The Competition of the Capitalists
The industrial capitalist obtains an income by buying the elements of an industrial production process, expediently organizing its operations, and selling the products. The surplus of his income over his costs is his profit, the quantity of money he uses for the objects of his needs, on which he lives all the better, the larger it is. His kind of reproduction is based on disposal over a certain amount of property in money form, which he manages in the above-mentioned way, because not only are the material elements of production and the objects of individual consumption for sale, but so is labor and its services. 
The use of his property for the purpose of its continuous reproduction includes the periodic repetition of the sales process; the profit is measured not in the unique yield of an investment, but in the average surplus over the periodically transacted expenditures.  Its amount thus also depends on the frequency with which he lets his property function in a certain period, on the speed of turnover of his capital.
In planning his activity, the industrial capitalist therefore strives for the continuity of his business. He buys, has production done, and sells in a way that avoids interruptions in the profitable functioning of his property. Hence he makes a distinction between fixed and current assets; these functional components of his property differ in regard to the time periods within which he must ensure their availability by investments of money. While the returns of the capital laid out for the fixed assets is spread out over several sales processes and does not get replaced until after repeatedly passing through all phases, the other part of the “production elements” must be continuously replaced by new acts of purchase. Because the turnover of the fixed assets includes several turnovers of the current assets, the different parts of the property invested in by the capitalist are always side by side in their different functions, whereby the amount of his profit becomes dependent on his liquidity, on disposal over money, as often as the continuity of his business requires it. 
As a buyer of the elements of production and as a seller of products, the industrial capitalist moves on the market. In the prices of commodities, he encounters the conditions of his economic success which set limits on his profit. His own appearance influences the level of prices to his disadvantage. As part of the demand side, he has an effect on price increases, so the costs of his production elements rise; as a seller in competition with other sellers, he lowers the price of his commodities, whose proceeds secure his advanced capital plus profit. Insofar as the result of his business is contingent on the course of competition, his profit results from the fact that his activity wins out over others.
This mode of reproduction needs the forcible prevention of measures which are seized by the competitors in their special interests, whenever they are hindered from reaching their goal by others: the exchange process requires the protection of property, the mutual acknowledgment of those dependent on each other, but as buyers and sellers only interested in their private advantage. The competitors need and finance the power of the state which restricts them and is separate from their private business, not only to protect person and property, but to protect them from the resulting collisions with various regulations, thus supplementing the injuries to person and property: the legal terms of exchange – i.e., contracts, commercial laws, but even employment law. The state also bears responsibility for the functioning of the universal equivalent, which is needed from the competitive standpoint of the private subjects as a valid, recognized “means of information.”
The discontinuous returns of capital from the sale of products which are subject to the unpredictable movements of the market endangers the continuity of the sales processes. On the one hand, the industrial capitalist receives payments whose transformation into the elements of the production process is not yet due; on the other hand, delays in sales lead to a shortage of money for purchasing the elements of production that are due. No matter whether parts of his property lie idle in monetary form or he faces liquidity problems – dependence on the intermittent returns is always at the expense of the rate of sales, curtailing the profitable use of his property. 
With commercial credit, the capitalist secures the continuity of his sales processes against its endangerment by the market: he accepts promises of payment for the delivery of commodities and uses credit himself when buying. The circulation of promissory notes saves the capitalist time and thereby money. Credit helps him avoid this; it reduces the speed of sales or – what is the same thing – advances additional money for the maintenance of production. However, this service of credit has its limit: every debtor’s solvency is always based on the actual returns, thereby – in case of delays past the due date – on disposal over capital reserves. So credit by no means makes concerns about liquidity superfluous: its reason remains, preserving the allocation of his property in its different, mutually exclusive functions.  It enriches the executive management of the industrial capitalists through the arts of the write-off  and financial planning, which differentiates his property according to liquidity ratios  and strives after “optimal liquidity.”
With credit, the capitalists jump over the barriers that the market sets to their profits without eliminating them. They produce only with an eye on the market, on demand, on solvent needs – and do so at the same time as if the sale of their commodities would only be a question of time. By circulating their debts, they act without consideration for the conditions of exchange. They transform their conflict on the market into the relationship of creditor and debtor, supplementing their competition with a positive interrelation produced by credit: each is dependent on the success of the other. 
The state, by regulating the trade that is carried out with the help of credit, has to ensure that the rivals follow through on their obligations. It complements the general trade laws with the rules for terms of repayment, writes a bills of exchange act, etc. Because of the communality in credit, one dead competitor also harms the interest of the others. In cases of insolvency, it must protect the creditors’ rights and let the bankruptcies cross the stage in such a way that avoids or reduces harm to the others.
The dependence on competition is a burden for the capitalist: he applies his skills as best he can and nevertheless always remains exposed to risks whose payoffs seem too meager to him. However, because he has succeeded as long as he is a capitalist in the unpredictable world of the market, he thinks the world of himself. His skill in dealing with risk has earned him the profit. This indeed consists of a surcharge to his costs, but he has calculated them in such a way that his offer was desirable. Success also pushes him to glorify business rivalry in which only one’s own achievement counts. If he fails, he cannot possibly be faulted, but has had bad luck – if he does not act like a victim of a competition that is not at all pure. He doesn’t lack accusations towards the state, which restricts him but doesn’t open up any new opportunities. The laws to which the ambitious entrepreneur must submit are quite unfair, especially on taxes. 
The industrial capitalist meets the challenges in maximizing his profit that market conditions cause him by making changes in that sphere where he alone decides over the effect of his assets; nothing can be done about the fact that buying and selling set barriers to the rate of sales – the market is the positive basis of his business. But it is possible for him to let more capital turn over within the same time. He uses a part of his profits as additional capital in order to increase his profit. By expanding production, he looks after the increase of his income. He overcomes the problems that arise for him from the continuous use of his property by having more production done under his command and in this way increases his turnover per time. He calmly takes note of the technical-organizational tasks that expanding his business entails – he pays for wage labor, which “accepts its duties” in the division of labor. 
