THE CONCEPTS OF DEVALUATION,

VALORIZATION AND
DEPRECIATION IN MARX: TOWARD
A CLARIFICATION1

Neil Smith Department of Geography,

Columbia University

I. and devaluation in the contemporary Marxist litera-

ture. This is particularly puzzling given not only the
The value form is the necessary economic result scrutiny which Marx’s concept of value has otherwise
of the capital-wage labour relation, and Marx devoted attracted, but given also that in his economic analyses
most of his life’s work to disentangling the processes Marx was extremely careful about terminological
involved in the constitution, determination and consistency. In fact, if one examines Marx’s work on
movement of value. By doing so, he provided a theo- the dynamics of the accumulation and circulation of
retical analysis of the capitalist mode of production capital, it is clear that while contemporary accounts
since the historical uniqueness of capitalism springs do not distinguish between different concepts for
precisely from the fact that the surplus product is the accretion and diminution of value, Marx himself
extracted and realized as surplus value. This result makes systematic distinctions between a number of
is predicated upon the appearance and development different though related processes.
of the capital-wage labour relation. Ever since Marx,
there has been a persistent concern in the Marxist When different processes are referred to with
tradition with Marx’s concept of value – its form a single concept, and when the same concept can
and substance, structure and development, and its describe different processes, there is an inevitable
alleged internal inconsistencies. But in all of these confusion about the processes involved. The distinc-
discussions, there is a striking omission. In Marx, tions between these processes have never been made
but even more so in the marxist tradition, a number clear, and that is the purpose of this paper. This is not
of different concepts are employed, seemingly inter- merely a problem in conceptual clarification, however,
changeably, to depict the various processes resulting although such clarification is valuable in its own right
in an accretion or diminution of value. The accretion and should help to elucidate certain aspects of the
of value is generally referred to as a process of valo- constitution, determination and movement of value
rization or appreciation; the diminution of value as in Marx. But like Marx’s own analysis of value, this
devalorization, depreciation, or devaluation. There is clarification is ultimately important for what it tells us
little or no distinction made between appreciation and about the structure and development of the capital-
valorization, or between devalorization, depreciation ist mode of production. The confusion between the
separate processes considered here has systematically
1 I would like to thank David Harvey for comments and
blurred a number of issues that are currently being
criticisms on an earlier draft of this paper.

4
 NEIL SMITH

debated in the marxist tradition. Primary among these that he does not completely work out the differences
is probably the theory of crisis. A better understanding between all of the concepts. This is one source of
of the different processes involved in the accretion and confusion directly attributable to Marx.
diminution of value provides a firmer basis for explain-
ing the origins of crisis as inherent in the value form By the time he wrote Capital, Marx certainly
itself; the constitution of value implies crisis. Further, made a distinction between valorization and apprecia-
this analysis will spread some light on the concept of tion and between devaluation and depreciation. At
fixed capital in the overall circulation and reproduc- least in the English tradition, this distinction has not
tion. Finally, the disaggregation of different processes been made clear, however. Actually in Marx thee
contributing to the accretion and to the diminution of were not only different concepts, but he progressively
value will have the perhaps surprising result of clarify- used different language in referring to these different
ing the status of capital employed by the capitalist processes. So wherein lies the further confusion? It
state. The bulk of this paper will be taken up with seems in English language Marxism that the major
clarifying the different concepts. The implications source of confusion outside Marx himself lies in the
of this clarification translation of Marx’s
will be referred to work into English. Even
only briefly and in where Marx makes clear
the most summary the differences between
form. different processes and
refers to them with
But before systematically different
proceeding, it is concepts, the English
important to get a translations often do
sense of where the not reflect the distinc-
initial confusion tion. The use of “depre-
lies. Is it in Marx? ciation”, for example,
Or does it come is probably the most
later? The answer, in systematic mistransla-
fact, is a bit of both. tion in many English
As with so many of versions of Marx. This
his ideas, Marx’s un- is true of Capital in its
derstanding of these Neil Smith at about the time he wrote this article various English transla-
processes developed tions, where “deprecia-
over the span of his life. Though very much concerned tion” is used to cover a multitude of different ideas,
with the determination of value, the make-up of the and where not every instance of depreciation in Marx’s
commodity, commodity exchange, and the origin of original is actually translated as “depreciation”. But
the money-commodity, Marx did not trace systemati- the confusion is even clearer and more damaging in
cally the complex processes involved in the fluctuations Grundrisse. Clearer, because none of the systematic
of value, given the determination of the value form. distinctions Marx make survive in the English; more
Only in the Grundrisse did he seriously begin this damaging, because it was precisely in Grundisse with
investigation, and there we find the first discussion the attempt to clarify these conceptions that Marx on
of valorization, devaluation, and so forth. Here, he several occasions made explicit the differences between
has already begun to distinguish between different different processes. Martin Nicolaus, who performed
processes involved in the addition and subtraction of valuable political service by translating the text, seems
value from capital. Marx’s ideas continue to develop, to have been unaware that when Marx used different
and the clarification between different concepts even if similar terms, he was indeed referring to sys-
develops apace, but as shall be shown below, it seems

