Capital is production run amok — production for the sake of production; the Fascist State — which in its fully developed form only exists in the American State — is consumption for the sake of Capital, i.e., consumption for the sake of production run amok. Since it produces nothing, the expenditure of the Fascist State is composed entirely of the surplus produced by the mass of capital set in motion.
This expenditure must come from that portion of the surplus produced by capitals which does not go into either the expansion of variable capital (wages) or the expansion of constant capital (machinery, raw materials, etc.) It comes in various forms — wages paid out to a portion of the working class, subsistence income, subsidies, payments for goods and services provided by private capitals, etc. The Fascist State pays for these expenditures by issuing newly created ex nihilo pecuniam.
Fascist State expenditure, therefore, only destroys the productive capacity of society to the extent this additional surplus value does not enter into expanded capitalist production. i.e., to the extent capital is not exported, or is exported in insufficient quantities.
According to Marx:
The contradiction of the capitalist mode of production, however, lies precisely in its tendency towards an absolute development of the productive forces, which continually come into conflict with the specific conditions of production in which capital moves, and alone can move.
The conflict expresses itself in the fact that production halts, and must always halt, before want is satisfied — that Capital is incompatible with abundance. Capital is a mode of production founded on scarcity and cannot be otherwise. On the one hand, a mass of society is rendered superfluous to productive activity by the development of the productivity of labor. On the other hand, an abundance of means of labor and necessities threatens the conditions under which surplus value is realized, triggering a longer or shorter period during which production ceases.
This internal contradiction seeks to resolve itself through expansion of the outlying field of production [by export of capital]. But the more productiveness develops, the more it finds itself at variance with the narrow basis on which the conditions of consumption rest. It is no contradiction at all on this self-contradictory basis that there should be an excess of capital simultaneously with a growing surplus of population. For while a combination of these two would, indeed, increase the mass of produced surplus-value, it would at the same time intensify the contradiction between the conditions under which this surplus-value is produced and those under which it is realised.
The absolute over-accumulation of capital is that point in the development of Capital where the realization and conversion of surplus value into new capital no longer takes place under any conditions. The periodic explosions seen earlier in Capital’s development has become a permanent feature of the mode of production.
The emergence of the Fascist State — which Marxists have, for the most part, never grasped properly — marks its beginning with the emergence of this permanent feature of the capitalist mode of production, as a social necessity arising from the inherent tendency of Capital toward the absolute development of the productive forces of society by absorbing into itself the ever increasing mass of surplus value, which grows daily, even more rapidly than Capital can expand into the outlying field of production within the World Market.
The rate of surplus value constantly increases owing to the laws of Capital’s own development — this implies an ever greater quantity of commodities (of capital in the form of commodities) thrown onto the World Market, and the constantly diminishing application of labor to the production of these commodities; the increase in the scale of productive activity; the centralization of capital into fewer hands; the accelerated pauperization of the mass of remaining property owners; the increasing gulf between the producers and the condition of production; and an always accelerating tempo of accumulation.
But this ever accelerating tempo of accumulation runs into the absolute barrier of Capital’s own conditions of existence — that Capital rests on the limited consumption power of the mass of laborers; that only the threat of starvation can compel an individual to so absolutely debase herself as to sell herself into slavery daily, and that, therefore, Capital ultimately rests on maintaining the mass of society within certain definite narrow limits of existence, i.e., the daily average wage.
The growth and development of the Fascist State is, therefore, subject to certain conditions, the most important of which is that the consumption of the mass of society must never expand beyond that point where the sale of labor power is threatened, i.e., must never exceed the average of the daily wage. Consumption must indeed increase, but this increased consumption must impoverish society on an ever increasing scale — the productive capacity of society must be routinely and systematically destroyed.
But, the conclusion that the consumption of the mass of society must never expand beyond the point where the sale of labor power is threatened implies, under conditions of Capital’s own logic, that the absolute value of the mass of wages must fall, despite the Fascist State’s ever increasing direct and indirect employment of wage labor. And, the conclusion that the productive capacity of society must be routinely and systematically destroyed implies, for the same reason, that the mass of capital, although constantly increasing, nevertheless falls in absolute value. Thus, while always increasing in absolute mass, total capital — both variable and constant — is declining in absolute value. This results in a negative rate of profit, although, as we shall see, it appears to the economist otherwise: that the mass of profits increase — even appears to increase obscenely — as the mass of surplus value increases.