However, his endeavors have an effect on market conditions which is detrimental to the goal of increasing profit: rising wages and purchase prices, as well as sinking retail prices, prevent him from reaching a profit that rises proportionate to the expansion of his business. The industrial capitalist discovers that the equation “time is money,” which he deduces from the barriers which the market imposes on him with the functional division of his capital, cannot be overruled. Because time is not money, but money costs – and this is not due to time, but the business of the capitalist – he strives to deal effectively with this obstacle. He pays attention to the improvement of his market opportunities and sells to distributors who attend to the most effective (fast and low-priced) sale of his products; on the other hand, he entrusts – for a fee – a special professional group to manage his financial transactions. 
The capitalist lets himself be represented by others, who economize on his business and accelerate his sales process according to their own self-interest. The commodity- and money-dealing capitalists carry out the business transactions of several industrialists simultaneously, and provide for the optimization of buying and selling as well as liquidity.  Even if a continual dispute takes place between them over the price of their services – commodity and money dealers assess and bear the “risk” of the industrial capitalist, thus decreasing it.
The state takes care of the creation of transportation and communications systems that become necessary with the expanded market, an infrastructure that represents investments too large with too slow a turnover to be pursued in the form of private enterprise. With the tax funds of the entire society, it finances the material conditions for capitalistic expansion which are demanded by the competition between industrial, merchant and financial capitalists, as well as the legal system for regulating the resulting collisions. Where not enough (willing) labor power is available for the needs of capital accumulation, the state uses its force to expand the appropriate supply; and if expanded production makes excessive demands on the availability of existing energy resources, it looks for a remedy when the private owners do not seize the initiative themselves because no business can be made from it.
The industrial capitalist, who covers the means for his expansion out of profit, discovers a positive side in the discontinuity of his returns: instead of hoarding part of his income as money, which he needs for the future replacement of capital goods, and waiting for the time at which reinvestment becomes due, he uses this “surplus liquidity” to buy additional elements of production.  He is confident in his business, so he takes the risk of not being able to sell some of his products or having to sell them at reduced prices, and therefore needs credit for the continuity of his expanded business. He consciously uses the means that is available to him in credit, and not only in the manner of giving and accepting promises to pay. He borrows money for the inevitable bottlenecks in liquidity or for the immediate expansion of production; he takes out a loan, with which he holds the liquid means of all capitalists, in order to not be directly dependent on the continuity of his own turnover process. 
The money trading capitalists are thus not only service providers for the technical operations which commerce needs with its stop and go. For their part, they use the need of the industrial (and merchant) capitalists for “liquidity,” i.e. money for the continuity and expansion of their businesses, by getting paid for the feat of making funds entrusted to them by a third party available to the industrialists for the running of technical operations during their turnover process. They require interest for the temporary surrender of money, whether it indicates the short term overdraft of a managed account or is formally carried out as a loan, also however paying (lower) interest for the cash entrusted to them and making their business out of the difficulties which the industrial capitalists have raising funds in the course of their turnover process. The service which the banks target consists of making their customers debtors, whereby, in the interest of their business, the issuance of loans exceeds actually available deposits. The money trade is one of debts, and it profits from its basis, the interest of the industrialists in not letting a peso lie “inactive” and always being liquid. The bankers appear as a means of the industrial capitalists against them and force them to pay attention in accelerating their turnover process to what extent the cost of credit is also worth it. However, this constraint – to consider when planning his business how to most favorably arrange the relation of internal and external financing – hardly disturbs Mr. Factory Owner, even if it makes it obvious that he gets his own business going with the help of other people’s money.  He just has to proceed in designing his accounting system so that the demands and costs that originate from the banks serve the goal of the company instead of thwarting it. The banks’ methods of extending loans – they pay attention for their part to the “balance” of the in- and outgoing streams of payment: they can also become illiquid  – teach the industrial capitalist that the independence from the monetary returns of his capital and the solvency of his immediate business partners which is attained by credit represents only another form of dependence in which he stands to the market and the business of the whole class.
The state has to regulate the competition between industrial and banking capitalists so that the interests and economic disputes of both sides do not impair the functioning of their businesses. It sets conditions for both sides in connection with the practice of granting loans. It checks the temptation of the industrial capitalists to get rich by sham transactions at the expense of others by regulating the ratio of their own capital funds to liquidity (e.g., requirements to register large credits, etc.). Likewise, it counteracts the penchant of bankers to use the dependence of the industrialists to the point of their ruin. The regulations for banks run on the premise that they work satisfactorily as a suitable means for the increase of national wealth (in private form, of course), which also applies to the setting of minimum reserve ratios and certain prohibitions on speculation which should prevent the business with debts from bringing the credit system to a standstill (“bankruptcy”!). If, in the end, debts circulate as money, the danger exists that the market will dissolve into inflationary processes which arise from the issuance of bank notes dictated by special interests: a central bank with all kinds of controls, a monopoly on the issuance of bank notes, etc.
Because the capitalist profitably invests part of his profits – from which he could also buy himself bonbons – he is not the only one who comes up with the idea that his wealth results from abstinence. Polemicizing against the finance capitalist who hinders him and makes profit without the prudent guidance of a turnover process consisting of three parts, he persuades one and all that he is exceptional not only in his abstinence, but also in his diligence; his profit represents in the long run only a fair wage for “a special achievement.” When his business, pursued with a lot of virtue, fails, it is the others who have ruined him, in particular the bankers. The fascist moment in the entrepreneur’s consciousness, the interest (which he shares with others) in a state which eliminates the barriers which competition sets for him, has not prevented friends of the working class to this very day from criticizing bourgeois class society in terms of finance capital and its allies in the state. Given revisionists’ interest in the state and its ideals, it is understandable why they are not convinced by Part V of Volume III of Capital, that with the imposition of capital in earlier times in many places the state ended the promotion of money capitalists at the expense of the industrialists. Their common characteristic with the fascists – like them, the “anti-fascists,” of all people, would have the state abolish the evil elite that they discover in the bourgeois world – will be stressed quite often in section IV.
