Question

Karl Marx begins Volume I of Capital with a discussion of the “commodity”. How is this central to (a) the secret to capitalist profits, (b) how capital circulates in the capitalist economy, and (c) the nature of capitalist crises?

Answer 1

Marx has considered that labour is treated as the "commodity" which is bought and sold in market. Marx tried to capture the struggle of proletariats with bourgeois.

Labour has value which is based upon the labour-time. Means of production also include capitals which has constant value and hence it was only the labour value which could deliver surplus value. So capitalists exploited the labours and used to pay them less, basically the subsistence wage on which they can only survive. This subsistence wage was called labour power. They were not paid according to the value of the product and hence they produced surplus value, which was extracted by capitalists. Also labours worked at subsistence wage because there were many unemployed labours to replace them who demanded more than subsistence wage. These unemployed labours were called reserve army of labours. Hence, the surplus value produced by them led to capitalists' profits.

First, capital is bought from money by the capitalists. This is first stage of capital circulation. It must be kept in mind that capital by itself has no value. And hence, the role of labour comes to play in producing capital value and surplus value. Labours produce commodities which included the capital value and surplus value. This the second stage of circulation of capital to commodity. And so capital is turned to commodity, to be sold in market for monetary capital. When monetary capital comes from the selling of commodity, third and last stage of circulation of capital completes. Now this monetary capital begins new circulation further in similar way. Hence, the curculation of capital takes place.

Capitalist economy cannot sustain for long on their own. This is what karl marx had predicted. He had said that capitalism will fail and socialism will follow. While the socialism did not come but capitalism also did not thrive for long, it took the shape of colonialism and imperialism later on to sustain. But to know why this happened, we must look into the capitalist system. Capitalists tried to keep surplus value with themselves and did not share with labours, which could have formed the markets for their products if they would have received more than subsistence wage. But this did not happen. And capitalists went on to accumulate capital and produced more and more commodities but lacked market for them. This reduced the value of commodities and profit of capitalists decreased. Capitalism faced underconsumption or overproduction problem which lead to capitalist crises.