How Capitalist Accumulation Generates an Industrial Reserve Army

Surplus value is transformed into capital through reinvestment. This reinvestment can feel foundationaless, like an engine spinning on its own, because it is capital made from capital. Capitalism depends on an “outside” for plunder and expansion, using the surplus to fuel further growth.

General Law of Capitalist Accumulation

Marx’s general law states that the richer capital gets as a whole, the poorer the people get as a whole, and the larger the surplus population or industrial reserve army becomes. The greater the immiserated sections of the working class, the greater the amount of populism that follows. This inverse relationship links capital’s power to the misery of the industrial reserve army.

Laws and Tendencies in Marx

Laws are necessary conditions for capital to function; tendencies emerge from those laws but lack the same necessity. Capital is highly lawful and necessitarian, yet its necessities can give rise to tendencies that might lead to dissolution. The law of the tendency of the rate of profit to fall exemplifies a “law of a tendency.”

Mechanisms of Accumulation

Capital returns to its starting point and is reinvested, requiring more labor power, means of production, raw materials, and often larger factories and agricultural support. This expansion creates a chain reaction across the system, pulling in additional resources and labor to sustain growth.

Rising Organic Composition of Capital

Political economists such as Smith and Ricardo missed the rising organic composition of capital. Organic composition is the ratio of constant capital (means of production) to variable capital (labor power). A rising organic composition means more machinery relative to labor, leading to diminishing returns of surplus value and the displacement of labor by technical change. Competition forces firms to increase productivity to avoid selling at higher values per unit.

Concentration and Monopoly

As organic composition rises, capitalists become fewer and form monopolies because not everyone can afford the necessary machinery and capital. This concentration intensifies competition and drives further technological adoption.

Cycles of Capital and Labor

During periods of extensive expansion, wages rise and strictures ease, allowing workers to extend their enjoyments and metaphorically loosen the “golden chain.” A rise in wages indicates a quantitative decrease in unpaid labor. In economic crunches, wages can fall and labor intensity rise again, while capitalists expropriate each other through competition, either destroying or absorbing businesses.

Surplus Population and the Industrial Reserve Army

Capital needs a surplus population as it expands, drawing workers from outside the existing labor force, sometimes through colonization. When capital contracts, this surplus becomes the industrial reserve army, a pool of unemployed or underemployed labor. The reserve army creates competition among groups based on gender, race, ethnicity, and nationalism, providing an economic explanation for racism. It may be propped up by the state or social programs.

Business Cycles

Modern industry experiences boom‑and‑bust cycles. The formation, absorption, and replenishment of the industrial reserve army are integral to these cycles. During stagnation, the reserve army pressures the active workforce, keeping hopes in check and allowing wages to be driven down.

Original Accumulation (So‑Called)

Capitalism required centuries of violent dispossession and the separation of producers from the means of production. The term “original accumulation” masks this forceful origin. Key requirements included land free of traditional ownership and workers free of subsistence, achieved by ending serfdom and private land ownership. The demise of feudalism created a landless workforce and capitalist agriculture needed to feed industrial workers.