The expansion of production through reinvested profits fails as a means to increase profits as soon as the demand for the products of the industrial capitalist no longer corresponds to his supply (and that of his competitors). The competition on the market, which causes him to expand, also forces him to examine whether he can permanently secure and increase his profit only by qualitative changes in production. It is not only a matter of investing more. What he needs is lower production costs that allow him to press the prices of his commodities below those of his competitors, without thereby having to make reductions in his profit. In doing so, his cost-accounting efforts aim to change the relation of investment and yield – of the commodity that he sells: his interest is in the reduction of the unit cost price. The increase of his invested property only pays off if he can produce more cheaply. Thus every one of these abstainers, when he gets down to business, comes to the practical confession that, first, his income is owed to the profit/cost ratio he manages in comparison with the corresponding ratio of his competitors; second, that the result of this comparison depends on what happens in the production process, whose elements he buys and over which he determines, but in which he is not involved ex professione; and third, that all the modifications he makes to improve the profit/costs ratio consists in increasing the performance of his workers. This confession comes easily to him, as it is dictated by his interest; it does not require him to study Marx.
at first, it is not their difference in the elements of production that attracts his attention, but their different meaning for his expense account: some cost what he has paid for them, others cost more when more is produced.  This separation into fixed and variable costs arising from the industrial capitalist’s interest in cost accounting demands, for example, the introduction of overtime and shift work. But this way of turning over more capital in the same time also has only a limited effect. It is based on the increased employment of the productive power of labor, but in a way that leaves this productive power unaltered and so demands more labor – applied by all capitalists, this increases the price of labor.
so capitalists and their technical-organizational personnel ponder changes in the production process which lower unit costs regardless of the conditions of the (labor) market. By applying new machinery and dividing the work that accompanies it, the same products can be manufactured more cheaply if the additional expenditures for “technical progress” are compensated by savings on wages. By rationalization of his company, the capitalist increases the productivity of labor and at the same time ensures the redundancy of workers, so the growing “demand” for jobs gives overtime its peculiar charm
and with the securing of new employment contracts, the “employer” is put in the happy position of being able to require more performance for the same wage: in the end, the technical advance was introduced not to make the work easier, but to make production more cost-efficient for the entrepreneur. It is precisely the quick as possible turnover of his “fixed costs” that causes an increased performance of the workforce, whose labor is anything but “replaced” by technology. 
So in the comparison with his competitors which he wants to decide in his favor by the organization of his production process, the industrial capitalist acts as a direct enemy of his workers. By putting his calculation into action, he denies some their existence by making them “redundant,” others by employing them. In the forms of the wage payment, he dictates their conditions of existence to them as a means to increase his means: because through changes in the production process his need for labor takes the form of an absolutely growing supply of job applicants, thus the pressure of the labor market reduces his costs , he discovers in the wage the flexible cost factor par excellence. With his minions, he develops an interest in thoroughly measuring the productivity of his staff – but not in order to pay for it, but to increase it. In time wages, once fixed, it strikes him that the performance that he gets for his money depends on the organization of the division of labor in the company, hence through the design of the workplace he can get a more positive effect on his profit from his investment in wages.  He better reaches his cost-accounting goal of lowering his unit wage costs by fixing the relation of wage and performance, where the technical circumstances of manufacturing permit, if he uses the interest of the workers in increasing their incomes for the acceleration of his turnover process (= lowering fixed costs relative to variable costs). In piece wages, the type of payment elicits the dedication of the worker to the success of his calculation: each technical change represents an opportunity to demand a special effort from the worker to increase the profit for which he is paid.  Group piece work also transfers the tasks of carrying out the selection of able and willing co-workers to the staff, as well as combining them effectively, so that the only concern that remains for the capitalist is whether or not a lack of quality in the product and recklessness in handling his “fixed costs” jeopardizes the beautiful effect of his measures. With bonus wages, he gets rid of this problem: he turns his concerns about his means of production and competitiveness into those of the workers for their pay package, strives for the most effective combination of all remuneration systems  and is confident, in view of the risk and the effort that he imposes on his workforce, that he does a lot of good for his business. However, he has to prove to the world that his success in competition is determined by how much performance he gets out of his workers for such low wages. In obeying the compulsion, experienced in competition, to set in motion with his means of production as much work as possible, thereby dealing cost-effectively with the cost factor labor, the capitalist is concerned with surplus value. He compares the costs of the workers with the surplus that their labor produces – the means of production serve the enlargement of the surplus only if they increase the productivity of labor and decrease its costs. 
The change of production methods – as a reaction to the reduction in profits that the capitalist experiences on the market – aims to enable him to underbid his competitors. He uses his productivity advantage by lowering the market price, offers a rising quantity of products and forces his adversaries to likewise produce more cheaply, upon punishment of failure. Because the privileged position in the comparison of prices is only temporary, the industrial capitalist does everything he can to accelerate the amortization of his investments: concessions to retailers, advertisements, etc., which tends to make his profits smaller than what “corresponds” to his innovations in exploitation, his advanced productivity. In the race with the rivals for new production methods, for the prevention of “moral depreciation” (which can also occur via a simple fall in the price of his technical means as well as the development of better ones), he anticipates the inevitable result of his hustle: that in the future he will be forced, again with a more effective division of labor and improved machinery, to also produce more cheaply with a greater investment of capital. “The fundamental law in competition, as distant from that advanced about value and surplus value, is that it is determined not by the labor contained in it, or by the labor time in which it is produced, but rather by the labor time necessary for reproduction. By this means, the individual capital is in reality only placed within the conditions of capital as such, although it seems as if the original law were overturned.” (Grundrisse, p. 657)
The rationalization of production is based on the application of management and technology, which are not themselves a profitable business. When special technologies are bought by a capitalist, the state, on which the organization of science is incumbent, grants temporary rights to their exclusive application: with patent laws, trademark protection, etc., the state honors the efforts of the economy to progress so that it also really benefits private property, which takes part of its tasks from it. It protects the special features of the production process and the products, thus the competition.
Because changes in production also demand the skill and knowledge of the workers – which they neither have by nature nor acquire in the family – the state has to establish an education system which allows individuals to work in each possible function in the division of labor though short orientations (= vocational training). It supplements the manufacture of individuals who are useful in industrial production by measures that promote their mobility, so that the capitalists have a pleasingly elastic labor market at their disposal. And it does justice to the destructive effects of exploitation with its health service.
