Henry McLaughlin
Department of Politics, University of California, Santa Cruz
In its orthodox usage, the accumulation of capital refers to the process by which an investment of profit or assets generates a return. This could be an investment in financial, fixed, and/or non-productive assets, or the “human capital” of the workforce. The overall purpose of accumulation is to increase the value of the initial investment and produce new capital. After briefly summarizing its role in Adam Smith’s work, this entry will focus on accumulation’s nuanced role in the Marxist tradition, which sees the concept emerge as a key component in the capitalist mode of production.
Smith does not explicitly lay out the contours of capital accumulation (he never uses the term). However, according to Duncan Foley, Smith begins The Wealth of Nations (1776)
with a vision of capitalist economic development as a self-sustaining, largely self regulating virtuous circle of capital accumulation. The growth of wealth through private initiative creates a wider and deeper market that allows for a more detailed division of labor, which in turn raises labor productivity and creates more wealth. (Foley 1999, 4)
Smith views accumulation in the capitalist mode of production positively, as the “central engine of economic development” (Foley 1999, 4). Key to initiating this process of capital accumulation is frugality. Smith writes that
Whatever a person saves from his revenue he adds to his capital, and either employs it himself in maintaining an additional number of productive hands, or enables some other person to do so, by lending it to him for an interest, that is, for a share of the profits… so the capital of a society, which is the same with that of all the individuals who compose it, can be increased only in the same Manner. (1776, 448)
Smith also writes that accumulation occurs through investment in “durable commodities,” the means of production, and in the workforce: “It is by means of an additional capital only that the undertaker of any work can either provide his workmen with better machinery or make a more proper distribution of employment among them” (456). Capital reinvestment leads to greater efficiency in production which leads to greater wealth: accumulation as a “virtuous circle.”
Karl Marx’s concept of accumulation is somewhat different from both the contemporary (neoclassical) usage and its role in the classical political economy he criticized. For Marx, capital is a process, not just money and assets (not just a “thing”). It is expanding value, appropriated from the surplus-value of the working class’s labor, “the reconversion of surplus-value into capital” (Marx 1990, 734). The profits gained from appropriation are reinvested to gain more capital, which for Marx signals accumulation. He writes that “Accumulation is the conquest of the world of social wealth. It is the extension of the area of exploited human material and, at the same time, the extension of the direct and indirect sway of the capitalist” (740). Smith sees a “positive feedback between the extent of the market and the division of labor,” but Marx argues that this is based on the exploitation of labor (Foley 1999, 108). Capital, for Marx, therefore takes both constant (fixed) and variable forms. Constant capital is investment in production, whereas variable refers to wages paid to labor. In Capital Volume I (1867), Marx first mentions the “Sisyphean task” of accumulation in the context of money hoarding (1990, 231), which is similar to Smith’s claim that “Parsimony, and not industry, is the immediate cause of the increase of capital” (448). Accumulation is first the act of saving. However, Marx sees capital accumulation as more than saving and reinvesting, it is also “vampire-like, [it] only lives by sucking living labour, and lives the more, the more labour it sucks” (324). Through the extension of the working day, laborers are paid less than they produce and capital (in-motion) expropriates this surplus labor. For Marx, as for Smith, accumulation increases social wealth. However, Marx also sees exploitation and its resulting exacerbation of inequality as a result.
Capital’s vampire like qualities are “obscured both by the splitting-up of surplus-value and by the mediating movement of circulation” (Marx 1990, 710); they are hidden behind a veil of appearances. The classical political economists had “metamorphosed” this process into a “pretended law of Nature… [which] excludes every diminution in the degree of exploitation of labour, and every rise in the price of labour, which could seriously imperil the continual reproduction, on an ever-enlarging scale, of the capitalistic relation” (772). In the capitalist mode of production, “the labourer exists to satisfy the needs of self-expansion of existing values, instead of, on the contrary, material wealth existing to satisfy the needs of development on the part of the labourer” (772). Another key aspect of Marx’s theory is the crisis of overaccumulation, a situation in which the profit rate can’t keep up with the amount of capital invested (“the falling rate of profit”). Marx thought that this would inevitably reoccur and eventually lead to a new mode of production: socialism.
Marx concludes Capital Volume I by discussing the concept of primitive accumulation, the moment where laborers are “freed” from control over the means of production. Marx effectively ends his long theoretical account with the historical origins of capitalism, its initial bouts of accumulation. Primitive accumulation, “(the ‘previous accumulation’ of Adam Smith) which precedes capitalist accumulation… is not the result of the capitalist mode of production but its point of departure” (873). Primitive accumulation signals the historical beginning of wage labor and “a degraded and almost servile condition of the mass of the people, their transformation into mercenaries, and the transformation of their means of labour into capital” (881). Most of the early political economists had attributed primitive accumulation to peaceful and hardworking merchants who had gained an excess of capital independent of state power. For Marx, however, primitive accumulation occurs through slavery, colonialism, forced dispossession, and “the spoliation of the Church’s property, the fraudulent alienation of the state domains, the theft of the common lands, the usurpation of feudal and clan property and its transformation into modern private property under circumstances of ruthless terrorism” (895). This implies that the violence of dispossession is not an aberration of capitalism but its precondition, and that the state plays a role in primitive accumulation.
