Communism: the Abolition of Private property. Part I

P Cockshott




1998 Preface

This article published in the Journal Communist Formation (CF) was an early attempt to think through what the slogan of `the abolition of private property' meant. It was a stage in the development of a theoretical position opposed to Market Socialism. Market socialist ideas were already gaining ground among economists in socialist block in the `60s and `70s.

The second part of the article promised in the 1977 introduction never appeared. The immediate cause of this was the dissolution of the communist sect which published the journal. The deeper cause, for it could have been published elsewhere, was that we had not at that point developed a sufficiently clear conceptualization of the nature of communist economic relations.

It was not until the late 1980s, that some of us who had been involved in publishing CF were, through collective discussion, to arrive at firmer answers to the problems posed in this article. These same questions were being posed even more firmly in the political and economic evolution of the socialist world during the period leading up to prestroika, and were beginning to be reflected in the English language literature. A key step here was Nove's publication of The Economics of Feasible Socialism. This work played an important role in discrediting the idea of the planned economy within the left in Britain, and provided the initial theoretical justification for the process by which Labour ended up dropping Clause 4 and become an unapologetic advocate of capitalism.

In the early 1980s, just after Neil Kinnock had been elected to the leadership of the Labour Party, he came up to Scotland to deliver the John Mackintosh memorial lecture. He had a heavy cold and had lost his voice, so Robin Cook read out his lecture in his stead. I was very struck by the obvious references to Nove's ideas in his talk, and realised that what had once seemed to me to be a theoretical debate which only had relevance in China and the Soviet Block, was now having echoes at the level of British national politics. I was convinced that whatever his reputation as a leftist, Kinnock was up to no good, a conviction reinforced by his actions in opposing the great miners' strike shortly thereafter.

It became increasingly evident that in the absence of an alternative political economy, an alternative idea about how the economy could be constructed and run, not only would socialism be unable to survive, but even the little that was Labourism would collapse in on itself. The extra-parliamentary left in Britain had a totally irresponsible attitude to the whole question. Either, like the SWP they rejected all concrete discussion of socialist economics as utopian, or like Militant they thought they could go on advocating old Labour policies without challenging people like Nove.

For that reason some of us started to discuss alternatives to market socialism once again, a process which eventually resulted in the book Towards a New Socialism1, and the polemic we have carried out on the subject these last half dozen years. The book was the promised part II of this article.

1977 Introduction

This text is the first result of our investigation into the theory of property relations. The political importance of this investigation cannot be too highly emphasised at a time when the general practice among Marxists is to operate with an extremely simplistic notion of property relations; a notion which has a certain polemical value while perpetuating theoretical confusion and political bankruptcy. This notion holds that the essence of capitalist property relations is the private ownership of the means of production; the essence of the communist revolution is its abolition. This has two theoretical effects: it removes the distinction between different forms of capitalist property (e.g. individual ownership, joint-stock property, state property and cooperative forms of ownership) and their economic and political articulation; and it reduces the question of the construction of communism to a single act of 'abolition'.

An empiricist reading of Marx's Capital can be used to justify this notion. But the theoretical object of this text is the specification of the invariant conditions of the capitalist mode of production. Where there is an analysis of specific forms of property-for instance the chapters on ground rent in Volume 3, or the brief discussion of nationalisation and cooperatives as transitional forms of property-their economic and political conditions of existence are theorised inadequately, if at all.

Our object is not the invariant character of property relations in the capitalist mode of production (or the invariant property relations of other non-capitalist modes of production) but the field of their variation under capitalism and in the transition to communism. This investigation is essential to an adequate comprehension of the current conjuncture, the elaboration of a communist programme, and hence the specification of the objectives of communist intervention in the present period.

Two specific aspects of the current conjuncture require a knowledge of the system of property relations in British Capitalism. The first concerns what we define as Level 3 property relations, which govern the distribution of surplus value. This function of property relations determines the level and form of capital accumulation in its effects both directly on the mass of disposable profits. and indirectly on the mass of money capital accumulated in banks and other financial institutions. It is not possible therefore to infer a level of accumulation from a demonstrated declining rate of profit. If one is to avoid an eternal two class. final crisis notion of capitalism which is the corollary of such a thesis. it is necessary to analyse the specific set of property relations which govern the distribution of surplus value. This set constitutes an aspect of the specificity of the current conjuncture.

It limits the objectives and possible outcomes of political intervention. In future issues of Communist Formation we will be publishing the results of work we are doing in this area not ably on the accumulation of bank capital and its effects on capitalist reproduction.

While Level 3 property relations govern the distribution of surplus value, different forms of capitalist property control production of surplus value, through their effects on the determinants of the rate of surplus value, i.e. the organic composition of capital, the conditions of production of absolute and relative surplus value, and the conditions of economic and political class struggle. Our theory of property relations enables communists to pose the question of the relationship, for instance, between state property and workers' cooperatives, and the reorganisation of the labour process; or the relationship between different forms of capitalist property and "workers' control". These questions are of fundamental importance to the analysis of the current conjuncture and its possible outcomes. They are opened out by this study of property relations.

Our investigation will be continued by an examination of 'socialist forms of capitalist property relations': cooperatives and state property. The political urgency of these questions should be obvious, since they concern the general conditions of, and obstacles to, the transition from the dominance of capitalist property relations to the dominance of communist property relations.

Äll property relations in the past have been subject to historical change consequent upon the change in historical conditions.
"The French Revolution, for example, abolished feudal property in favour of bourgeois property.
"The distinguishing feature of communism is not the abolition of property generally, but the abolition of bourgeois property. But modern bourgeois private property is the final and most complete expression of the system of producing and appropriating products that is based upon class antagonisms, on the exploitation of the many by the few.
Ïn this sense the theory of the communists may be summed up in the single sentence: Abolition of private property." (Communist Manifesto)

As a science, historical materialism, the theoretical basis of communism, does not start with things as they appear; it starts with abstract ideas- concepts-and from them attempts to explain things as they appear. As Marx says, it "leads from abstract definitions by way of reasoning to the reproduction of the concrete situation." (Contribution to the Critique of Political Economy, Lawrence and Wishart, p 206). Thus, in examining property relations, a historical materialist analysis does not start with property as it appears, with the legal expression of property relations. Instead it recognises property relations to be particular types of production relations, and that in consequence, property relations must be understood in the context of the mode of production to which they belong. So, to understand property relations and the conditions under which private property can be abolished, we must first see what a mode of production is.


Historical materialism groups human societies on the basis of their modes of production.

The reproduction of the conditions of material production provides the basis for both the unity and continuity of human societies. Social continuity depends upon the ever-repeated production of the material goods needed for survival. Social unity arises from the interconnection and inter-dependence of the different aspects of social production. Thus, the starting point of any study of society must be its process of material reproduction, just as scientific biology makes its starting point the reproduction of the species. The material reproduction of a society must take place in an organised way, within the framework provided by one or more modes of production.

What historical materialism terms a 'mode of production' is a combination of two systems: a system of productive forces, and a system of production relations. The productive forces include all the elements of the labour process: workers, the implements or means of labour they use, and the objects that they transform through their work. A mode of production, however, needs more than just a collection of men, machines and raw materials. It needs an actual system of productive forces.

What do we mean by a system of productive forces? We mean the way in which the elements of the labour process are technically organised into an effective process of production. This organisation sets up definite technical relations between the various elements of the production process. Raw materials and other objects of labour require appropriate means of labour if they are to be worked up into finished products. The type of technical relations that make up the system of productive forces, is determined mainly by the implements used. These determine what resources are available as objects of labour; what types of physical operations the workers must carry out; and what types of co.-operation and division of labour are possible. For instance, a low development of the instruments of labour means that human muscle power is the only source of energy: As a result, the simultaneous co.-operation of a large number of workers is needed for any task that requires large-scale expenditure of energy, such as the movement of big objects. Most importantly, the system of productive forces determines the size and properties of the basic units of production; and, in doing so, it determines what forms of exploitation are compatible with the continuation of production.