Credit permits the industrial capitalist to increase his profit by reducing his unit cost prices, provided that he is in the position to compensate for the proportion sunk into more fixed capital by enlarging his sales. If the industrialists make use of the loans offered by the banks corresponding to their production needs and catch up to the gaps in production costs, they also, by steadily revolutionizing production, create their restriction in the market, running up against the limits of solvent demand: some victims are inevitable. A part of the loan is taken in expectation of future profits, from which it is certain that it remains an expectation. Debts are invested as capital without working as such. They are the lever for businesses tied to industrial innovations, used by every capitalist to cope with the pressure of the market – and they are nevertheless never this means for all of them. In cases of insolvency, some capitalists do not fail to notice that their property is fictitious.  They have not used their debts in such a way that they are going to generate their repayment, so their creditors put an end to the illusion that the same property exists several times over. The competition between lender and borrower, which is based on putting this illusion into practice, clears this up when it no longer guarantees its advantage to both sides. The bankruptcy of industrialists clarifies where this double profit originates from, with the certainly not insignificant side effect that the money capitalist also enriches himself from the failing industrialist. Vice versa, the same thing shows up in bankruptcy, but as a mode not useful to the market economy in the course of competition between industrial and bank capital, which due to the compulsion to rationalize includes the transition to speculative business and swindling. The industrial capitalist massages balance sheets and simulates wealth by pseudo-representations in order to be credit worthy, thus he consciously deals with fictitious capital when he notices the conditions of credit (the interest rate) no longer “really” pays off for him.
This is why the state has to enforce compliance with its credit laws: interested in its enterprising citizens using their freedom to really increase wealth instead of only taking it from others, it sets appropriate barriers on each of the competing parties.
The difficult position of exploitation offers plenty of clues for the bourgeois mind to praise the capitalist: thanks to him, there is the constant modernization of production and the world is supplied with an ever larger number of improved products. As a man of progress who everyone knows does not enjoy lots of stuff, he is entitled to his profit. It is nothing other than an entrepreneur’s wage, remuneration for his hard work, for contending with the objective constraints of the market, and he only does it for the masses. Those functionaries of the capitalist mode of production who suffer heart attacks prove their willingness to sacrifice themselves; if exploitation takes so much work, it is an aptitude that contrasts favorably to the character of the speculating banker. The demands of productive capital on the state are justifiable; for fascists as well as revisionists, the money grubbing financiers are guilty parties.
As a consistent materialist, the industrial capitalist does not worry about the effects of his measures on the market. If using the means for increasing profit that are offered by the society named after him leads him to overshoot the solvent demand for his products, then the capitalist does not need to hang up his career for long. It is only important that he is not affected by the deterioration of the profit/costs ratio in his industry; i.e. he must calculate consciously with the lower rate of profit on his advanced capital and ensure the quantity of his profit by the mass of his sales. The size of his capital is a weapon in the competitive struggle because it allows him to increase his turnover relative to others’ share within an industry at the expense of the competitors; this is his exclusive sphere of action. So the successful capitalist differs from his less fortunate class brothers not in the employers’ high art of continuously decreasing payment for the labor performance carried out in his service – they all do that – but by the size of the wealth that he can use and that also then still allows him to continue practicing his stressful methods of abstinence when the others have run out of funds. And because he holds his ground in his specific line of business, its limits are also no problem for him: his leverage in one branch of production just gives him the possibility of switching over his profits to profitable use in other branches. He pursues his interest in the size of profitably invested capital by constantly comparing profitability between all spheres of production – an achievement which, vice versa, the size of his capital gives him the power to do. The competition between manufacturers of products of the same type is supplemented by competition over spheres of investment, which is why the free business rivalry of the market economy includes the reciprocal expropriation of the capitalists. The capitalists manage the preservation of profitable investments by treating the inevitable effects of their profit-increasing measures as barriers caused by the competition, and continue to increase their private property at the expense of already existing wealth, thus from the failure of accumulation in one place providing the means for its continuation in another. Led across all branches of production, this competition for monopoly – by which the capitalists, in increasing their wealth, make themselves independent of the growth of the remaining social wealth, thus from the condition for their business – has consequences. 
Because the various investment spheres and the competition over them are based on dealing ruthlessly with the workers, and the capitalists are confronted with the resistance of workers’ coalitions against the effects of exploitation that destroy their existence (see “Wage Labor…” IV.2), they see a need to stand together on the labor market against the trade unions.  Certainly, they have an excellent instrument in the “redundancy effect” of their productivity increases. But to make their exploitation material willing and cheap, this “natural” consequence of their profit-increasing measures no longer works if strikes interrupt production and the replacement of striking workers proves to be impossible due to the special requirements of the workplace. So the capitalists bolster their exploitation by a class warfare through which they protect their competition between themselves against the unity of the workers. While these business associations of the capitalists are firm in regards to the workers because their united action benefits them all by preventing inconvenient wage costs for leverage in the business rivalry without prescribing their behavior on the labor market, the alliances arising from their common interests are by nature not all all firm in regards to the other competitors on the commodity market (price-fixing arrangements, subdivision of the market, etc.). They originate with certain constellations of the market, and their reason also disappears with them. “The common interest is appreciated by each only so long as he gains more by it than without it. And unity of action ceases the moment one or the other side becomes the weaker, when each tries to extricate himself on his own as advantageously as he possibly can.” (Capital III, Ch. 10) The forms in which the capitalists give up their competition on the market just aim at continuing it, and their effects reach only as far as the solvent demand permits it. It is clear that class warfare and cartel formation represent other ways by which disregard of the market becomes the general consequence of the practices they maintain – but the capitalists are genuinely indifferent.
The state can either violently prohibit the defensive struggle of the workers against their destruction and allow capital to ruin its own means, or – and this characterizes the modern state – it makes a virtue of necessity: it permits not only the right to a unionized struggle, but orders the “social partners” to negotiate the relation of wages and work. In the interests of the principle of equality, it grants the right to association to the employers as well and prescribes limits to the class conflicts, i.e. autonomy in collective bargaining. This consists in enfranchising labor struggles, which prescribes what is permitted, primarily to the trade unions, i.e. they are not allowed to harm the well being of the “whole community.” It is much more open-minded to the demands of the employer associations for the improvement of the state-guaranteed conditions of free employment because it notices what its existence is based on when it promotes its “economy” – while it lectures the trade unions about the proper use of their freedom and the legal limits of their influence.
