Even though most of us engage in eco­nomic activ­i­ties on a daily basis, few of us actu­ally under­stand the system.

Of course, since the global cri­sis we’ve seen a lot of pub­li­ca­tions on the fail­ures of cap­i­tal­ism and how we could repair, improve, and per­haps replace it. But before think­ing about what could be changed in order to improve upon the cur­rent con­di­tions, we have to under­stand how our cur­rent eco­nomic sys­tem actu­ally works.

And while we’re all taught the neo­clas­si­cal under­stand­ing of eco­nom­ics from pri­mary school onwards, to me it seems few of us actu­ally posses the knowl­edge to crit­i­cally assess its short­com­ings. In an attempt to facil­i­tate such an assess­ment, I try to clar­ify some of the main prin­ci­ples in the cur­rent eco­nomic system.


The image above illus­trates the gen­eral prin­ci­ple of cap­i­tal accu­mu­la­tion (click on it for larger ver­sion). Read­ing from left to right, we see a prod­uct being pro­duced and sold in the way we are famil­iar with. In order to pro­duce any object, labour (1) has to meet with mate­ri­als (2), includ­ing means of pro­duc­tion, in a pro­duc­tive envi­ron­ment (3). So far, so good.

But then some­thing extra­or­di­nary hap­pens: sur­plus value (4) is cre­ated. Or actu­ally, it just comes into being. So when we look at the final price of the prod­uct we just pro­duced, it con­sists of the price of pro­duc­tion (5), which includes mate­r­ial resources, labour, means of pro­duc­tion, and what­ever extra ser­vices you can think of, and a profit (6).

At this point, most read­ers will say: “Yes, of course, this is how it works. One who cre­ates some­thing, should be allowed to profit from engag­ing in that activ­ity”. I want to stress here that the price of pro­duc­tion already included a fee for the pro­ducer, which means the profit is basi­cally equal to the sur­plus value that came falling from the sky before. If we keep in mind that con­cepts like wage labour, profit, sur­plus value, and alike are all human inven­tions, one can seri­ously ques­tion the valid­ity of this ‘profit’ thing.

But once this profit has been gen­er­ated, where does it lead to? Well, now we’re touch­ing on the core of cap­i­tal­ism. Profit, as you might remem­ber from your high-school eco­nom­ics class, is used to invest. Invest in new means of pro­duc­tion, expand­ing pro­duc­tion capac­ity or research and devel­op­ment. Regard­less of its direct appli­ca­tion, the final goal is to apply this profit to gen­er­ate more profit: accu­mu­la­tion for accumulation’s sake.

While of course not all busi­ness is as strict about it as could be, the thing that wor­ries me most is the fact that this process of profit gen­er­at­ing and invest­ing in means of pro­duc­ing more profit (accu­mu­la­tion for accumulation’s sake) is com­pletely accepted by mostly every­body, every­where. While this process of accu­mu­la­tion is com­pletely based on human con­cepts, we tend to think of it as a nat­ural way of relat­ing to one another. For me, real­is­ing that words like profit and sur­plus value are merely human con­cepts is the first step in under­stand­ing the cur­rent sys­tem, and ulti­mately find­ing alternatives.

fur­ther reading:

  • Grae­ber, David. Debt: the first 5000 years. New York: Melville House Pub­lish­ing, 2011
  • Har­vey, David. A Com­pan­ion to Marx’s Cap­i­tal. Lon­don: Verso, 2010
  • Har­vey, David. The Lim­its of Cap­i­tal. Lon­don: Verso, 2006

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on 12+ h. a day, 6/7 days a week

2017-08-06 12:09:32

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multitude- multitude

on Survey

2015-04-01 13:27:31

[…] the spon­ta­neous responses to the last ques­tion of the sur­vey car­ried out in […]

Conrad Newel

on 12+ h. a day, 6/7 days a week

2015-03-23 18:10:56

@Colt Sievers I will be the first to agree with you on all counts. I would love to read that article. If you ever want to publish it on my blogg please do not hesitate to contact me.

Colt Sievers

on 12+ h. a day, 6/7 days a week

2015-03-23 16:58:10

@Conrad having worked in one of those offices that you mention, I have found your post as much provocative as naive and simplistic. I should make an entire post to explain why... will leave that for later. Thanks, anyway, to keep the discussion alive

Conrad Newel

on 12+ h. a day, 6/7 days a week

2015-03-23 16:45:07

Besides my terrible diction or lack thereof this raises another issue. Should we really feel outrage or sympathy for these interns? After all the ones who can afford to take these kind of jobs are the sons and daughters of the wealthy. What this letter is, is infact symbolic capital and social significance for sale. The rich kid can buy this piece of significance for among other reasons to go to a party and say to his less affluent counterpart, "hey I work for SANAA, or DS+R or whoever. Where do you work again?" Its a status symbol, just like a porsche, or a private jet. Affordable to a selected few that can afford it.