By units of production we mean aggregations of workers and means of production within which certain organically linked labour processes take place. Within the unit of production the various different labour processes are more or less directly connected, and stand in definite, relatively fixed, technical relationships, the output of one process becoming the immediate input of another. "The material base of the unit of production is thus constituted as a grouping of means of labour serving to reproduce a determinate labour process. As a result, a unit of production exists only so long as the reproduction of an aggregate of labour processes carried out with the aid of an aggregate means of production is continued; the existence of the 'unit of production' through time is nothing other than the existence of successive cycles of the same labour process using the same means of production." (C Bettleheim, Calcul Economique et Formes de Propriete, Maspero, 1971, p 94).

Since the technical conditions of production require a particular type of labour process materialised within a certain technical unit of production the continuity of the labour process demands the repeated reproduction of these units. The method: by which reproduction is ensured is one of the keys to the system of social relations of a mode of production. The development and extent of the division of labour in society profoundly affects the way that productive units reproduce themselves. The more highly developed, the more the units of production become dependent upon each other. "The various stages of development in the division of labour are just so many different forms of ownership; i.e. the existing stage in the division of labour determines also the relations of individuals to one another with reference to the material, instrument, and product of labour." (Marx/Engels, The German Ideology, L&W, 1938, p9).

The unit of production groups together workers and means 0 production. Reproduction of units of production must therefore encompass the reproduction of both these elements. The crucial question is whether or not the workers and means of production can be reproduced within the unit of reproduction. Self-sufficient peasant households are able to reproduce most of their own labour power and means of production. The division of labour is poorly developed. The household is able to produce most of what it needs: the means of production are simple, or else self-reproducing. The scale of the unit of production coincides with that of the family, thus ensuring the day-to-day reproduction of labour power. At the opposite extreme consider the capitalist factory:

It reproduces neither labour power not its means of production, but must buy both in the market place.

The social form assumed by the reproduction of these units of production is one of the two main aspects of any system of relations of production. The other is the mechanism for ensuring that workers perform surplus labour, i.e. labour over and above the amount necessary to satisfy their own needs. In a class society, this compulsion to perform surplus labour is the mechanism of exploitation. At any given level of technology and standard of living, a certain proportion of the labour performed by the workers, or direct producers, is required for their own reproduction. The workers need food, clothing, shelter, and other consumer goods for themselves and their families. These require a definite amount of labour for their production: From the workers' standpoint this is necessary labour. Any labour over and above this is surplus labour. In a communist society, the surplus labour would be used for collective social benefit, or for the maintenance of the old or sick. In class societies, the benefits of this labour are monopolized by a class of exploiters.

We can now be a bit more precise about what a mode of production is. It is:

  1. a system of productive forces that involves a particular type of unit of production and corresponding division of social labour;
  2. a system of production relations that ensures the reproduction of these units of production and enforces a particular form of appropriation of surplus labour.


Private property, in its developed form, appears as a relation between two terms: a legal subject and a legal object. The legal subject owns the object, and is entitled to, (a) enjoy the use value of the object; and (b) alienate the object to other legal subjects. Subjects are often referred to as legal "persons", and the objects as legal "things". This can be confusing since it seems to imply that a legal "person" is a person in the everyday sense of the word, which is not always the case. The legal personality may in fact be an institution, such as a trust, a company, or a religious organisation. On the other hand, the legal object need not be a thing in the everyday sense either. A legal object can be a human being, as in the system of private property corresponding to chattel slavery. The subject and object of property are abstract categories corresponding to the developed system of private property: They must not be reduced to empirical or commonsense notions about persons or things.

Not all modes of production need a fully developed system of private property (it was absent under primitive communism; see Engels, Origins of the Family, Private Property, and the State). Even in those modes of production with a highly developed system of private property, such as slavery or capitalism, the full potential of these categories of private property may not be realised. For instance, Nicholas, in his Introduction to Roman Law, says (p 61) that where there was slavery under Roman Law önly human beings could have rights; legal persons were necessarily also natural persons. Admittedly natural persons were not always legal persons, but no doubt it seemed evident that a slave could have no rights. ..." By contrast under capitalism a natural person may not be the object of a property relation, (except in those instances where slavery and capitalism coexist within the same state e.g. USA in the 185 Os). For the purposes of analysis, however, it is important not to confuse particular historical examples of private property with the general system.

The above definition of private property is necessarily abstract, because we are dealing with private property in general To be more concrete, and to tell one mode of production from another, we have to look at the functions of property relations. We can distinguish three functions which property relations perform:

Level 1 property relations: act to ensure the reproduction of the units of production.

Level 2 property relations: act to ensure the extraction of surplus labour.

Level 3 property relations: act to govern the distribution of surplus labour.

Although these functions are analytically distinct it does not follow that a particular type of property relation will perform only one function.


Under the capitalist mode of production the unit of production takes on a particular social form: that of the enterprise. An enterprise is both a technical unit of production and, at the same time, the subject of property relations. That is to say, it can both acquire and alienate property. This character of the unit of production as a legal subject corresponds to a particular technical organisation of production and form of the division of labour. Under capitalism production is social: the division of labour encompasses the whole of society. The units of production produce not for their own needs but for those of society. They do not consume their own product: it enters into the production of society in general. In the "natural economy" of the peasant household, the units of production and consumption coincide.

Although the enterprise both produces and consumes, it does not produce what it consumes. Each enterprise is both a unit of production and of productive consumption, because in the labour process raw materials are consumed and other means of production worn out. The division of labour in capitalist society means that each enterprise produces a small range of goods, while consuming many different types. Each enterprise must consume goods produced by others. This necessitates a circulation of products among the enterprises. But, as these are legal subjects owning property, how can this necessary circulation take place, without violating their rights?

The only possible way is the exchange mechanism. If products are exchanged as equivalents, then there is no loss of property. One product exchanges against another, which is thereby counted as its equivalent. A car factory indirectly exchanges cars for sheet steel. The factory cannot consume cars, which therefore have no intrinsic use-value for it, but it can consume sheet steel. Therefore it exchanges something of no use to it for something that it needs. It follows that the enterprise is not interested in the use-value of its products, but only in the equivalents that it can obtain in exchange. These equivalents are thus the exchange values of the products. Enterprises produce for the sake of exchange value not use value.

A good produced for exchange is a commodity, a particular form of private property. A consequence of the production of such exchangeable items of property is the development of a system of equivalence relations. It follows from the nature of equivalents that each commodity can have only one equivalent in terms of every other commodity (e.g. if a car is equivalent to 10 tons of sheet steel as an exchange value it cannot at the same time be equivalent to 11 tons). As two commodities can have only one exchange ratio at a time, it follows that, if one of the commodities, for example gold, is set aside, all other commodities must have definite exchange ratios in terms of it. A necessary condition of developed commodity production is that there must be some commodity acting as a universal equivalent, or money, in which all other commodities express their exchange values. The expression of exchange values in terms of money, the universal equivalent, constitutes the price form.

It can now be seen that the existence of the units of production as subjects of private property, and of the products as objects of private property, is a mechanism for the reproduction of the units of production. It reproduces them both technically and socially. Exchange enables what is productively consumed to be replaced, allowing production to continue. If all units of production are enterprises, and thus subjects of property, then each of them is forced to resort to exchange in order to reproduce itself. They cannot afford to give their product away without receiving an equivalent in return. To do so would put an end to their existence. Thus commodity exchange reproduces the enterprises as enterprises. Private property reproduces itself. Private property becomes a necessary effect of private property.

We have now identified several aspects of capitalist production.

  1. The system of productive relations prevents the enterprises from reproducing themselves independently.
  2. The enterprises are subjects of private property.
  3. The products, as commodities, are objects of private property.

This set of relations ensures that we have a system of generalised commodity production. It is not an adequate definition of capitalist property relations, since it could apply to a slave economy. Slavery can be a system of generalised commodity production. To distinguish between them, we must look at the property relations that bring about exploitation under capitalism. These may be summed up as: the existence of a class of "free" labourers. The word free is here used in a double sense.

  1. The labourers must be legally free as individuals; they must have the right to acquire and alienate property through purchase and sale. This involves them being free from the ties of personal dependence that slavery and feudalism involve.
  2. They must be "free" of the means of production, i.e. they must neither own nor possess sufficient means of production to produce on their own account. )

This means that the producers are legal subjects having the right to own property (and indeed, workers nearly always do own certain petty private property, clothes, person effects, maybe a dwelling). This right, bourgeois legality upholds for workers as for capitalists . Equality before the law!