The state demonstrates once again in the laws against restraints of trade that it restricts the entrepreneurs only in the interest of the functioning of the principles that they submit to and need for their business. In antitrust law, cartels are basically forbidden. As the state recognizes the collision of class interests in the right to association and institutionalizes them through it, so it responds sympathetically to the need of capitalists to merge with others in order to preserve their own businesses – the limit of its sympathy is the well-being of the entire economy of the nation, and this limit is very wide, as not only the penalties show. All the laws about restraints of trade begin with the formulation: “here the antitrust law does not apply …” because of the positive aspects of gains from the formation of “dangerous” cartels, as even economics textbooks notice: “The exceptions are so numerous that the prohibition principle is violated to a large extent.” The state’s list of numerous “approved” trusts and those “liable to registration” does justice to the logic of their business, as does its duty to order a stop when necessary to their tendencies to damage the market.
In order to remain in business at the expense of others by the enlargement of the productive property which they are incapable of supporting through achieved profits, the capitalists transform credit into a form of concentration: they extend the scale of production by forming corporations. By giving up their independence, they obtain a profitable functioning for their property which it is not fit for owing to its limited size. They master the requirements of business rivalry which are no match for those who exist in isolation by mergers with other capitalists, in which they can profitably use their property because it is combined with the property of others: capital is credit.
In a corporation, socialized means of production functions as individual property; private property, the exclusive disposal over a portion of social wealth, also permits the capitalist to use the property of others. Technical supervision, administration and management, thus the functions of the entrepreneur, separate completely from their basis, private property, so that some of the previously cited illusions about the specific services of the capitalists do not apply here: for the shareholder, mere possession of a part of the enterprise confers the increase of his wealth.
Just as the combination of the capitalists against the workers’ organizations and cartelization serves the common interest of several private owners, so the abolition of their competition in the individual interest of the capital owners also continues the competition. Because the continuity of business depends on the size of an enterprise, the establishment of a corporation precludes the involved parties from arbitrarily withdrawing their money or the tangible assets they make available. The protection of free commerce with private property in the search for optimum profitability must not destroy the collective enterprise – dealing with stocks that circulate as shares to a portion of the profit gained.
So the competition of the capitalists unfolds around spheres of investment, a profitability comparison in the form of the capital market on which securities that represent really existing and functioning productive capital get priced according to the expected profits of the enterprise which one participates in. As an alternative to the profitable lending of money, the trade in shares continuously refers to the price of loan capital: “If the nominal value of a share of stock, that is, the invested sum originally represented by this share, is £100, and the enterprise pays 10% instead of 5%, then its market-value, everything else remaining equal, rises to £200, as long as the rate of interest is 5%, for when capitalised at 5%, it now represents a fictitious capital of £200. Whoever buys it for £200 receives a revenue of 5% on this investment of capital. The converse is true when the proceeds from the enterprise diminish.” (Capital III, Ch. 29) For bank capital, this opens participation in industrial enterprises with the help of debts transformed into money that does not belong to the bankers, whereby the competition between industrial and money capitalists is supplemented splendidly by their cooperation.
If capitalists act as shareholders in order to wage their battle for profitable investment spheres, then the separation of capital ownership from its economic function is relevant not just to the position of the capitalist as leader of his business. The increase of private property through the securities trade emancipates itself from its basis, which is the gaining of a surplus in the business of the industrialists. It follows from the quotations of the securities by which they become nominal representatives of not at all existing and functioning capital that speculation on the profits of industry gives them the means for their ability to compete, and that the size and mobility of the capitalists is based on the fact that they pay dividends. Like commercial and bank credit, combination into joint-stock companies also permits the continuation of competition in such a way that the capitalists jump over the profits obtained from the industrial sales process, thus also over the conditions of their expansion of production.  With the help of the various forms of credit, they increase production up to the point that it becomes unprofitable – and because credit puts them in a positive dependence on each other, overproduction becomes an affair that concerns them all: crisis.
The reason for crisis is that the capitalists, in trying to prevail in the competition, produce “without consideration for the existing limits of the market or solvent demand,” so that the expansion of production carried out by them comes into conflict with the purpose they pursue: the increase of their capital. The credit system, the lever for the accumulation of private wealth, is at the same time the lever for overproduction because it allows the entrepreneurs to carry out the expansion of their companies as if they would be independent of the realization of their profits (around which everything revolves) on the market. They treat the conditions of the market as their assumption, by conducting themselves – on account of the compulsion to hold their ground under these conditions against others – in the business of immediate exploitation as if this business would ensure them accumulation. Because the market operations of their sales process is in practice separate from the advance of industrial expansion, because one’s own enterprise becomes carried out by competing commodity- and money capitalists, and because every one of the capitalists involved in this competition strikes his advantage from the fiction that “the conditions of direct exploitation and those of realizing it” are identical, they all work together to prove the opposite, which produces the crisis: “The first are only limited by the productive power of society, the latter by the proportional relation of the various branches of production and the consumer power of society.” (Capital III, Ch. 15)
With the reason for the crisis (overproduction = too much was produced for the profits of the capitalists), the forms of the crisis are also no longer a mystery. If the conversion of profit into new capital has increased the wealth of the capitalist class to such a degree that the conditions for its profitable use are lacking in the society, then the competition of the interdependent businessmen over markets and credit is not a celebration of their mutual ruin of the free-market economy, but they strive with all their power to gain or restore their conditions for accumulation against the others. The joke in the concept of crisis is that capital lacks what it depends on: profits – so that it is only about one thing, property that does not yield a profit, thus does not represent capital, must be eliminated from the competition or reorganized so that it again makes profits: depreciation.
insofar as the overproduction of capital appears as the unsaleability of commodities at prices that make a profit, the depreciation of capital takes place in the form of price reductions, if not in simply remaining fallow and going to seed.
something brings the capitalists affected by the lack of demand into payment difficulties: money becomes a commodity in short supply and the confidence which some have availed in the form of all types of credit turns out to be unfounded: “... In a general crisis of overproduction, the contradiction is not between the different kinds of productive capital, but between industrial and loanable capital – between capital as directly involved in the production process and capital as money existing (relatively) outside of it.” (Grundrisse, p. 316)
the positive dependence on each other which the capitalists have negotiated through credit makes the question superfluous as to which nook in the society has produced too much. The insolvency of one capitalist brings down the other and the banks have their hands full trying to recoup for themselves the “real value” of their debtors who – because they do not yield the appropriate profit – are also no longer what they once were.