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CONCEPTS OF DEVALUATION, VALORIZATION AND DEPRECIATION

tematically different processes. The mistranslation has terminological confusion, and because of complete
obscured the systematic differences Marx made.2 confusion in the English translations, are not
conceived as separate processes. Since the distinction
Nicolaus’s indifference to the different processes between these sets of processes is not understood,
responsible for fluctuations in value is undoubtedly nor are the processes themselves understood, despite
due to the fact that the English language itself does the emphasis that has been placed on Marx’s value
not recognize these differences by attributing to each theory; depreciation is not devaluation, and neither
a different label. In fact, no neat conceptualization is the same as devalorization. These sets of processes
of these processes is possible in German either, but are central to Marx but rarely if ever even mentioned
despite the resulting terminological awkwardness, in discussions of value theory. This paper attempts an
Marx did make the necessary distinctions. Nicolaus’s initial clarification to the confusion that attends these
indifference most probably also originated in his own concepts.
broader perspective on Marx’s work. In particular, in
a critique of his introduction to Grundisse, Nicolaus II.
has been accused of neglecting the form, structure,
and different moments of value. He does in fact place a) Appreciation/depreciation. The process of
little emphasis on the centrality and inner complex- appreciation and depreciation is one that takes place
ity of value in Marx, and this is remarkable in an purely in the price sphere. In the original Marx uses
introduction to the Grundisse, a text where so many of the French “Appreziation” and “Depreziation.” The
Marx’s final ideas about value are worked out. What price of a commodity expresses its value and its
Nicolaus does instead is to fall back on an excessive exchange value, in money terms; it is the money-form
concern with labour as an absolute, ahistorical of value. As such it expresses the relation between
category. It is not necessarily that labour was anything commodities, which is exactly what Marx implied
different for Marx, but that Marx also emphasized far when he distinguished between money as standard of
more than the ahistorical character of human labour, price and money as measure of value. Price and value
the particular historical form it took as wage labour are different expressions though inextricably related:
under capitalism and the value form associated with “the two are constantly different and never balance
this capitalist relation of production. Of this Nicolaus out, or balance only coincidentally or exceptionally.
says little. The eternalization of proletarian labour The price of a commodity constantly stands above or
and consequent neglect of the structure of value can below the value of the commodity, and the value of
be detected in the writings of the Second Interna- the commodity itself exists only in this up-and-down
tional but found its full political expression in Soviet movement of commodity prices”.4 Thus changes in
Marxism where, of course, it had the very practical the supply and demand for commodities constantly
function of justifying the continuation of proletarian changes their price up or down but need have no
labour under “socialism.”3 This is not a tradition we effect at all on the value of these commodities. This
should emulate. is depreciation and appreciation – depreciation when
the price falls, appreciation when it rises. Likewise,
Three sets of processes will be considered here: ap- in the more extreme cases when the value of money
preciation/depreciation, valorization /devalorization, either rises or falls, this brings about a general fall
and revaluation/devaluation. These constitute three or rise (respectively) in the prices of commodities
distinct (although certainly related) sets of processes without necessarily at all changing the value of com-
which, because of Marx’s apparent conceptual and modities.5 This too is a case of simple depreciation or