The different modes of production each have a particular way of extracting surplus labour. We have identified the property relations and system 6f productive f6rces necessary to ensure the specifically capitalist form of exploitation. The same basic principle governs the reproduction of the units of production in the form of enterprises, as ensures the subordination of the labourers to capital: the right of property owning subjects to voluntarily exchange property. In this way the legal expression of bourgeois right hides the real economic relations that it makes possible.

It will be noted that in specifying the necessary property relations of capitalism we do not have to mention the individual capitalist as the owner of the enterprise. This is a point of great political importance. The Marxist theory of production relations is not a theory of relations between individuals. It is a theory of the relations between economic categories. As Marx said, speaking of the relation between buyer and seller:

"This juridical relation, which thus expresses itself in a contract, whether such a contract he part of a developed legal system or not, is a relation between two wills, and is but a reflex of the real economic relation between the two. It is this economic relation that determines the subject matter comprised in each such juridical act. The persons exist for one another merely as representatives and therefore, as owners of, commodities. In the course of our investigation we shall find, in general, that the characters who appear on the economic stage are hut the personification of the economic relations that exist between them." (Capital I, L&W, 1970, p 84, our emphasis).

Marxism does not explain private property as resulting from human individuals and some supposed tendencies that they may have to "truck barter and exchange". It shows that the individual, the starting point of bourgeois economic and legal philosophy, is not the real starting point of the history of property, but one of its results. The free individual is an effect of private property relations, and the ideologies associated with them, not the reverse. Thus in examining bourgeois property relations we start not with concrete individuals and their property, but rather with the abstract categories of private property. Similarly, in examining the property relations governing bourgeois exploitation, we start not with the concrete personalities of capitalist and wage labourer, but with the property system, and technological system that makes these personalities possible. This system must be stated in its most general and abstract form in order that the concept of capitalist property relations not be confused with particular historical examples of such.

Since the capitalist enterprise reproduces itself through the circulation of commodities, it assumes the form of a mass of commodities, and accumulation of value. But value serving to extract surplus value, thus value in motion, in growth: it is capital. The enterprise is an accumulation of capital. The commodity is a form of private property, so too is an accumulation of commodities; the enterprise is thus also a possible object of private property.

The enterprise can be both subject and object of private property relations. When entering into commodity exchanges, it must act as a subject, a party to contracts. But any developed system of circulation also entails a system of credit. Credit involves the transfer of property from one subject to another without a simultaneous movement of property in the opposite direction. In the normal exchange we have the following:



Commodity x


Commodity y (money)


since A&B exchange equivalents, neither of them have their status as independent juridical subjects affected. They leave the exchange as they entered it, as independent owners of private property. All that changes is the use values in which the exchange value of their property is materialised. In the case of a credit exchange, A would not get commodity Y in return for his X. Instead he would get an acknowledgment of debt. B would become A's debtor, while A would become B's creditor. B would owe A the value of commodity X. The debt becomes part of A's property, it ranks among his assets. Credit requires an extension of the form of private property beyond that required for simple exchange. For the latter, all that is needed is a relation of ownership between subject and objects of property. With credit, a relation between two legal subjects becomes converted into a legal object. Debts thus circulate like commodities.

As capitalist enterprises must enter into credit relations, they become the objects of claims against them. In the credit system, the possibility of the enterprise becoming an object as well as a subject is realised: hence, the possibility of bankruptcy. Since bourgeois property relations do not allow a person to be an object of property (i.e. a person cannot be a chattel slave), the existence of the enterprise, an abstract and impersonal entity that is both subject and object of property, is a necessity. In the ease of bankruptcy, where the debts of the enterprise exceed its assets, the enterprise ceases to be a legal subject, and becomes a pure object of property for its creditors. It ceases to be able to enter into contracts; its property becomes the property of its creditors, and its juridical personality dissolves. If the enterprise were identical with a concrete person, this would be tantamount to it ceasing to be a legal personality, and becoming the property or slave of its creditors . The enterprise figures as property in two senses:

  1. As potential property, for the enterprise's commercial creditors. This is a level I property relation, as it arises from the reproduction process of the enterprise. It does not involve the transfer of surplus value-it is an extension of the property relations that arise from commodity circulation.
  2. As an object of property for its owners. This is a level 3 relation, i.e. it entitles them to receive surplus value produced in the enterprise.

The level 3 relations are the most variable. The capitalist mode of production must always have enterprises and wage labourers i.e. the level 2 relations are always the same; this is not true of the level 3 relations. Private capitalists or joint stock companies are not necessary elements of the mode of production in the way that wage labourers and enterprises are.

If we consider the matter at the level of the individual enterprise, it can clearly carry on simple reproduction as a unit of production/exploitation whatever happens to the surplus value produced by its workers. Simple reproduction involves the continuation of production on the same scale without technical change. It does not require any re-investment of surplus value.

A single enterprise, however, is not an economy. What holds at the enterprise level may not hold at the social level. In the reproduction of the total social capital, the surplus value cannot be ignored. The total labour power of society is distributed among various branches of production. A portion of the labour is employed reproducing the existing conditions of production: replacing consumed raw materials and instruments of production, and producing consumption goods for the productive population. The production of surplus value entails the expenditure of surplus labour and the existence of a surplus product. For this surplus product to be converted into money, for use value to become exchange value, it must be purchased. This requires the existence of purchasers of the surplus. Those who purchase the surplus product become its owners. The purchasers of the surplus product are the real appropriators of the surplus value. Without them, the surplus cannot assume exchange value form; unsold products accumulate, the process of social reproduction is interrupted. Without the real appropriation of surplus value, capitalism cannot reproduce itself.

For money to flow from real appropriators to enterprises, in exchange for surplus product, it must have passed from enterprises to real appropriators as revenue. Taking an economy as a whole, suppose that surplus value has the money, or price form, of 10,000 million. The real appropriators receive 10,000 million in money from enterprises and with this sum they buy from the enterprises 10,000 million worth of commodities. The net result is an unbalanced flow of 10,000 million of value from enterprise to real appropriators. This unbalanced transfer of value violates the principle of reciprocity upon which all commodity circulation is based. Such violation is the unmistakable sign of an exploitation process.

The questions that we must examine are:

  1. how this transfer of value comes about i.e. what social relations govern it;
  2. who the real appropriators are;
  3. what use value form the appropriated surplus assumes;
  4. what function it plays in social reproduction.


This investigation is concerned with the role of property relations as the primary determinant of the distribution of surplus value. For this reason, we shall ignore those parts of distributed surplus value not so determined, in any direct sense. namely tax and that consumed by unproductive labour. With these exceptions, surplus value in capitalist economies divides into two major parts: rent and profit.

Under capitalism, it is capital, materialised in the capitalist enterprise, that pumps surplus labour out of the producers. Rent and profit are the first two categories into which the surplus value 'produced' by capital falls; categories corresponding to the two forms assumed by the separation of direct producers from the means of production.

"Profit of capital (profit of enterprise plus interest) and ground rent are thus no more than particular components of surplus value, categories by which surplus value is differentiated according to whether it falls to the share of capital or landed property, headings which in no whit. however, alter its nature. Added together, these form the sum of the social surplus value. Capital pumps the surplus labour, which is represented by surplus value and surplus product, directly out of the labourers. Thus, in this sense, it may be regarded as the producer of surplus value. landed property has nothing to do with the actual process of production. Its role is confined to transferring a portion of the produced surplus value from the pockets of capital to its own. (Capital III, L&W, 1 972,p821)

5.  RENT

The existence of private property in land-the 'monopolisation' of land-is an essential condition for the establishment of capitalist exploitation. Unless producers are separated from land, the principal means of production in pre-capitalist economies, they cannot be subordinated to capital. This historic necessity explains much of the difficulties that capitalism encounters in colonial territories where the private ownership of land has not been established.

"However, the landlord plays a role in the capitalist process of production not merely through the pressure he exerts upon capital, not merely because large landed property is a prerequisite and condition of capitalist production, since it is a prerequisite and condition of the expropriation of the labourer from his means of production, but particularly because he appears as the personification of one of the most essential conditions of production." (ibid.).

The necessary historic role of private ownership of land does not, of course, tell us anything about its functioning in an established capitalist economy.

Capitalist ground rent has two forms corresponding to two aspects of landed property; these forms are differential and absolute ground rent.


Differential ground rent, in its capitalist form, has three preconditions, one natural and two social.