The capitalist only sets his capital into motion on condition that the surplus extracted from the worker can be realized. His capital is laid out and must return to him in its entirety plus an average rate of profit. If his sum of capital is $100 and the average rate of profit is 10%, he expects to recover $110 from his investment. If the sum of capital is $1000 and the average rate of profit is 5%, he expects to recover $1050 from his investment. He places a definite quantity of capital in motion and expects a definite quantity of capital to return to him. The profit expected by the capitalist is in absolute mass equal to the absolute mass of the surplus produced by the variable capital he sets in motion. If the variable capital set in motion by the capitalist equals $100 and the rate of surplus value equals 50 percent, the capitalist expects a mass of profit equal to $50.
The capitalist placed in motion a capital of $1,000, composed of $900 of constant capital, and $100 of variable capital. Having extracted from the worker an additional $50 in surplus value the capitalist must now sell his commodities and reconstitute his original sum of capital, $1,000 plus a profit of $50. Under the conditions we are now considering — absolute over-accumulation of capital — the entire sum of surplus value equal to $50 must be destroyed, but it must be destroyed in manner that still appears to allow the capitalist to “realize” the full $50 of surplus value in the form of profit.
This is accomplished as follows: In exchange for the $50 amounting to the value of his surplus product the capitalist receives $50 of ex nihilo pecuniam, which, as it requires no labor time to create at all, contains no value. He has his $50 and is completely satisfied with the exchange. But, the value of the commodities, rather than being reconverted into money capital, disappears from circulation and is destroyed.
Leaving aside the constant capital, we have three sums: variable capital (wages) amounting to $100, surplus value amounting to $50 that must be destroyed, and profit amounting to $50 that must be realized. For the economists, who long ago expelled value from their field of study, this destruction poses no problem. And, this is as it should be: since the economist only reflect the economic laws of Capital from the standpoint of bourgeois society, by expelling value from his consideration he has only done in theory what Capital is doing in reality, namely, abolishing itself within the limits of its historical form.
But, from our standpoint this exchange presents us with a problem that deserve further consideration: $100 has been laid out in the form of variable capital, and $150 has been realized. Yet, the total sum of expenditures was $200: $100 in variable capital, $50 in profit and $50 in Fascist State expenditures. Moreover, the actual mass of capital has shrunk by an amount proportional to the expenditures of the Fascist State.
The solution is obvious: The capitalist received in return for $50 of his surplus value no real value; the $50 of surplus value was consumed unproductively. In return for the real value produced by Capital of $50, nothing was realized. Fifty dollars of commodities were withdrawn from circulation by the Fascist State and replaced with ex nihilo pecuniam with a face value of $50. The conditions of realization were formally fulfilled in this transaction, yet actually abrogated: in return for $50 of value the Fascist State paid nothing.
The $50 of ex nihilo pecuniam paid to the capitalist has no value, and this he discovers when he is confronted with the rising cost of production due entirely to the depreciation of the purchasing power of his capital. This depreciation is calculated not simply on the value of the variable capital and profit, but on the whole of his capital. If, before his total capital was c = $900, v = $100, and s = $50, for a total value of $1050, he finds that his total capital has decreased in purchasing power by $50.
Thus, rather than having a reconstituted capital with a purchasing power of $1050, his capital has a purchasing power of only $1000, or 95.24% of its expected purchasing power. The depreciation of the purchasing power of his capital means he cannot produce the same mass of surplus value on the basis of the former conditions of production. He can purchase $100 of labor power, but this $100 of variable capital now has a value of only $95.24. With a rate of surplus value of 50%, his capital only creates a mass of surplus with a value of $47.62. Although the rate of surplus value is unchanged, the value of the mass of surplus value and the mass of profits has fallen — and this has occurred even though all the conditions of his activity has been formally fulfilled. He has no choice: to achieve the same mass of surplus value, and, therefore, the same mass of profit, he must increase the rate of surplus value.
For the mass of capital set in motion the conditions allowing for the increase in the mass of surplus value produced, and the conditions allowing for the increase in the realization of this same mass as profit now stand wholly in contradiction to each other. In the former case, the production of surplus value requires the further reduction of social labor time in its necessary form; but, the realization of the surplus value requires the extension of social labor time in its superfluous form. The complete incompatibility of these requirements for the normal functioning of Capital under conditions of absolute over-accumulation is presented in all its glory.