2 Karl Marx, Grundrisse der Kritik der Politischen Okonomie, 4 Grundrisse, English edition, pp. 137-8.
Amsterdam, 1939. The English translation is by Martin Nico- 5 Karl Marx, Capital, International Publishers, New York,
laus, Grundisse, Penguin and New Left Review, London, 1973 1967, Vol. I, p. 99, passim. Unless otherwise mentioned, all ref-
3 Moishe Postone and Helmut Reinicke, “On Nicolaus’s ‘In- erences to the English translation of Capital are to this edition,
troduction’ to the Grundisse,” Telos 22, 1974-75, p.p. 130-48. originally translated by Moore and Aveling.

6 Human Geography
 NEIL SMITH

appreciation. In Grundesse, Marx gives the example of It is the definition of capital as “value in process.”6
the twist manufacturer who puts on the market 40 lbs. The universal valorization of social wealth depends
twist with a value of 200 thalers, because it contained on the valorization of that particular use-value
a labour power equivalent to 200 thalers. But he can which produces wealth - labour power – and this
only sell the twist at 180 thalers, and so “the depre- defines capital in a dual sense. The sale and purchase
ciation [Depreziation] of the twist manufacturer’s 40 of labour power as a commodity removes the last
lb. twist from 200 to 180 necessarily appears as an obstacle to the continuous circulation of value, given
appreciation [Appreziation] on the part of silver, a that money, product and instruments of production
depreciation of twist relative to silver” (p. 446). are already exchanged as commodities. But further,
the valorization of labour power is a direct expression
Depreciation is implied in appreciation; it is not of the relations of production defining capitalism: on
a process of adjusting some already set price that rep- the one side a class of capitalist who own the means
resents the already determined value of a commodity. of production yet do no labour, and on the other a
Depreciation and appreciation are implied in the class of labourers who own none of society’s means of
very determination of value itself, since value is only production and are compelled to sell their own labour
realized – made real – through exchange, and exchange power in order to reproduce themselves.
implies the constant setting of price. Affecting only
prices, depreciation and appreciation express purely The third aspect of valorization is implied in the
relative changes; the moment such changes become first two and is, obviously, the expansion of value
absolute, meaning that some change in value takes through the production and capitalization of surplus
place, then depreciation and appreciation are them- value. Since it reproduces itself by consuming pro-
selves transformed into something different. ductively part of the surplus product created by the
working class, the capitalist class must constantly
b) Valorization/devalorization. The process of valorize a quantity of this surplus product. Since
valorization is concerned with the movement of individual capitalists are in competition with each
value inherent in the creation and circulation (that other and since capitalists can cheapen their products
is, the definition) of capital. In the German, Marx and thereby expand their markets at the expense of
uses “Verwertung” for valorization. In its strictest others by investing larger quantities of capital in more
sense, valorization is the movement involved in the productive instruments of production, capitalists as a
general formula: M-C…P…C’-M’. This can be class are compelled to valorize continually increasing
disaggregated into three identifiable but mutually quantities of surplus product. They are compelled
dependent processes: first, the transformation of to capitalize increasing quantities of surplus value:
social wealth into the value form. Value is the social valorization implies accumulation, the self-expansion
expression of abstract human labour – a social abstrac- of capital. Thus Marx notes that “the circuit of
tion if you will – which is brought about not simply money-capital expresses … simply the process of
ideally (in theory) but in reality. It is brought about self-expansion and accumulation [Verwertungs- und
by the continual comparison of different quantities of Akkumulationsprozess]”.7
concrete labour power as objectified in commodities
exchanged in the market place. The development Valorization is clearly basic to the definition and
of the value-form is clearly an historical process that constitution of capital but one would hardly say the
depends on the development of the world market, same for appreciation. In reality, the three disag-
since otherwise commodities could express their value gregated aspects of valorization are inseparable, and
only locally and there would in fact be myriad local occur as part of a single process which, throughout
laws of value, all more or less separate. This is the first Capital, Marx refers to as “Verwertung” even if it is
aspect of valorization. The second aspect of valoriza- not always translated as “valorization”.
tion is implied in and is a continuation of the first.
6 ibid. p. 154.
7 ibid. Vol. 2, p. 57.