  1. Natural precondition; existent differential productivity of land;
  2. First social precondition; the existence of an average rate of profit. (NB. Average of all employment of capital);
  3. Second social precondition; ownership of land by non-producers.

Differential productivity of hand depends on fertility in the case of agriculture, or mineral deposits in the case of mining. With urban land use the question is somewhat more involved since the 'productivity' is a function of social practices. Examining differential rent in agriculture. it can be seen that equal quantities of capital applied to equal areas of land of different fertilities, will yield different rates of profit. Discounting short-term fluctuations, capital will not be invested in soil of low fertility that yields profits below the average rate. Thus land that yields less than the average rate of profit will not be cultivated, marginal land will be that of a fertility giving an average rate 6f profit, while more fertile soils will yield above average profits. As land itself has no exchange value. in the sense that it costs nothing to produce, differential fertility acts to counter the formation of an average rate of profit.

With the separation of landowners from productive enterprises, it is possible for landowners to charge a differential rent equal to the difference between the average rate of profit and the greater profit earned on more fertile land. This 'excess' profit, over and above the average rate of profit, converted into revenue appropriated by landowners, constitutes differential rent.


Descriptively, the existence of absolute ground rent is quite easy to explain. In the discussion of differential ground rent, it was seen that only land that yielded above average rates of profit would command rent. Land on which the average rate of profit was made would give no differential ground rent. In this case there would be no incentive for the landowner to allow the land to be used rent-free. To do so would be to renounce in practice the right of private ownership, or at least its significant effects. Instead, a non-farming landlord will withhold land from cultivation. Reduced to essentials, the private ownership of land is the right of exclusion.

"The mere legal ownership of land does not create ground rent for its owner. But it does, indeed, give him the power to withdraw his land from exploitation until economic conditions permit him to utilize it in such a manner as to yield him a surplus. be it used for actual agricultural or other production purposes, such as buildings, etc." (Capital III, p 757)

Land which yielded only the average rate of profit to capital, and on which no differential rent was paid, would be taken out of cultivation by landowners. The supply of agricultural commodities would fall and their prices would rise. Higher price, and therefore profit levels, would draw land back into cultivation and prices would eventually stabilise at a level such that the least fertile land in cultivation would be yielding above average profit, and paying rent. The level of rent paid on the least productive land in use is absolute ground rent. On all but the poorest land, where only absolute ground rent is paid, landowners draw both absolute and differential ground rent.

It is evident from this that the conditions for the abolition of the two types of rent are different. The nationalisation of land could abolish absolute ground rent, since this rests only upon a legal right of ownership, and, in the last resort, upon the political power of the state as the protector of private property. If the state were to nationalise land and then agreed that no rent need be paid on the poorest land, the political conditions required for the existence of absolute rent would have been removed. Not so with differential rent, since this has an economic basis as well as a legal or political one. Even if the private ownership of land were abolished, the maintenance of an average rate of profit would require the state to levy differential rents.

Absolute ground rent can be seen to be a special case of monopoly price. Like all instances of monopoly price, the level of absolute rent is determined by political conditions and cannot be explained in purely economic terms.

The theoretical difficulties involved in Marx's presentation of rent are acknowledged but, for the purposes of this essay, they can be left to one side.


Profit is an inevitable category of the capitalist mode of production. Given that the means of production exist as exchange values, which can be expressed in money, then, since the surplus value produced is also converted into money, it appears as profit. The ratio between the price of the capital and that of the surplus value is a rate of profit. This will be how things look at the level of the enterprise. What happens to this profit? There are two possibilities: it may remain the property of the enterprise; which now becomes the real appropriator of the surplus value by using its profits to accumulate fresh capital. Here there is nothing new to be explained. Alternatively, the profit may be appropriated by some juridical subject other than the enterprise. In the first case no new property relations have to be presupposed other than those that we have already dealt with. Since the enterprise is the site of the extraction of surplus value, and since the existence of enterprises is predicated upon them being the subjects of property relations, their retention of surplus value is already presupposed as a possibility. But is the retention of all profits within the enterprise adequate to ensure the reproduction of the capitalist economy as a whole?

This amounts to asking whether capitalism could exist without some sort of level 3 property relations. This cannot be the case. Let us assume that level 3 property relations did not exist, and follow through the consequences of such an assumption. We would have an economy in which each enterprise retains all its profits. Since an enterprise is essentially a unit of production (i.e. an aggregation of workers and means of production within which certain organically linked labour processes take place), it cannot consume the profits unproductively as revenue, but must transform them into capital. This implies accumulation, and thus a change in the scale of production: expanded reproduction. Not only is more produced of existing types of commodities, but also the composition of the product changes, new types of commodities appear on the market. Not only is there an expansion of the value produced, there is also qualitative change in the use values produced. This in turn implies the existence of new enterprises specialising in the production of these new commodities. If these are to come into being, surplus value must be devoted to their construction. Therefore the existing enterprises cannot be the sole real appropriators of the surplus value they produce. It follows that level 3 property relations must be an integral part of the capitalist property system.

The level 3 property relations can fall into 2 basic types:

  1. The existence of interest-bearing capital; .
  2. The existence of enterprise owners. .

In both cases we must presuppose the existence of a new set of juridical subjects. In one case these new subjects own interest-bearing capital; in the -other, the enterprises themselves. Neither case requires qualitatively new legal forms. In the case of interest-bearing capital, its legal foundation is already prepared by the laws of contract and commercial credit. In the case of enterprise ownership, the matter is even more simple, the enterprise is already formed by the accumulation of values and is thus, "by nature", an object of property. Furthermore, the enterprise is the prototype subject/object, owner and owned in one. The same legal form reappears in the case of the joint stock company, which is owned by shareholders while itself owning property, e.g., enterprises. The enterprise form in this way provides the key to an understanding of the whole juridical superstructure of capital ownership, just as the commodity form provides the key to the juridical relations involved in the production of surplus value.

We can now sum up the essential components of capitalist property relations.

  1. Production is carried out by enterprises that reproduce themselves through the purchase and sale of commodities.
  2. There exists a class of free, propertyless labourers.
  3. The enterprises are objects of property, their owners being either persons or institutions who are able to dispose of some or all of the surplus value produced in the enterprises.

It is this set of property relations that provides the common factor to all those societies within which the capitalist mode of production operates. They are the necessary and sufficient conditions for the existence of an articulated capitalist mode of production. Societies, however, often have more than a single mode of production operating within them, so that to say that capitalist property relations exist within a society is not to say that it is a capitalist society. For a society to be capitalist, the capitalist mode must be either the only or the dominant mode of production within it.


What do we mean by dominant mode of production?

At first the term conjures up notions of size. Capitalism is dominant because it is the largest mode of production. On this basis we may say that a society is capitalist if more than half of its working members are employed in the capitalist sector. This definition is inadequate, however, since the much higher productivity of a capitalist sector would allow it to dominate an economy in which the majority of the population were still employed under a less efficient mode of production-say feudalism. A more dynamic concept is required.

Each mode of production has a specific form of extended reproduction, by which we mean, above all, the extension of its production relations, rather than just the expansion of its stock of means of production. This provides a way of determining the dominant mode of production in a society. We can define it as follows: the dominant mode of production, where several modes exist, is the one able to impose its own law of extended reproduction at the expense of other modes, so that these undergo contracted reproduction and their social relations are in the process of being broken down. If we are to address ourselves to the crucial question of the transition from a society dominated by the capitalist mode of production, to one dominated by the communist mode of production, it is to the types of extended reproduction that characterise them and the forms of dissolution of capitalist social relations, that we Will have to turn. Here we restrict ourselves to one aspect of these questions: property, its role and transformation. What functions do different elements of the system of capitalist property serve in the extended reproduction of capitalism; and, what are the transitional forms through which capitalist property relations will pass in the process of the dissolution of capitalism?