Rosa Luxemburg offers a significant addition to Marx’s analysis of accumulation in The Accumulation of Capital (1913), and David Harvey expands upon both with the notion of “accumulation by dispossession” According to Luxemburg, the growth of capitalism leads to a search for new markets and labor pools in non-capitalist areas. Without new markets to resolve the crisis of overproduction, capitalism would collapse. For Luxemburg:
The other aspect of the accumulation of capital concerns the relations between capitalism and the non-capitalist modes of production which start making their appearance on the international stage. Its predominant methods are colonial policy, an international loan system–a policy of spheres of interest–and war. Force, fraud, oppression, looting are openly displayed without any attempt at concealment, and it requires an effort to discover within this tangle of political violence and contests of power the stern laws of the economic process. (Luxemburg 1913, 452-3, as cited in Harvey 2003, 73)
David Harvey explains that the dual aspects of surplus value appropriation and the expansion of markets are “‘organically linked’ and ‘the historical career of capitalism can only be appreciated by taking them together’” (Harvey 2003, 73). Accumulation occurs through expropriation as production expands; it simultaneously occurs through imperialism and war (“accumulation by dispossession”). Harvey effectively brings Luxemburg and Marx’s primitive accumulation up to the present day, writing that the “the whole pattern of turbulence in the relations between state, supra-state, and financial powers on the one hand, and the more general dynamics of capital accumulation (through production and selective devaluations) on the other, has been one of the most signal, and most complex, elements in the narrative of uneven geographical development and imperialist politics to be told of the period since 1973” (70). Financialization, “crisis capitalism,” the privatization of industries in the public sector and lands in the public trust have drastically increased since the neoliberal turn of the mid 1970s. According to Harvey, unproductive and speculative investing has a geographic component and is creating “deep impacts upon the overall dynamics of capital accumulation… it facilitated the re-centering of political-economic power primarily in the United States but also within the financial markets of other core countries (Tokyo, London, Frankfurt)” (72).
Other notable scholarship on accumulation includes Joan Robinson’s post-Keynesian/Marxist analysis of economic growth, The Accumulation of Capital (1956), Immanuel Wallerstein’s work on world systems theory, feminist critiques such as Maria Mies’ Patriarchy and Accumulation On A World Scale (1986) and Silvia Federici’s Caliban and the Witch (1998), and Jason W. Moore’s ecological critique Capitalism in the Web of Life (2015). Federici, for example, takes a feminist approach to accumulation, arguing that the disciplining of women’s bodies, the reorganization of the medieval family structure, and the rise of witch hunts were crucial to primitive accumulation, and that capital accumulation does not signal a liberatory stage of history. According to Federici, primitive accumulation did not just constitute “the expropriation of European workers from their means of subsistence, and the enslavement of Native Americans and Africans to the mines and plantations of the ‘New World,’… [but] the transformation of the body into a work-machine, and the subjugation of women to reproduction of the work-force” (1999, 63). Furthermore, as women’s “labor, their sexual and [their] reproductive powers were placed under the control of the state and transformed into economic resources,” the body was not only commodified but also regulated and cast in a new light (hence the witch hunts) (170). Federici shows us how accumulation also appropriates “differences and divisions within the working class,” and exacerbates hierarchies of gender, race, and age (not just bodies) in the capitalist system at large (63-4).
Moore, on the other hand, constructs a combined environmentalist, feminist, and Marxist analysis of accumulation, placing its logic within a greater “world ecology.” For Moore, accumulation is not just a way of appropriating wealth or power, but of appropriating nature’s “free gifts,” and of organizing nature itself. Capitalism depends on “appropriating the unpaid work/energy of humans and the rest of nature outside the commodity system” (Moore 2015, 54). Moore writes that “Every great wave of accumulation begins with a high ecological surplus” (the sources of unpaid work in service to accumulation), meaning that accumulation is more than just transferring wealth from the noncapitalist world (98). Accumulation is oriented toward “restructuring the relations of production–human and extra-human alike–so as to allow the renewed and expanded flow of Cheap labor, food, energy, and raw materials into the commodity system” (98). Taken together, these last two works offer greatly expanded notions of accumulation, and demonstrate how we might continue to see it as a guiding logic of capitalism today.
(See Capital, Class, Nature, Primitive Accumulation, Production, War)
Bibliography
Harvey, David. “The ‘New’ Imperialism: Accumulation by Dispossession.” Socialist Register, 2004: the New Imperial Challenge, edited by Colin Leys and Leo Panitch, Merlin, 2003, pp. 63–87.
Luxemburg, Rosa. The Accumulation of Capital. Routledge, 2013,
libcom.org/files/luxemburg%20the%20accumulation%20of%20capital.pdf.
Federici, Silvia. Caliban and the Witch. Autonomedia, 2014.
Foley, Duncan. Notes on the Theoretical Foundations of Political Economy.
1999, www.economia.unam.mx/jarojas/poleconprintFoley.pdf.
Marx, Karl. Capital: Volume I. Penguin Books, Inc., 1990.
Moore, Jason W. Capitalism in the Web of Life: Ecology and the Accumulation of Capital. Verso, 2015.
Smith, Adam. An Inquiry Into the Nature and Causes of the Wealth of Nations. Electric Book Co., 1998.