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CONCEPTS OF DEVALUATION, VALORIZATION AND DEPRECIATION

Devalorization is an integral part of the movement that the “devalorization being dealt with here” (deval-
and circulation of capital that results in its valoriza- orization as a moment of the valorization process) was
tion. As capital transforms itself through the circuit quite different from the “constant devaluation of the
M-C…P…C’-M’, it adopts a succession of bodily existing capital” which “does not belong here, since it
forms. Specifically, in the M-C transaction, the value already presupposes capital as completed.”9 The latter
represented in M is realized in C through the exchange, process – devaluation – will be examined below. But
and C is thereby valorized. But this takes place only at while he clearly distinguishes two separate processes
the expense of M which is simultaneously devalorized. here – devalorization and devaluation – he continues
As Marx notes in an important passage in Grundrisse, to employ the same term for both (Entwertung). As
“capital has made the transition from the form of we shall see below. “Entwertung” is best translated as
money into the form of a commodity, of a product, devaluation, and, indeed, is so employed by Marx in
which has a certain price, which is to be realized. In Capital. The problem with devalorization in Marx is
its money form it existed as value. It now exists as therefore not a problem of translation but a problem
product, and only ideally as price; but not as value of conceptual elaboration.
as such”. Thus “devalorization [Entwertung] forms
one moment of the valorization process [Verwertung- A convincing argument could be made that
sprozesses]… Therefore, while capital is reproduced as the process referred to in Grundrisse, is wrongly
value and new value in the production process, it is conceptualized as devalorization and that it should
at the same time posited as not-value [Nicht-wert], as be seen more in the manner of Capital where Marx
something which first has to be valorized by means speaks not of a devalorization but merely of a change
of exchange…. The product is devalorized initially in the form of value – a metamorphosis from M to
in so far as it must be exchanged for money at all, in C, for example. In Grundrisse, it could be argued,
order to obtain its form as value again…. Looked at Marx has yet to complete his derivation of the money
precisely… the valorization process of capital – and function as just a specialized function of commodity
money becomes capital only through the valorization exchange endowed in one particular commodity. In
process – appears at the same time as its devalorization contradistinction to Capital, therefore, he begins the
process, its demonetization.”8 analysis with money and not the commodity form,
and is constantly fighting to critique and discard
The concept of devalorization is not quite as fetishism of money in particular, and in general the
unproblematic as this presentation would suggest Ricardian search for an invariable standard of value.
however. While he clearly develops the concepts of It is this struggle, indeed, that leads to his realiza-
valorization, the same cannot be said for Marx’s concept tion that the commodity form and not money must
of devalorization. Although in the above quotation be the starting point for his analysis. This critique
from Grundisse, Marx clearly distinguishes the process progresses gradually, and so particularly in the early
of devalorization, he is not consistent in the use and pages of Grundrisse, he remained himself prone to
derivation of this concept and never used a separate some aspects of the fetishism of money. In particular,
term for this apparently separate process. Thus as late he emphasized that money is “pure exchange value,”
as the Chapter on Money in Grundisse, he seems not and while this need not in itself be wrong, without
yet to have developed the concept, but by the later a prior analysis of the commodity, and especially of
Chapter on Capital, the concept is clearly developed the relation between use value and exchange value, it
in the manner presented above. At this point, he was may well lead to the retention of a bourgeois overi-
even explicit about distinguishing the process I have dentification of value with money. The description of
labeled devalorization from other apparently similar the M-C metamorphosis as a process of devalorization
processes. Thus he prefaces the analysis of devaloriza- could be seen as a product of this overidentification of
tion with a clear delimitation of the concept saying money and value; indeed, in at least one place in the
8 Grundrisse der Kritik …, p.p. 306-8; p.p. 402-4 in the
English edition. 9 ibid. p. 306; ibid. p. 402 in the English edition.

