation problem, and the equalisation problem. Nor even just the semi-mystical, determinist/teleological claim that capitalism is doomed by a long-term tendency for the rate of profit to fall. It involves a failure to grasp that surplus is appropriated and capital accumulated at multiple different points in continuous circuits of capital through production, distribution, and exchange.

Globalised, financialised monopoly-capitalism super-exploits workers both as producers (especially in the Global South) and as consumers (especially in the Global North). Capital appropriates surplus both by underpaying workers for their labour and by overcharging workers as consumers. The implications for the class struggle in the neoliberal era are huge (and this will be the subject of our second paper).

So, in summary:

I. All value is created by labour.

II. Value is a social aggregate created by the collective labour of the international working class.

III. The distribution of value between and within social classes is determined by circuits of capital in production, distribution, and exchange.

IV. Surplus can be appropriated both at the point of production and at the point of consumption/social reproduction.

V. Workers are exploited both as producers (where labour-power is paid below the value of the labour expended) and as consumers (where wages are reduced by surplus appropriation in the form of taxes, rents, interest, prices, etc).

VI. The intensified exploitation of workers at the point of production – i.e. the appropriation of super-profits, mainly in the Global South, by financialised capital and transnational ‘hollow’ (non-producing) corporations – is a fundamental feature of neoliberal capitalism.

VII. The intensified exploitation of workers at the point of consumption/social reproduction – i.e. surplus-appropriation in circulation as opposed to production, especially in the Global North – is a fundamental feature of neoliberalism.

VIII. Monopoly gives rise to over-accumulation/under-consumption and a growing long-term crisis of stagnation because: a) productivity and output rise faster than wages; b) markets are managed to create demand, increase sales, and maintain prices; and c) the global mobility of capital – in contrast to the relative immobility of labour – enables capital to access precarious, low-cost labour, expand the reserve army of labour, and undercut the wages of high-cost labour.

IX. Financialised transnational corporations are now the hegemonic fraction of world capital, able to appropriate surplus at numerous points in global circuits of capital through control of finance, technology, knowledge, markets, branding, etc, typically operating via a labyrinthine global network of sub-contractors.

X. These historical shifts in the balance of exploitation/accumulation occur in the context of a chronic, deepening, insoluble crisis of over-accumulation and under-consumption; and their effect – in siphoning wealth from labour to capital on an unprecedented global scale – is to intensify this crisis.

[1] John Bellamy Foster and Robert W McChesney, The Endless Crisis: how monopoly-finance capital produces stagnation and upheaval from the USA to China, 2012, New York, Monthly Review Press, 127-9.
[2] Cédric Durand, Fictitious Capital: how finance is appropriating our future, 2017, London, Verso, 150.
[3] We make passing reference here to a matter of live debate in Marxist economic theory between those, like William I Robinson, who argue that transnational capital is now globally hegemonic, and those, like John Bellamy Foster, who argue that relations between Global North and Global South are still best understood in the framework of imperialism.
[5] Foster and McChesney, op.cit., 109-10, 170-3.
[6] Durand, op.cit., 105-12.
[7] Durand, op.cit., 140-50 passim.
[8] The contemporary term ‘yuppie’ stood for ‘young urban professionals’.
[9] In 2015, after a public outcry, the government introduced new regulations to constrain the activities of pay-day lenders, but this only substantially affected those with the most extreme rates of interest like Wonga, which promptly went bankrupt.
[10] Michel Chossudovsky, The Globalisation of Poverty and the New World Order, 2nd edition, 2003, Global Research Publishers.
see also
[12] We discuss this in Chapter 7 of System Crash ( Our analysis has much in common with that of Paul Sweezy, Paul Baran, Harry Magdoff, John Bellamy Foster, David Harvey, Costas Lapavitsas, and others, but especially with that of William I Robinson. Key studies relevant to much of this paper include: Paul Sweezy, The Theory of Capitalist Development (1942); Paul Baran and Paul Sweezy, Monopoly Capital (1966); David Harvey, The New Imperialism (2003); William I Robinson, A Theory of Global Capitalism (2004); Harry Magdoff and Paul Sweezy (2008), Stagnation and Financial Explosion; John Bellamy Foster and Fred Magdoff, The Great Financial Crisis (2009); Costas Lapavitsas, Profiting without Producing (2013); William I Robinson, Global Capitalism and the Crisis of Humanity (2014); and William I Robinson, The Global Police State (2020).
[13] William I Robinson, The Global Police State, 2020, London, Pluto Press, 32.
[14] These are approximate figures based on various statistical estimates widely available online.
[15] Durand, op.cit., 64.
[16] Again, these are approximations based on widely available estimates.
[18] See, for example, Capital, Vol II (1978 Pelican edition), 165, 177, 180-3, 194.
[19] See, for example, Michio Morishima’s Marx’s Economics (1973).
[20] See Ellen Meiksins Wood, The Origin of Capitalism (2017), esp. 137-40, for an intelligent discussion of this in the early development of capitalism.
[21] Capital, Vol II (1978 Pelican edition), 115.
[22] Paul Sweezy, The Theory of Capitalist Development, 1942, New York, Monthly Review Press.
[23] Quoted in Sweezy, op.cit., 176-7.
[24] Paul Sweezy, ‘Demand under conditions of oligopoly’, in Journal of Political Economy, Vol 47, No 4 (August 1939).
[25] Foster and McChesney, op.cit., 21.

Neil Faulkner is the author of Alienation, Spectacle, and Revolution: a critical Marxist essay (out now on Resistance Books). He is the joint author of Creeping Fascism: what it is and how to fight it and System Crash: an activist guide to making revolution. Neil sadly passed away in 2022.

Phil Hearse is a member of the National Education Union and a supporter of the ACR

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