We showed the necessity for a separation between enterprises and real appropriators of surplus value in the context of accumulation and expanded reproduction. It is on this point that we must focus our attention. What types of real appropriators are possible under capitalism; how do transformations in the level 3 property relations-the relations that govern the real appropriation of surplus value-affect the modalities and cadences of the social reproduction process as a whole; and, to what extent do transformations in these level 3 property relations constitute moments in the dissolution of capitalist production relations? This involves an examination of three juridical forms of capitalist property relations: the joint stock company, the workers co-operative enterprise, and the state capitalist form. We chose these three for examination. Together, they span the field of variation of possible developments from our given starting point: a modern capitalist economy, such as that of the British Isles. We chose specific forms of property for examination, since the political struggle of the proletariat can never be a struggle for the abolition of private property in general, as an immediate goal. That indeed is the strategic objective towards which the communists must direct every partial struggle, but it can never be the immediate objective of these struggles.

At any given moment, changes to an existing concrete set of property relations are limited to those compatible with the continued material reproduction of society. It is only in such a field of variation that effective political struggles can change property relations.

Movements within and of this field are the resultant of two kinds of forces: the system of productive forces, particularly in its technological aspect; and the class struggle. changes in the system of productive forces act to shift the limits or margins of the field of variation. For example, the development of large-scale machine industry is a precondition for either joint-stock companies or state capitalism being the dominant form of capitalist ownership. The field of variation of dominant forms changes: on the one hand, it now includes joint-stock companies and state capitalism; on the other, it excludes domination by sole proprietorship-the form of capitalist petty bourgeois ownership. The impossibility of a return to this form of dominance is attested to by the repeated defeats of the reactionary populist movements of the petty bourgeoisie since the development of machine industry. This points to the second force that enters into the transformation of property relations: the class struggle.

Once a new system of productive forces and relations is established the variations within that field and the direction of technological development are determined by the class struggle.

Political class struggle is always a struggle around and about state power, but state power is the means by which particular property relations may be changed or abolished. It is these changes in property relations that are the strategic objectives of conscious class struggie, it is they that give strategic content to the struggle. Without a concrete understanding of the limits of the field within which this struggle is waged, and the significance of the various pcssible transformations, no scientific practice of the proletarian class struggle is possible.

The remainder of this paper and its sequel is concerned with the nature of the variant forms of property relations to provide a basis for the scientific political conduct of the class struggle.


In the property relations corresponding to petty commodity production, the distinction between the enterprise a nd its owner is inapplicable. The petty commodity producer is the direct personification of the unit of production; because he and his labour are its main element. The concept of ënterprise" is usable here, even if in a qualified sense, since the units of prod uction are not self-sufficient, i.e. they are forced to buy commodities in order to reproduce themselves. Petty commodity producers must thus be distinguished from ärchaic" commodity producers such as feudal serfs. The latter only engage in commodity production in order to obtain money for the payment of rents, or usury on loans. In their case it is only the surplus portion of their labour that has to be converted into money through the sale of commodities.

With petty commodity production, the enterprise is directly personified in the producer. It has no juridical existence apart from him as a person. It seems to be his personality that gives legal existence to the enterprise. It is because certain inalienable rights inhere in him as a subject or citizen-rights to hold or dispose of property-that the unit of production is able to function. That, at least, is how things appear in the classical ideology of bourgeois property right. From a materialist standpoint we can see that this is incorrect. It is not the case that the enterprise has no juridical existence apart from the person of the producer who provides its real basis. On the contrary, the individual producer has no juridical existence, in terms of property right, outside the enterprise. It is the system of economy based upon self-reproducing enterprises that, under petty commodity production, and capitalism, provides the material and historical preconditions for the "personal" property rights of individual producers. As we have seen, enterprise production requires the existence of the enterprise as a juridical subject or personality. The "personal" rights of the petty producer are the expression under particular technological and social conditions of this general requirement.

The isolated individual, possessed of free will and free disposition of property is the starting point of bourgeois juridical ideology. For Marxism, however, the free individual is far from being a starting point. He is the product of a long history; he is the product of the development of private property. To each stage in the development of the division of labour and private pr(operty, there corresponds a form of individuality. The technical/social relations of petty commodity production enforce ' correspondence between concrete human beings and the juridical category subject of property. Legal and biological entities coincide. Here, the law is no arbitrary enactment of the state, hut an accurate reflection of the real conditions of social life.

Capitalism retains this same coincidence, but, as we have seen, does so for other reasons, i.e. because the exploitation process requires the sale of labour power as a commodity. Thus the exploited class, the incarnation of the commodity, must have the right to sell it. Labour power becomes an object of property, and the individual workers subjects of property right.2

It is from these property relations, from the ineluctable necessities of the mode of production, that the banal bourgeois notion of universal human equality is generated. It is the spiritual product of a property system under which "the notion of human equality has already acquired the fixity of a popular prejudice" (Capital I p 60); a property system which at the same time reduces human equality to an ironic joke for all but the bourgeois. Communists, however, who seek the abolition of privateproperty and the system of rights that accompanies it, have no need to cloak their aims in a mythology of inalienable rights, however "human". The private entrepreneur is the form of capital ownership that develops naturally out of petty commodity production. It is the result of the first steps in the socialisation of production that capitalism achieves. The transition point between petty bourgeois and private capitalist is, as Marx says, an example of the dialectical transition of quantity into quality. "The possessor of money or commodities actually turns into a capitalist in such cases only where the minimum sum advanced for production greatly exceeds the maximum of the middle ages. Here, as in natural science, is shown the correctness of the law discovered by Hegel (in his Logic), that merely quantitative differences beyond a certain point pass into qualitative changes." (ibid p 309). Outwardby we have only an increase in the value of labour power and means of production, but this masks a transformation of the production process.

Instead of being the work of an individual -who is thereby fused with the unit of production and the immediate personification of its legal existence-production is now co-operative, the work of many producers. The property relations thus undergo a qualitative change. Instead of being simple bevel 1 relations serving only to reproduce the unit of production, they become reproduced in triplicate. (We do not intend to imply that petty commodity producing societies had no level 2 and 3 relations, just that these were not based upon commodity exchange.) Production becomes simultaneously exploitation, while the unity between the producer and the unit of production as subject of property breaks down. The producers become propertyless proletarians, and the unit of production acquires the status of a fully fledged enterprise, an autonomous subject to whose reproduction they are subordinated. At the same time a new personality arises: the enterprise owner or entrepreneur. The entrepreneur is the personification of his capital, according to Marx. What does this mean?

We know that the enterprise and its owner are distinct subjects. The capitalist is not identical with his unit of production, in either the technical or juridical sense. The relation between the capitalist and the enterprise is more complex than the system of personification holding under the petty bourgeois property relation; it now has at least two aspects. Firstly, a private capitalist can act as agent for the enterprise. The latter may indeed have property rights, may be a legal personality, but for their practical exercise, these rights require a real person to act as agent or representative of them. The enterprise purchases labour power and means of production, enters into contracts, and sells products, but to do this, somebody must act on its behalf, must sign the cheques etc. In the early stage of capitalism these functions devolve upon the owner. Secondly, the capitalist as an appropriator of surplus value has a direct interest in the expansion of his capital invested in the enterprise. In the long run he can continue to appropriate surplus value only by ensuring the accumulation of his capital. Competition forces capitalists to modernise their enterprises, to intensify exploitation, and expand the scale of their production; accumulation is an internally imposed necessity (in the long run at least; this is shown by the figures for accumulation in Britain since 1855).

The distinction between these twin aspects of personification of capital remains blurred at this stage of the evolution of bourgeois property. They become more distinct as capitalist production breaks free of the shell of individual private property that at first protected it, and assumes its classical form-the joint stock company. Companies developed as a result of the advance of technology.

The devehopment of enterprises such as railways which require capitals of large mass with a high fixed capital proportion are beyond the reources of individual capitalists. Hence the necessity for the capitals of a large number of individuals to be merged under one ownership-that of the company. Here the separation between the capitalist as consumer of surplus value, and the capitalist as the personifier of capital is brought about by splitting these two functions between two groups of individuals: the company managers, and the shareholders. Unlike the early capitalist entrepreneur, the shareholders, the legal owners of the capital, become completely superfluous to production.