8 Human Geography
 NEIL SMITH

Grundrisse (quoted above), he does explicitly equate 2, he is concerned with the way in which already con-
“devalorization” with “demonetization.” stituted value circulates as capital. It would be logical,
then, to speak of a devalorization process as a part of
By Capital Marx is no longer ambiguous about the constitution of value, but when the perspective
the relation between money and value; in so far as changes, to see the same process as an interruption in
it is capital, money is only one form of value albeit the circulation of capital. Indeed this is precisely the
the form which expresses all social value relations. kind of dual perspective that Marx sets up for resolu-
Money is the social distillate of value. And in Capital, tion in volume 3 of Capital but which, like so many
when he returns to the theme of devalorization, he other apparent contradictions, is not resolved due to
now talks not of devalorization but of an interrup- the fact that volume 3 is unfinished.
tion in the valorization process. This is particularly
true of volume 2 where, in the first four chapters, But it is more than just a case of “devalorization”
he discusses the overall circulation of capital and being not inconsistent with the remainder of Marx’s
addresses the same issues that led him in Grundrisse to work. Although he rarely makes the relationship
conceptualize the process of devalorization. Hence, explicit, the concept of devalorization is central to the
for example: “The circuit-describing process of capital derivation of crisis from the very structure of value. If
means constant interruption, the leaving of one stage devalorization is a necessary moment of valorization,
and the entering into the next, the discarding of one then any interruption of the circulation of capital,
form and the assuming of another. Each one of these any halt in the movement of value, can be expected
stages not only presupposes the next but also excludes to cause a dramatic polarization between elements of
it.”10 What is emphasized in this and other discussions capital caught in a devalorized form and those in a
of the circulation process in Capital, is not the gain or valorized form – between money capital on the one
loss of value per se but the change of form experienced side and commodity and productive capital on the
by capital I the process of circulation. There is in other. In so far as it cannot move – cannot enter
Capital no clear conception of devalorization such as into exchange or into the production process – de-
appears as Grundrisse. valorized capital in the form of inventory, stockpiled
raw materials, hoards and unemployed labour power
If we view in this way the development of Marx’s loses its value entirely and ceases to be capital. The
thought on valorization, it is an easy next step to importance of this, and of the recognition that this
argue that devalorization as an historically intermedi- loss of value originates in the very determination of
ate concept in Marx, and that its value was merely value itself cannot be overstated. The change of form
in helping Marx to work through the final, correct captured in the concept of devalorization opens up
conceptualization that appears in Capital; the term the possibility of an actual change in quantitative
and concept of devalorization should therefore be value, and this is precisely the origin of the possibility
discarded. But I want to suggested that this conclu- of crisis in Marx. “Devalorization” expresses precisely
sion is premature. In the first place, the discussion the dialectic between change of form and quantita-
in Capital is not inconsistent with that in Grundrisse. tive loss of value, and as such, is very different from
In defining the devalorization process there, Marx either depreciation or devaluation. Further, one might
referred to the positing of capital as “not-value” rather speculate that in order to elaborate more completely
than as “no-value,” indicating quite clearly that a his theory of crisis, in volume 3 of Capital, Marx
change of form was taking place, not necessarily any would have had to make more explicit this concept of
quantitative loss of value. In fact, the main difference devalorization, first derived in the Grundrisse. Thus it
between the two treatments is a difference of perspec- seems not just reasonable but necessary to retain the
tive; in Grundrisse, where he discusses this issue, Marx concept of devalorization, while acknowledging the
is concerned with the different processes contributing ambiguity of its origins.11
to the constitution of value, whereas in Capital volume
11 c. f. “This devaluation [Entwertung] (Marx uses the word
10 Capital, Vol. 2, p. 102. in this sense only in the Rough Draft [Grundisse]), which