because a partial or complete standstill of production is demanded when the operating expenditures for current assets of all types prove to be money down the drain from the start. The reduction of production, which can be afforded by those firms that on account of the partial marketability of their commodities no longer have to struggle with illiquidity, is only the practical admission that they lack profits – by no means sufficient for maintaining themselves as capitalists. The red numbers in the books can be eliminated only if the methods which a capitalist uses to control the production of his surplus are applied especially prudently in the difficult times of crisis: rationalizations are needed without profit being available for investment! The reaction to the crisis, in which the bosses bring layoffs to the wage laborers, follows thus in companies that are responsive in managing the crisis: its first step is increasing the productivity of the remaining employees and the second step, with the help of unemployment and extra work (which thus do not stand in opposition to each other), makes generating profit possible. It consists in once again executing all those measures that characterize the craft of the capitalist and renews their success on the basis of the various forms of depreciation. This success is admittedly based on the fact that, except for victims within the capitalist class that are caused by the competition in the crisis, still many other victims are found who open-mindedly confront the management of the crisis with increased work efforts and lower demands. Only then can a verified market be used to advocate moderate profits and use these for the revival of the market.
The depreciation of the fictitious capital circulating in shares that is necessary on account of the low profit expectations in crisis periods doesn’t need to become a generalized phenomenon because of the efficiency of some capitalists. Shareholding in some companies leads to crisis profits as auspices for the company are relatively stable (the competition is weakened, bought out or bankrupt) and the sway of their workforce favorable.
The special aspect of competition in a crisis period is that the capitalists take the lack of profits as an occasion to deal with the contradictions connected with their occupation so that others are responsible for restoring the conditions of accumulation that have been disrupted by too much accumulation: it does not in the least bother the successful among them that material wealth is sacrificed to the form in which it exclusively becomes produced and further will be. That only needs which are capable of paying are worthy of consuming capitalistic products is a truism of the world of private property that is most impressively demonstrated during a crisis: production is cut back in view of an army of unemployed who are refused an income from the selling of their labor and who lack the necessities of existence; the law of value determines consumption. A materialism like that displayed by the propertied class certainly does not come without the idealism of those it exploits, because without a good amount of idealism one can hardly make sacrifices in order to be exploited again.
The state is responsible for the production of this idealism and its preservation, by the way. What it does for the crisis-afflicted capitalists is a necessary accompaniment to the protection that it grants private property (see I.). In for a penny, in for a dollar: if one bets on private property and lives from taxing it (and also only gets tax revenues when capital prospers), this is the endorsement that capitalistic growth is equivalent to the promotion of the wealth of the nation – also and especially in crisis periods. The bourgeois state uses its political force for the economic necessities of the entrepreneurial class by
regulating all conflicts between industrial and money capital, but also making its wealth (which it pries from its citizens) available for the promotion of the inclination to invest
subordinating all objectives, from the inadequate functioning of its money (inflation: the functionalizing of credit for the means of circulation becomes unpleasantly apparent in the crisis), labor (unemployment), the economic structure (the crisis as disproportionality) to one goal: growth
disciplining its citizens in the interest of this growth – before, after and during the crisis – with sociopolitical impositions of all kinds, in this way it is made clear why employer associations consider class warfare to be obsolete. In the state, the capitalists have at their command a reliable authority which – one refrains from looking at the shopfloor trifles in Wage Labor III – removes the propaganda of class struggle through its effective leadership. Whereby even the consent of the victims is a prospect: democracy is the prevention of class warfare by the other side. This is called economic policy. (See ch. 8 of The Democratic State)
On account of the fact that capitalism creates crises for the capitalists and this does not exactly please them, there is even a criticism of capitalism from the standpoint of the capitalists. It consists in attacking all the social characters who make themselves particularly annoying in the crisis for the business of the capitalist. The trade unions hold first place among the enemies of the system, the workers place number two, because they neither work, save or buy enough. Third place goes to the foreign competition, and the next step is to the state in its management of the crisis. It never fulfills its duties to its favorite citizens consistently or fast enough: because the state is in demand as a crisis manager, the characters who are running it right now are accused of lacking efficiency. This again does not mean that someone who accuses the bourgeois state of not doing enough for the protection or reorganization of the national wealth must inevitably become a follower of fascism or imperialism: revisionists who plead for a worker-friendly use of capital also strive vigorously in every crisis to search for culprits as well as to give the statesmen constructive proposals on how to use mass purchasing power to resolve the crisis, which, as one has seen, is only one of capital. The absurdity of criticizing capitalism for its crises is based, on the one hand, on consent with the goals of the ruling class and their economic growth and, on the other hand, on the inevitable injuries to various interests in supporting these goals. Certainly, the antagonists of this type of criticism have no difficulty fielding the economic difficulties eyed with such concern: isn’t the social role of the capitalist to create jobs? This also highlights on the plane of ideological debate that capital can depict its route to economic recovery only when the capitalists, and no one else, use it for themselves. The various ways of giving bits of advice to capital for overcoming its problems are inventions of the right, middle and left wings of political economy.
 Business management economics has the same subject as here. It also concerns the measures that a capitalist will take for the sake of his profit, but indeed not to explain the laws he must follow as a capitalist. All the aspects of his hustle and bustle appear in business management as factors that have a positive or negative impact on the amount of his profit, must be combined with each other, and depend on skillful management. This subsidiary science for business practices positions itself on the viewpoint of the capitalists not to understand him in his necessities, but to weigh the alternative choices of the entrepreneur with regard to their effects on the course of business: “Business administration looks at the empirical object from the viewpoint of economic efficiency and profitability, or profit maximization.” (Löffelholz: Revision of Business Administration, 2nd ed., Wiesbaden, 1967, p. 66) From this viewpoint, all the phenomena are described which are explained in our study. The citations from the statements of business management does not prove the identity of their results with ours – they merely show how the necessities of capital suggest themselves to its character masks, without the realization of their interest needing a glimmer of explanation of the laws that they execute. All citations from business management texts are testimonies to the false consciousness of the capitalists and their paid managers – and which they use to their advantage as it seems from their interest: techniques of exploitation.
 See Löffelholz, p. 636: “Budgeting and accounting are time period- or period-oriented, viz. the bill is intended to identify the cost, performance and the success of a billing period.”