"The capitalist mode of production has brought matters to a point where the work of supervision, entirely divorced from the ownership of capital, is always readily obtainable. it has theref ore become useless for the capitalist to perform it himself." (Capital III p 386)
"Transformation of the actually functioning capitalist into a mere manager, administrator of other people's capital, and of the owner of capital into a mere owner, a mere money-capitalist. Even if the dividends which they receive include the interest and profit of enterprise, i.e. the total profit (for the salary of the manager is, or should be, simply a wage of a specific type of skilled labour, whose price is regulated in the labour market like any other labour), this total profit is henceforth received only in the form of interest, i.e. as mere compensation for owning capital that is now entirely divorced from the function in the actual process of reproduction, just as this function in the person of the manager is divorced from the ownership of capital." (ibid p 436-437)
"This is the abolition of the capitalist mode of production within the capitalist mode of production itself, and hence a self dissolving contradiction, which prima facie represents a mere phase of transition to a new form of production. It manifests itself as such a contradiction in its effects. It establishes a monopoly in certain spheres and thus requires state interference. It reproduces a new financial aristocracy, a new variety of parasites in the shape of promoters, speculators and simply nominal directors; a whole system of swindling and cheating by means of corporation promotion, stock issuance, and stock speculation. It is private production without the control of private property." (ibid p 438)

Nominally the shareholders appear as the owners of the means of production, vested thereby with all the dignity and rights of ownership, but this is a mere fiction. For as we have argued, property relations have different significances according to the functions within the mode of production that they express. The property relations involved in shareholding are what we have called level 3. That is, they are concerned only with the distribution of surplus value. Formally the shareholders own the means of production, but in practice they have neither the ability nor the desire to exercise their right to control and dispose of their property.

For a start, they are numerous and dispersed, meaning that effective control of the means of production has to be delegated to salaried managers. But more importantly, they have no interest in controlling the means of production; their sole interest is in the receipt of their dividends. The means of production are of interest to them not as items of private property but as sources of surplus value. The shares represent not so much titles to a share of the companies capital, as titles to a share of the surplus value extorted from the workers in the company's enterprises. In this the shareholder differs only in detail from the moneylender; and dividend payments can be distinguished from the interest payments on a government bond only by the slight percentage differences in their rates. Dividends may be higher, but this is compensated for by the greater security of the government stock.

These stocks and shares together provide the means by which the individual owners of capital are converted into mere rentiers, divorced from the actual processes of production and exploitation. The reproduction of capitalist production and exploitation continues to be ensured by the existence of the enterprise, as the unit of production and exploitation. In the case of a small company, company and enterprise may coincide. Larger companies may own several enterprises. The relation between the company and its enterprise may be of two functional kinds:

  1. Where enterprises owned by single companies are interdependent in their production-the car industry provides many examples of this. European Ford plants are linked in a sophisticated system of division of labour in the production of components and their assembly. In this case, the company has the function of ensuring the technical reproduction of the enterprises it owns and controls. In our terrainology, the company's ownership of the means of production constitutes an effective level 1 property relation, in so far as the production of the same coniponents in different plants, often in different countries, allows the company to divide and disunite its workforce. Thus, the company's ownership of several enterprises is a direct weapon of economic struggle against the workforce. Here, the company's ownership functions as a level 2 relation.
  2. Where a company owns enterprises in different branches of production that are technically distinct and independent. In this case, the company's ownership of enterprises is merely a means of appropriating surplus value. Thus, the company functions solely as a level 3 property relation.

The company is the most perfect personification of capital in the abstract. Its sole objective is the accumulation of capital, the expansion of property in the abstract. In ensuring the separation of practical control from the consumption of surplus value, capital provides itself with functionaries: managers whose role in the supervision of accumulation is determined differently from that of individual capitalists.

If the company's objective is the accumulation of capital without limit, the same need not be true of the rentiers living off the surplus value it extracts. If the company does not reinvest at least a portion of its profits it will tend to fall behind its competitors and go out of business, the same compulsion 4oes not apply to a rentier divorced as he is from the actual process of production and accumulation. He can happily consume all his surplus value without this in any way impairing his future revenue-provided of course that there is no inflation. Nothing that he does can affect the dividends that he obtains from his shares; the supervision of production and accumulation are not his responsibility. True, if he "reinvests" some of his dividends in more shares he might seem to be able to increase the revenue he receives. But this itself is an illusion if we consider not the individual shareholder, but shareholders in general.

Suppose a rentier does decide to accumulate some "capital"; how does he set about doing it? Let us imagine a rentier with a shareholding of 100,000. Let us further imagine that this was in the good old days before the present "confiscatory" level of income tax, so that after tax he has an annual income of 10,000 or a 10% return on his "capital", which of course is not capital at all, but merely a few scraps of paper entitling him to a share in the surplus value produced by workers in various enterprises. After keeping up the appearances necessary to a man of his station in society and maintaining his wife in the manner to which she is accustomed, he finds that he has 1,000 left over. He decides to ïnvest" this, so he phones up his broker with instructions to buy 1,000 worth of shares in some reliable company. Having done this he can sit back with a warm glow of satisfaction; not only has he enriched himself but, he thinks, he has also promoted employment and the creation of wealth through his investment.

What a provident fortune it is that capitalism ensures the existence of a class such as his own. A class blessed not only with wealth, but also the virtues of thrift, providence and foresight, who thereby ensure the development of industry and provide employment for the feckless working classes!

A comforting thought, but with little bearing on reality. What has in fact occurred? He has acquired 1,000 of shares, but only because someone sold them to him. As likely as not, this batch of shares was sold by some other rentier. With the money he received, this latter gentleman can do what he wishes, add another racehorse to his collection, or simply deposit it in the bank. This much should be evident: the rentiers are at liberty to exchange shares with each other to their hearts content, some accumulating shares, others relieving themselves of such accumulations; but however much they do this, it has absolutely no bearing upon any real accumulation of capital; it is just so much shifting round of titles of ownership.

When we look at the process as a totality, rather than from the viewpoint of the individual shareholder, the illusion that dealings in shares have any intrinsic connection with a real accumulation of capital is dispelled. Since it is not generally within the power of shareholders to force the issue of new shares, which would be determined by the decisions of company directors, we must for the moment consider the number of shares on the market to be fixed. This enables us to isolate the effects of shareholders' activities from those of the company managements.

Let us take an extension of our previous example. Let the total number of shares on the market be 10,000 million, at an initial price of 1 per share. If the annual dividends on these shares amounts to 1,000 millions, and if out of this rentiers decide to spend half on consumption and half on ïnvestment" in shares what will happen?

For the sake of the argument we will divide the rentiers into two groups labelled A & B each holding 5,OoOm of shares and having each 250m to invest. The situation can be displayed as follows:
















Figures in millions.

If group A starts investing first, and tries to purchase 250m worth of shares off B what will result?

Using the same headings as before we might get the following:







B now try to invest their money in shares, but they now have 500m to invest, not the 250m that they started out with. Faced with this large demand, A act like any capitalist and raise the price of their "commodity" from 1 to 1.10. So we get the following:



















What have we here? A net profit of 1,000m, an apparent expansion of value, and not an exploited proletarian in sight. With such methods of enrichment open to him, little wonder the rentier scorns the naive labour theory of value. Its doctrine that profits arise from the exploitation of labour power in the production process is after all refuted daily by profitable practice? And is not practice, or as the sophisticates call it "praxis", the ultimate criterion of truth?

If this is not evidence enough, the process can be repeated with A buying back shares from B and turning a still greater profit in the process as share prices 'continue their rise amidst brisk trading'. In principle there is no limit to the speculative paper profits that can be built up through the buying and selling of valueless titles to unproduced surplus value. Notice: although the price of shares has escalated, the quantity of money serving as a medium for the circulation of these shares between shareholders remains unchanged. Here is the rub. Shares are not directly exchangeable against commodities; if the rentier wishes to realise his profit in a liquid form, he must convert his shares into money. There is nothing to stop individual shareholders from doing just that, indeed it is happening all the tinie, whenever shares are purchased they must also be sold, so shareholders are continuously realising their profits;just as others are continuously reconverting money back into shares. So long as the circuit m -s - m' -s'- m" -s"-m"' - etc., goes on there is no difficulty realising profits. If, however, a rentier decides to convert his profit into commodities rather than more shares, he may only do so provided too many others don't get the same idea. What happens if they should happen to get the same idea?

Ruin. As profits made on the stock market are transferred into commodities, so money that had been devoted to the purchase of stocks and shares is switched into the circulation of comnmodities. There are fewer buyers of shares, so those selling them are forced to sell at lower prices. Seeing the fall in price others may decide to "go liquid" and get out while the going is good. So, in what is termed "profit taking" hundreds of millions of pounds may be wiped off the price of the "capital" invested on time stock market within hours. In the end, some shareholders will have profited at the expense of others, but collectively they are not a penny richer.