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CONCEPTS OF DEVALUATION, VALORIZATION AND DEPRECIATION

c) Revaluation/devaluation. Unlike appreciation facing translators has been that there is no single word
and depreciation, revaluation and devaluation occur in English that is a general equivalent of “Wertsteiger-
solely in the value sphere. They represent not merely ung,” meaning the increase or augmentation of value.
and increase or decrease in price but an absolute To solve this problem, I employ “revaluation” as a
quantitative augmentation or destruction of value. strict translation of Wertsteigerung.
And unlike devalorization and valorization, revalua-
tion and devaluation are not moments of the normal It is no accident that Marx introduces the distinc-
self-expansion process. They are necessary products tion between capital in general and particular individual
of this self-expansion and presuppose it, but involve capitals at precisely the point where he begins to talk
not a momentary change in the form of value but about the revaluation and devaluation of capital. For
rather an absolute quantitative augmentation or the same economic forces can lead to quite different
destruction of value. Marx is clear about these twin results depending on whether the object of concern is
processes: “Revaluation [Wertsteigerung] and devalu- a specific capital or capital in general. Let us start with
ation [Entertung] are self-explanatory”, he says in the what might be thought of as devaluation in the weak
third volume of Capital. “All they mean is that a sense. If, in its exchange on the market, a single capital
given capital increases or decreases in value as a result experiences a depreciation for whatever reason, i.e., if
of certain general economic conditions …. All they it is sold at a price below its value where its value is de-
mean, therefore, is that the value of a capital invested termined by the quantity of socially necessary labour
in production rises or falls irrespective of its self- time the given commodity embodies, then this indi-
expansion by virtue of the surplus labour employed vidual capital has been devalued. It has been devalued
in it.”12 because this specific capital has not realized the entire
value it embodies and a depreciation of capital has led
In Capital Marx consistently refers to revaluation directly to a devaluation, at least in this narrow sense.
and devaluation as “Wertsteigerung” and “Entwer- However, in so far as this depreciation is matched by
tung,” and he treats these as opposites. As we saw an appreciation of some other capital with which this
above, he also used “Entwertung” in Grundisse to original capital was exchanged, then no devaluation
refer to the process we have called devalorization – a of the general capital has taken place. Devaluation in
process which Marx himself clearly distinguished this sense is not only relative but isolated to a single
from devaluation. By Capital however, “Entwertung” capital, and in itself it is of little importance. It will
always means devaluation. Unfortunately, Marx’s not be considered further.
consistency is not replicated in the translations of his
work into English. Where Entwertung and Wert- Devaluation in the strong sense, devaluation
steigerung appear together, they are generally trans- proper, occurs when the general capital either of a
lated as depreciation and appreciation, although on branch, or of a region of the world economy experi-
its own, Entwertung is often translated accurately as ences a general and absolute destruction or loss of
devaluation. Leaving aside the fundamental confusion value. As such it affects not just individual capitals
between the price sphere and the value sphere implied randomly, but all or most of the capitals in a given
in this mistranslation, it seems that one of the problems branch. This general devaluation occurs when capital
is unable to realize the socially necessary labour
constitutes a moment of the process of valorisation itself, should embodies in it for a given value equivalent. Marx
be distinguished from the devaluation of capital, which results
makes very clear what he means by devaluation, and
from the increase in the productive power of labour.” Roman
Rosdolsky, The Making of Marx’s Capital, Pluto Press, London, in particular how he distinguishes devaluation from
1977, p. 318n. We distinguish it here with the term “devaloriza- deprecation, but unfortunately, the one place where
tion”. he spells out this definition and distinction is the place
12 Das Kapital, urich, 1933, Vol. 3, p. 132. In the English where Nicolaus’s translation is least consistent. The
translations, see p. p. 110-111. (Here incidentally, “Wertsteiger-
following section from the original is worth quoting
ung” and “Entwertung” are typically translated as appreciation
and depreciation.) at length. Referring again to his twist manufacturer