 See Löffelholz p. 505: “The assets of the company consist of the useful life of two complexes of goods: l. Fixed assets: These are the means of production which outlast several production processes, e.g. land, buildings, machinery, the entire operating facility; and 2. Circulating or operating assets: These are the means of production that can only be used once in the production process, particularly [!] in turnover, e.g. raw materials, inventories, energy, liquid assets and receivables, in particular for the purchase of goods and payment of salaries, wages and taxes.” The view of his business from the standpoint of the circulation of his capital, closing his turnover as rapidly possible, leads – as one can see – to the fact that the capitalist notices the difference between fixed and circulating capital and at the same time confuses these differences of his productive capital with completely different laws!
 Already the abstract concept of the industrial capitalist is informative about his relation to the wage laborer:
the wage laborer’s performance is an activity for profit, for whose sake he is bought
the wage is a cost factor in the calculation of the company, whose interest conflicts with that of the worker in his reproduction; so that in executing his business the capitalist always seizes measures which are at the expense of the workers
this eliminates the accusation that capitalists personally hanker to oppress other people as a minimization; it is worse: he is the agent of the bourgeois economy whose profits can only come about by recklessness towards other peoples’ lives.
 See Löffelholz. p. 515: “Liquidity and profitability stand in a certain dichotomy to each other.” “For liquidity costs money.” (Mellerowicz)
 See Grundrisse, p. 545-6: “The most that credit can do in this respect – as regards mere circulation – is maintain the continuity of the production process if all other conditions of this continuity are present, i.e. if the capital to be exchanged with actually exists, etc.”
 See Löffelholz, p. 722: “The write-offs serve different purposes (which link together in causal connection):
1. They serve to return the net assets and capital structure of a company to the correct balance
2. The means should be provided by the proceeds coming in from the write-offs to purchase the depreciated item (reinvestment) after the expiration of its operating period (preservation of the company’s assets)
3. The write-offs serve for the exact determination of the profit by the cost distribution in the periodic income statement ...
4. The write offs serve as cost accounting in the net costs appraisal.”
 See Löffelholz, p. 519: “The cash funds, namely money and bank balances, are liquid means of the first degree; bills of exchange, provided that they are eligible for discount, are liquid means judged hardly inferior ... The securities are liquid means in stock securities, acceptable for collateral and not distinguishable from collateral ... The commodity stocks also have a different liquidity character, and depend on the nature of the product and market situation ... The fixed assets are generally not sold, but most lendables belong to the illiquid resources ...”
 So Marx here explains why anything that falls beyond the scope of Capital and concerns the capitalist class, he always designates with “competition and credit” and also notes that the “real crisis” can only be explained from “the real movement of capitalist production, competition and credit.” (Theories of Surplus Value II, p. 512, see Capital III, Ch. 6, p. 205). It is the compulsions of the competition that the capitalists bring about through their self-interest in practicing the exploitation of capital which they themselves have no concept of. And credit, besides permitting him to deal with the practical obstacles to his profit-making, mediates the contradictions of the realization of capital: it ensures the generalization of the antithesis of production and circulation that beset capital in crises, but is not paid for by the capitalists. Because this much is certain: if the contradiction of this form of reproduction takes the character of borrowing credit, which promotes the disposal of property, then the failure of this business does not affect the existence of the “wealthy”: They have resources! (See Wage Labor I.3)
 To be sure, the revelations of Business Management economics are detailed implementations of the false consciousness of the capitalist about his activities. We separate them from the common ideas about his role in the world, not only for reasons of representation, which the most important lessons of Business Management bring into view, where the professed dealings of the capitalists with his property immediately follows what Business Management makes of it. What is summarized in section 4 as flourishing false consciousness is actually separate from the “technical” knowledge necessary for exploitation and exists not only in the minds of capitalists, but also the rest of the population. They are false consciousness about the nature of the ruling class.
 See Löffelholz, p. 220 f.: “The medium-sized business differs from the small business in two respects. Initially, the management of the ongoing business requires one manager for itself ... In the big companies one or another of the other executive functions must be the task of a group that organizes itself as a board ... The very large company is characterized by the fact that both the management of the ongoing business as well as the provision of general corporate policy must be organized on a group basis. And each of these tasks requires the full manpower of several people ...”
 There are these people: their business is retail, they are a pre-existing condition found by the industrial capitalists, who use them. See Capital III, Ch. 20.
 See Löffelholz, p. 22: “Merchant businesses (which are by no means ‘unproductive’): They provide for the distribution of the goods of the productive companies by offering them appropriate arrangements (assortments) at low priced, opportune locations (taking over transport and warehousing) and promote them in conditions which are favorable for the buyer and other companies, usually by advertisement. Banking businesses: They take over services in the payments and credit transactions.”
 Business Administration celebrates this approach as an invention of Lohmann and Ruchti; see Löffelholz, p. 589: “The write-offs serve, as has been mentioned several times, to basically replace the depreciated object. But also the consumption-conditioned write offs work as a source of new investment, a process first described by Lohmann and Ruchti (the Lohmann-Ruchti Effect). This effect is based on the fact that in the selling prices of the manufactured products the amortization value for the assets used in the earlier period will be recompensed as needed for the renewal of the wear and tear of the assets, by which the quantities for amortization are obtained, i.e. that the liquefaction of the capital bound in fixed assets and the elimination of spent capital goods from the production process fall apart temporally. If the amortization amounts anticipated in this sense are constantly reinvested, then it leads to a plant expansion, without requiring the injection of new funds (by intake of outside capital or increasing its own capital funds).”
 See Löffelholz. p. 571: “(l) Business credit or turnover credit is a short-term loan to cover a temporary cash need. The applicant for credit is granted a kind of advance on the market revenues from finished or in-process materials or merchandise. Each real [!] business credit allowed from the sales process, for which it was made available, is liquidated ... (2) Investment credits are loans for the creation of operational readiness or for the procurement of goods for the implementation of the company’s goal. Credits for productive purposes, which cannot be paid back from the turnover process within the duration of the circulation of goods, are by their nature always fixed loans. Even credit given for the creation of the necessary stocks of raw and auxiliary materials and manufacturing goods, as well as resources for the workforce, thus the normal wage and salary fund are basically fixed loans. Because the turnover of the company will drop if one wants to draw from the necessary resources, and may lead to the collapse of the company. Such loans may only be covered from the profits of the company ...”