In practice, of course, the money used in these transactions would be as fictitious as the profits of speculation, consisting as it does merely of accounting operations by banks, who back up their promises to pay with the promises of other banks, and so on down to an imaginary stock of imaginary gold. Although from the standpoint of the stock market, this money has been far from idle, from the standpoint of commodity circulation it has been precisely that. lt is as if the money had formed a hoard withdrawn from circulation.

This money came into the hands of the rentiers as dividends, as their share in the profits of the companies and enterprises that they nominally own. The dividends are not surplus value itself; they are only its monetary equivalent.

What is extracted from the workers is surplus labour; this is embodied in a surplus of commodities over and above that required to maintain the working class and the means of production. So the money coming to the rentiers is but another title to ownership-a universal equivalent. It differs from the shares in that it is universal; it is exchangeable against any commodity. To become the real as opposed to just the legal appropriators of the surplus value incorporated in the surplus product. the rentiers must use the money in the purchase of commodities. If not, the surplus product, or a portion of it, fails to find a market. Surplus value has been produced but cannot receive an adequate expression in money.

In capitalist society everything appears inverted. If the surplus value cannot assume money form, it appears not to have been produced. As some Marxists put it: if it can't be converted into money, it can't be realised. A more accurate picture would be given by saying that if surplus value remains in the form of commodities then it can't be idealised. The surplus value is real enough; workers have already been exploited to produce it, the problem is converting it into its ideal or monetary form.

The failure of the rentiers to spend all of their revenue leads to a fall in demand for the products of the enterprises. In the above example, the rentiers got 1 ,000m from their companies. Only half of this, or 500m, is spent on commodities, the rest gets tied up in the stock market. If we assume that l,000m-of surplus value exists to match the money paid out as dividends; then only half of this surplus will find a market. Since this decline in demand will have uneven effects, falling more heavily on some enterprises than others, it follows that some companies will not only find themselves with unsold stocks on their hands, they will actually be making a loss. The consequence is a reduction in the scale of production in the immediately succeeding period. This in turn means smaller outlays on constant and variable capital, further reducing the overall level of economic activity. Hence the paradox: any. attempt by rentiers as a class to accumulate capital, rather than consume surplus value as revenue, leads not to expanded reproduction, but to contraction. Real capital does not accumulate but depreciates. This can happen alongside an immense appreciation of fictitious capital in the form of stocks and shares.

Let us look, in a very schematic and superficial way, at the way the behaviour of shareholders can affect the dynamics of the capitalist economy. We will look at various alternative combinations of factors implicitly using the conclusions of chap XX of Vol II of CapitaL

First alternative: almost all profits paid out as dividends to shareholders; shareholders have high level of consumption out of dividends. Result: rate of capital accumulation, and thus development of productivity, low; economy never the less buoyant with few difficulties in finding markets for the surplus product.

Second alternative: again almost all profits paid out as dividends, but now shareholders have low level of consumption out of dividends. This potentially has very strong deflationary effects, since a portion of surplus revenue is constantly being withdrawn from the circulation of capital, to be used for the circulation of fictitious capital, or to take the form of an idle 'hoard' in the hands of the banks. This is liable to lead to violent fluctuations in the level of output and employment; only when companies undertake a real process of capital accumulation (investment in new plant, expansion of employment), financed through new share issues and bank loans etc, could surplus revenue be redirected into tIae circulation of capital. But this depends upon the initiative of companies not rentiers and in an economy with the built-in deflationary tendencies that we have described the incentive for them to invest would be low.

Third alternative: dividend payments in effect assume the form of fixed rate interest payments (as might happen for example if debentures were the predominant form of share) and shareholders have a high level of consumption out of dividends. This alternative is particularly interesting as it appears to have at least two possible phases or states of existence. In the first phase where you have a low level of company investment, the situation is very stable. In this situation, since the rentiers' income is kept stable and independent (within limits) of transitory fluctuations in the rate of profit their expenditure provides a steady base level of demand for the surplus product. Alongside this, the absence of a significant level of autonomous capital accumulation on the part of the companies ensures that total profits do not rise much above the level of dividends. Overall we have the archetypal simple reproduction process. The system shifts into its other phase if for some reason a high level of investment takes place. The extra demand that this creates enables a higher level of profits to be realised; profits rise above the level of aggregate dividends. Using the retained profits that would now be left over after the payment of dividends companies could now become self financing. They would be able to fund capital accumulation out of their own resources; they would no longer need to have recourse to the stock market for funds. The result would be a generally expansionary situation with the raised level of investment creating both a high level of effective demand, and producing technical changes that contribute towards the production of relative surplus value. The resulting system will tend to evolve towards a situation in which a declining proportion of surplus value is appropriated by rentiers and the independence cf companies vis a vis the latter increases.

Fourth alternative: dividend paymeots again approximate to fixed rate interest payments, but with a lower level of consumption by the rentiers. This would be like a combination of alternatives two and three. It would have strong deflationary effects, worse than those of alternative two since the revenue withdrawn from circulation is relatively independent of the current level of profits. In consequence, if unchecked by remedial state intervention a recession would result in a high level of bankruptcies; a mere fall in profits would not cut down the amount of revenue being withdrawn. If the deficiencies in demand caused by these withdrawals could be counteracted in some way, however, then the way would be open for the system to shift onto a regime of high investment high retained profits, and a diminishing economic significance of the rentier class. The obvious way for the extra demand to be made up would be for investment to rise. But this investment could not be financed out of retained profits to start with, since it is only a high level of investment that would produce the necessary profits; we would have a chicken and egg situation. The investment would either have to be financed through the banks or by new issues of shares. The latter alternative however, merely reproduces in perpetuity the dominance of the rentiers with all the attendant instability and deflationary tendencies that this involves. Bank finance does provide a definite alternative but credit is always easily available during a recession. The mere offer of credit is not enough to restart capital accumulation; the offer must be taken up by companies who see the possibilities of profitable investment.

The historical resolution of the dilemma is found in Keynsian policies that convert the income of the rentiers into state expenditure either through taxation of unearned income, or through the issue of government bonds. Such a policy is clearly against the interest of the rentier fraction of the capitalist class, and its introduction requires a change in the balance of class forces. Here we see how a specific form of capital ownership can form an obstacle to capitalist development itself, and how changes in the dominance of one or other form of capital ownership must have political as well as economic preconditions. But under a capitalist political regime, all that does or can occur is a shift not a rupture. No bourgeois government would abolish shareholding, the most that can occur is a reduction in the importance of the stock market relative to other forms of capital.

The immanent tendency of the capitalist mode of production is towards the abolition of all personal private property. First the direct producers are expropriated and reduced to the status of propertyless proletarians. Then the centralisation of capital and the formation ofjoint stock companies dissolves the personal property of the private capitalist. With the joint stock company ownership is separated from control: the capitalist as organiser and controller of the production process is reduced to a paid functionary, albeit well paid; the capitalist as owner is reduced to a functionless rentier. The personal ownership of the rentier, in its turn, becomes a juridical fiction, a pure level 3 relation concerned only with the distribution of surplus value and carrying with it no effective control over the means of production. Being functionally redundant to the operation of capitalism it can wither away. This withering away however, is not the same as an abolition. The dominance of rentiers property is reduced to make way for new forms of capital, but shareholding persists because:

  1. The development of technology, and the concentration of capital is an uneven process. Sonic areas concentrate more slowly: capitals arising for the first time in new areas of technology recapitulate the development of capital as a whole. Some capitals at earlier stages of development still continue to exist.
  2. Share ownership remains the standard juridical form of capitalist property. In this capitalism shows its standard conservatism, retaining the same juridical form with changed economic content. Companies remain constituted as objects of private property through the ownership of their shares, but the concrete personalities who constitute the subjects of this property relation change. Into the place of the rentiers there steps a handful of big financiers; and a still smaller group of impersonal financial institutions, banks, insurance companies, investment trusts. The private shareholder is not abolished outright or expropriated, just progressively displaced. The continuous depersonalisation of capital ownership, in no way undermines the capitalist character of the production process, it ushers in no new age of 'managerialism' or 'technocracy', it merely provides proof of the objective and impersonal character of the laws governing the capitalist mode of production. Modern capitalism retrospectively proves Marx's thesis that the types of personalities who walk the economic stage, are personalities precisely because they are the agents or personifications of objective functions; functions laid down by the structure of the mode of production.

