Glossary

Abstract labour: See Concrete labour.

Autarchy: Attempt to cut an economy off from trade links with the rest of the world.

Capitals: Term often used to describe competing units of capitalist system (whether individual owners, firms or states).

Centralisation of capital: Tendency for capital to pass into fewer and fewer hands, so that whole capitalist system is under direct control of a few competing capitals.

Chicago school: Followers of Milton Friedman and monetarism.

Concentration of capital: Growth in size of the individual competing capitals that make up the capitalist system.

Concrete labour: Refers to the specific material characteristics of any act of labour – what distinguishes, for example, the labour of a carpenter from that of a bus driver. Abstract labour, on the other hand, refers to the social characteristics that all types of labour have in common under the production of commodities for the market.

Constant capital: Marx’s term for a capitalist’s investment in plant, machinery, raw material and components (in other words the means and materials of production), denoted by c.

Deficit financing: The method by which a government pays for the excess of expenditure over receipts from taxation by borrowing or printing money.

Department One: Section of economy which is involved in turning out means and material for further production.

Department Two: Section of economy which is concerned with turning out goods which will be consumed by workers (sometimes called ‘wage goods’).

Department Three: Section of economy which turns out goods which will not be used as means and materials of production, and which will not be consumed by workers either – in other words the section that turns out ‘luxury goods’ for consumption by the ruling class, armaments and so on.

Depreciation of capital: Reduction in the value of plant, machinery and so on during their period of operation. This can be due to wear and tear, or to the ‘devaluation’ of capital (see below).

Devaluation of capital: Reduction in the value of plant, equipment and so on as technical advance makes it cheaper to produce.

Euromoney (Eurodollars): Vast pool of finance which grew up in late 1960s and 1970s, beyond the control of national governments. Based upon the ability of the banks in one country to borrow from a second country and then lend to a third.

Expenses of production: Spending which capitals have to undertake to stay in business, but which does not materially expand the output of commodities (for instance, spending on marketing goods, advertising, protecting plant and machinery).

Exploitation, rate of: Ratio of surplus value to wages (strictly speaking only the wages of workers who materially produce commodities should be counted). It can be expressed another way, as the ratio of the time the worker spends producing surplus value for the capitalist, compared to the time he or she spends on producing goods equivalent to his or her living standard. Denoted as s/v.

Keynesianism: Economic doctrine based upon ideas of the British economist of the inter-war years, J.M. Keynes. Holds that governments can prevent recessions and slumps by spending which is greater than their income from taxation (so-called ‘deficit financing’).

Labour theory of value: View developed by Marx (on basis of ideas of previous thinkers such as Smith and Ricardo) that there is an objective measurement of the value of goods, which is ultimately responsible for determining their prices. This is the ‘socially necessary’ labour needed to produce them – in other words the average throughout the system as a whole, using an average level of technique, skill and effort. For Marx’s own accounts of the theory, see Wage Labour and Capital, The Critique of Political Economy and chapter one of Capital, volume one.

Monetarism: Doctrine which holds crises cannot be solved by governments increasing their spending to more than their tax income. Increasing the supply of money, this holds, will simply lead to higher prices. Under the name the quantity theory of money, this was the orthodoxy in bourgeois economics before the rise of Keynesianism in the 1930s, and became fashionable again in the mid-1970s.

Neo-classical economics: Dominant school in bourgeois economics since the end of the nineteenth century. Believes value is a measure of the ‘marginal’ satisfaction people get from goods, and justifies profit as a result of the ‘marginal productivity of capital’.

Non-productive consumption: The use of goods in ways which serve neither to produce new plant, machinery, raw materials and so on (‘means of production’) nor to provide for the consumption needs of workers. The use of goods for the consumption of the ruling class, for advertising and marketing, or for arms, all fall into this category.

Non-productive expenditures: Expenditures undertaken by capitalists or the state over and above what is necessary for the material production of commodities (includes spending on consumption of the ruling class, on its personal servants, on the ‘expenses of production’ and so on).

Organic composition of capital: Ratio of the value of investment in plant, machinery, raw materials and so on (‘means of production’) to the value of expenditure on employing productive labour. Using Marxist terminology, this is the ratio of constant capital to variable capital, or c/v. See also Technical composition of capital.

Productive expenditures: Spending which is necessary if commodities are to be produced and surplus value created (spending on the means and materials of production on the one hand, and on workers’ wages on the other).

Profits, mass of: Total profits of a particular capitalist. Measured in pounds, dollars and other currency.

Profit, rate of: Ratio of total profit to investment. Measured as a percentage. Denoted as s/(c+v).

Profit share: Proportion of total output of a firm or country that goes in profits, as opposed to wages.

Socially-necessary labour: Amount of labour needed to produce a certain good, using average level of techniques prevailing throughout economy and working at average intensity of effort.

Sraffa, Piero: Cambridge economist who refuted basic contentions of orthodox bourgeois economics, the ‘neo-classical’ marginalist school. But he also rejected the labour theory of value, and instead tried to develop a theory of value of his own, based on ideas in the pre-Marxist economist Ricardo. His followers reject the Marxist theory of the falling rate of profit, and usually see crisis as arising when wages cut into profits.

Surplus value: Marx’s term for the total profit made by capital from the exploitation of workers (the profit of the individual capitalist plus what he pays out to other capitalists in the form of rent and interest payments, plus what he spends on ‘non-productive activities’). Denoted by s.

Taylorism: Technique of so-called ‘scientific management’, based upon time-and-motion studies of every act of labour. Spread through industry in the early 20th century.

Technical composition of capital: Physical ratio of plant, machinery, raw materials and so on (‘means and materials of production’) to total labour employed. When this ratio is measured in value terms rather than physical terms, it becomes the ‘organic composition of capital’.

Transformation problem: Problem which arises when the attempt is made to move from Marx’s account of capitalism in terms of value to the prices at which goods are actually bought and sold. Many economists have claimed it is impossible to solve the problem, and that therefore Marxist economics must be abandoned.

Underconsumptionism: Theory which blames capitalist crisis not on the law of the falling rate of profit, but on the alleged inability of capitalism to provide a market for all goods produced within it. The first versions of the theory were put forward by early 19th century economists such as Sismondi, but it has been developed since both by Marxists (from Rosa Luxemburg to Baran and Sweezy) and by Keynesians.

Variable capital: What the capitalist invests on employing wage labour. Denoted by v.

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Last updated on 28 June 2019