 Business administration economics summarizes this consideration in the “Golden Accounts Rule” and in discussions about its usefulness. See Löffelholz. p. 524: “(l) The Golden Accounts Rule in the narrow sense, in the so-called classic form, requires that the fixed assets will be financed by equity capital; (2) the Golden Accounts Rule in the broader sense demands that not only the fixed assets, but also the circulating capital engaged for a long period, the iron components of circulating capital, be covered through one’s own equity and long-term debt, the rest of the circulating capital assets by short-term outside capital. The Golden Accounts Rule in its other version is, as a general rule, quite correct because it means that long-term investments are not to be financed in principle with short-term debt ...”
 See Löffelholz, p. 525: “The Golden Bank Rule ... requires, in its strictest version, ‘perfect liquidity,’ i.e. the credits (active loans) granted by a bank must correspond both in scope as well as maturity exactly according to the amounts made available by the bank (passive loans) in amount and maturity. The Golden Bank Rule in the strict form evolved only in the Renaissance (in the 16th century) after numerous bank crashes demanded it. And it can not be maintained by the modern credit bank at all, because it is in the nature of the bank to transform short-term deposits into longer-term credits ...”
 See Löffelholz, p. 376 f.: “Fixed costs are part of the total cost, which remain uninfluenced by changes in the rate of utilization. Fixed costs thus arise from the willingness to produce at the existing capacity …Variable or variable costs are part of the total cost, its height is the rate of utilization of the company, e.g. manufacturing wages, raw material costs, etc. ... ”
 See Löffelholz, p. 2 & 1: “Technology ... is the practical application of the discoveries of the laws of nature for the substitution of human labor by mechanical aids and natural forces. The purpose of technology exists therefore primarily in substituting the factor of productive labor by the production factor of the operational funds (one speaks also of the substitution of labor by capital and then understands by capital produced means of production). The advantages of this substitution of labor are obvious: The productivity of labor ... rises tremendously ... is still constantly increased. Their disadvantages are also sufficiently well known. By the mechanization and automation of the labor process humans become ever dependent on the technical apparatus. A business shows this dependence in a very strong shift in the operational cost structure. By substituting labor the share of the proportional costs (wages) sinks within the total costs of the enterprise, while the fixed costs of the growing plants increase strongly. The enterprise becomes more immovable thereby, the bottom price is very high because of the high fixed costs, i.e. the enterprise can come into difficulties if its profit sinks slightly for long; then it cannot cover the fixed costs any longer.”
 Business administration economics remembers therefore the useful character of the labor market, which in economics show up in the talk of “wage formation theory”; this characteristic arises for the capitalist from the fact, self-evident to everyone in the world, that the “labor commodity” is just the condition for his business: there are people who must pay for their existence by the sale of their labor. See Löffelholz, p. 266: “According to newer perceptions, the law of supply and demand is also good indeed for wage formation, but the labor market has a number of peculiarities based on the peculiarity of human labor[!], for human labor is a commodity that does not increase arbitrarily: it can be reduced. The labor supply on the labor market consists of three components: the number of able workers, the number of working days in the week and the number of daily working hours. If the hourly wage is very low, then the labor supply does not decline, but on the contrary, it increases because each able bodied worker attempts to increase his wage level with the high labor supply. With high hourly wages, on the other hand, the labor supply shrinks because many workers are content with their wage income and are not willing to do more work.”
 See Löffelholz p. 269 f.: “In the time wage, the wage is calculated after the consumed working time; in the time unit the executed job performance is not [!] taken into consideration.. By changing [!] the work performance in the time unit, the unit wage cost sinks proportionately ...” “In the modern assembly line, the production time wage again gained importance because the workers were forced to adapt to the pace of the conveyor belt.” “The disadvantage of the time wage is mainly due to the fact that the company bears the risk [!] of the willingness to work and the adroitness of the workforce entirely …[!]. The time wage gives no incentive to increase the labor performance. Poor work attitudes must be prevented through surveillance measures.”
 See Löffelholz. p. 275: “The disadvantages of piece wages do not lie in the system, nor in the danger of too high an incentive to increase the performance, but only in the great difficulty of fixing the piece time properly. Today there is a whole series of very good methods for piece determination, however it is not a business task, but one for scientific management. The infamous piece scissors are thereby prevented, which consists in simply reducing the piece rates (a system that with high piece wages that is very popular in the Soviet zone).”
 See Löffelholz, p. 279: “The bonus pay for qualitative performance improvement can be combined of course with a piece wage system. For example, a quality premium of a high enough amount prevents the pieceworker from overloaded work by which the quality of the labor performance suffers, making a lot of re-working or re-machining necessary.”
 What the wage forms mean for the workers and their competition is discussed in the corresponding points of analysis in “Wage Labor.”
 It is thus understandable that Business Administration economics immediately throws up this “liquidity problem” as a cost-benefit calculation in the skillful management of debt. See Note 8.
 The usual idea of monopoly as a capital of extraordinary size has at first nothing to do with the concept of monopoly, because the amount of capital employed is indeed the means to avoid comparison with competitors, at the same time however also guarantees the “instability” of the exceptional position of a company because it is overcome through merging with the competitors. (See IV.3.) But also the monopoly which is based on the exclusive use of a technical process or exclusive use of natural production conditions dissolves by the discovery of similar procedures and other resources, so that it – precisely because of the principles of competition from which arises the quest for monopoly – is only temporarily and exceptionally the case that there are real monopoly prices which are determined by nothing other than the solvent need for the product concerned.
 See Löffelholz, p. 266: “A further characteristic of the modern labor market is a form of market, because it is now largely a bilateral monopoly. Formerly, when the workers were not yet organized, the entrepreneurs were in the stronger position and could press down the wage. Through the uniting of workers into unions, workers now have to a considerable extent a supply monopoly [!] which faces the demand monopoly of the employers. However, just as little as with other monopoly prices can the wage be arbitrarily settled through bilateral monopoly on the labor market. The productivity of labor [!] is basically the upper limit of wages.”
 When business administration economics discusses the advantages which arise for a company from a change to a new juridical form of business, then it enumerates, like in the discussion of liquidity and financial problems, the constraints that the company will “get rid of” because they threaten its continued existence! See Löffelholz, p. 599: “The main reasons for conversion are: 1. broadening the capital base and credit ... 2. reducing the risk by limiting the liability ... 3. increasing credit ... 4. reducing the tax burden ... 5. preparing for a merger ...”