Capitalism as a mode of production remains perfectly feasible without joint stock companies or sole owners. A capitalist mode of production would be perfectly possible without any personal ownership of capital. In principle one could have an economy in which all production was carried on by impersonal enterprises that were not themselves owned by anybody. Companies do not in principle need to be owned by any individual to function efficiently, as juridical forms for the accumulation of capital. As we have seen, in the course of capitalist development the objective functions of the individual capitalist are reduced almost to vanishing point. The residual functions of the stock market, as a means for the channeling of capital into new companies in recently established branches of industry, are being progressively replaced by the banks and the big monopolies who can set up directly owned subsidiaries. The accomplishment of such a result might seem the logical outcome of the present tendencies of capitalist development. for as Marx said:

"Success and failure both lead here to a centralisat ion of capital, and thus to expropriation on the most enormous scale. Expropriation extends here from the direct producers to the small and medium sized capitalists themselves. It is the point of departure for the capitalist mode of production; its accomplishment is the goal of this production. In the last instance it aims at the expropriation of the means of production from all individuals." (ibid p 439)

But as we have argued above this potentiality of capitalism can never in practice be realised under the rule of a bourgeois state power. Its realisation would in the final instance involve a political expropriation of the bourgeoisie as owners of the means of production; it need not of course abolish the bourgeoisie as controllers of the means of production. The economic process itself can never complete the process of expropriation that it initiates. "However, this expropriation appears within the capitalist system in a contradictory form, as appropriation of social property by a few; and credit lends the latter more and more the aspect of pure adventurers." (ibid p 440) The concentration and centralisation of capital under the rule of a bourgeois state leads to a continuous reduction in the numbers of the property owning bourgeoisie, but this decline in their numbers is offset by the ever growing wealth and power of those who remain; their hold on state power remains unshaken.

Furthermore. capitalism without a property owning bourgeoisie, would require substantial changes in the juridical categories of capitalism. As we have said earlier, these involve two types of legal personalities; private individuals, and enterprises. Private individuals, citizens, etc, are subjects of property and only subjects of property, they may own but not be owned. Enterprises arc both subjects and objects of property, they can both own and be owned. A capitalism without a property owning bourgeoisie would need not two but three categories of legal personalities or subjects.

  1. Private individuals: they would remain subjects of certain political rights of citizenship etc, but w9uld no longer remain subjects of property rights in the full sense, since they would no longer retain the right to own the means of production.
  2. Enterprises of the classical capitalist type: these remain both subjects and objects of property. As we have already pointed out capitalism for its extended reproduction demands the existence of objects as well as subjects of property; it needs some level 3 relations.
  3. A set of ultimate owners: the members of this set would have to have the following properties: they would be impersonal in the sense that they would not be individuals, so that they (in practice obviously their agents) would not be subject to the same political rights as individuals; they would be subjects but not objects of property rights, they would own but could not be owned.

From these three categories, it can be seen that what is required is that the rights that up to now have inhered in private individuals are now split between them and the set or class (in the logical sense) of ultimate owners. The individuals on the other hand, having lost their rights of private property are in the process of ceasing to be private individuals, and in the process of becoming once more social producers-members of a community.

As such, an economy of this sort, though still capitalist in the sense that commodities, money, and enterprises employing wage labour still exist, constitutes a further phase in the dissolution of the capitalist mode of production and its transformation into an economy of associated communal producers.

We have defined above the essential juridical categories of such an economy, but only in the most abstract and negative manner. In particular, the character of the ultimate owners is left unclear. We have defined the need for a set of such owners but beyond implicitly specifying that this be nonempty have said nothing more. In the second part of this investigation we will look at two examples of such sets; in one case the set has only one member-the state; in the other it has many-cooperatives. These alternatives are not mere abstractions, examples of both exist in the world today, in various combinations. Abstraction, however, will remain a necessary tool in the investigation of these property relations, and an essential prelude to Marxist investigation of concrete social formations dominated by such types of property.


Our second article will be directed at the examination of four problems:

  1. The articulation of the two socialist forms of capitalist property relations-cooperatives and state capital. This is a key political question for any communist party holding power. Such a party must be able to identify two levels of obstacles to the extension of state property. Firstly, there are the obstacles posed at the level of the productive forces. A low level of socialisation of these poses obstacles to the transformation of cooperative property into state property. This is an accepted thesis of Marxism-Leninism. In order to make concrete political decisions, the precise nature of these obstacles must be theorised. Secondly, and relatedly, there are the obstacles posed at the political level. Here, the question is primarily one of the proletarian party's relations with non-proletarian strata -in particular peasants. In addition, however, there are questions of the political effects of cooperative property within industry itself.
  2. Under what conditions can the proletarian state establish a real appropriation of the surplus product? This is initially a question of achieving a monetary appropriation of the surplus product. But, as we have argued, monetary and real appropriation of the surplus product are two different moments. It is necessary to analyse the two moments separately and to see under what conditions a real appropriation of the surplus product becomes possible without the intervention of a monetary appropriation.
  3. What is the specifically communist form of appropriation of surplus labour? What is the form of transition to this? In what way do the juridical rights and duties of the wage labourers change in the transition process? What is the significance here of the socialisation of labour discipline as represented by soviet labour codes? What is the relationship between the extraction of surplus labour and the class struggle under socialism? Is it meaningful to talk of exploitation under socialism?
  4. What are the conditions for the abolition of commodity circulation? In the sphere of consumer goods? In the sphere of means of production? The role of state monopoly trading as a transnational stage. Transnational forms of the distribution of consumer goods. Conditions necessary for a transition to the allocation of producer goods in natura.


1 Cockshott and Cottrel, Published by Spokesman Books, Nottingham


It is in this context that certain differences between modern bourgeois law and Roman Law, both of which have well developed concepts of private property, are to be understood. Under Roman law, the legal subject is always a person, there being no abstract legal subjects. Since it was indeed possible to reduce a bankrupt to slavery, to the status of an object, the distinction between property and its personification was not necessary. Roman law thus had no concept of agency, a person could only enter into contracts on his own behalf. He could not act as the agent for another legal personality. This would be incompatible with bourgeois production relations, whose form of ownership reaches its most developed form in the liriited liability company, the agents can enter into contracts on its behalf without themselves being directly liable. Here we see how the specific form of exploitation, slavery or wage labour, can have far reaching effects on the legal categories of private property.

In all modes of production based upon exploitation, some or all of the means of production are the monopoly of an exploiting class. Only under capitalism is this brought about under conditions of complete legal equality between exploiter and exploited. Since the worker appears in law as a potential property owner, his dependence upon capital, the fact that he must regularly sell his labour power to capital, seems to be an accidental or contingent effect of the distribution of property. As he has the same rights as a capitalist, it seems that it is mere personal misfortune that forces him to sell his labour power. The exploitation process thus has the ideological form of a contract freely entered into by consenting parties. This distribution of property is no accident. It follows necessarily from the nature of the property relations and the type of productive forces. Even if we assume that the exchange of equivalents (bourgeois right) holds in its most perfect and idealised form (namely, the exchange of commodities at the values), the divorce of the workers from their means of production is still ensured. If the worker is paid the full value of his labour power. he still only gets enough for him and his family to live on. It is precisely this 'just enough to live on' that defines the value of labour power. The worker will be unable to accumulate capital of his own. Furthermore, the means of production are such that they can only be worked by the collective labour of many individuals. Thus the individual worker, even if he could acquire means of production, could only do so by becoming a capitalist himself and thus exploiting other workers. It is, however, impossible for the working class as a whole to own sufficient means of production to achieve this aim. The domination of the labour process by Capital, the subsumption of the worker within capital thus seems to be a necessary condition of production. The greatest disaster for a proletarian is to be without an exploiter: to be unemployed. In this, capitalism is different from slavery, which need not grant the exploited any property rights. In those slave societies that followed Roman law e.g. Rome or Cuba, such a right, known as peculium might exist. This was a concession wholly incidental to the basic mode of production. In Anglo Saxon slave systems, such as that of Virginia, the slave had no right to own property. cf Slavery in the Americas, Klein, London 1967.

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