10 Human Geography
 NEIL SMITH

who this time sells 40 lbs. (with a value of 200 thalers) There is no clearer statement in Marx about the
for only 180 thalers in silver because no more can be obvious difference between depreciation and devalu-
realized on the market, Marx writes: ation.

Thus a general devaluation [allgemeine The crucial argument here is that because value
Entwertung] of 20 thalers has taken place, expresses the relation between the price of a commodity
or a destruction of capital [Vernichtung von and the socially necessary labour embodied in it, and
Kapital] to the amount of 20 thalers. A not just the relationship between commodities, de-
general devaluation thus takes place despite the valuation is systematically different from depreciation.
fact that the depreciation [Depreziation] of the Logically, revaluation is to devaluation what apprecia-
twist manufacturer’s 40 lbs. from 200 to 180 tion is to depreciation. The difference is that the first
necessarily appears as an appreciation [Ap- two processes occur in the value sphere while the latter
preziation] on the part of silver, a depreciation occur in the price sphere. There is certainly a rela-
of twist relative to silver; and a general depre- tionship between them, just as there is a relationship
ciation [allgemeine Depreziation] of prices between price and value. But for now, the question is,
as such always comprises an appreciation of how do devaluation and revaluation take place?
money, i.e., of the commodity in which all
the others are appraised. Thus, in a crisis – a While they are logically symmetrical, revaluation
general depreciation of prices – there occurs up and devaluation are certainly not historically sym-
to a certain moment a general devaluation or metrical. Revaluation certainly occurs but devalua-
destruction of capital. The devaluation, unlike tion is the historically dominant process, and results
the depreciation, can be general, absolute, from two major sources. In the first place, there is
not merely relative [Die Entwertung kann the necessary tendency under capitalism toward a
allgemain sein, absolut, nicht nur relative, wie perpetual increase in the productiveness of labour. By
die Depreziation] because value expresses not constantly innovating the machinery and other fixed
merely a relation between one commodity and capital employed in the labour process, the capitalist
another, as does price, but rather the relation manages to produce a larger quantity of commodi-
between the price of the commodity and the ties with the same or a lower expenditure of labour.
labour objectified in it…. If these amounts are That is, he reduces the socially necessary labour time
both equal, then devaluation occurs, a devalu- required for each commodity and thereby increases
ation which is not outweighed by an appre- the rate of surplus value. The value of commodities is
ciation on the other side, for the other side reduced by reducing the value of raw materials, instru-
expresses a fixed amount of objectified labour ments of labour, and especially labour power itself. In
which remains unchanged in exchange.13 so far as the search for relative surplus value, through
the increase in the productiveness of labour, becomes
the “most powerful lever of accumulation,” and thus
the essence of the capitalist mode of production, the
13 Grundrisse der Kritik … p. 350. In the English translation devaluation of labour power is a central historical
Nicolaus not only confuses depreciation [depreziation] with necessity. Machinery devalues the labourer’s labour
devaluation [Entwertung], but mistranslates the key passage power; “his valuelessness and devaluation [Wertlosig-
pointing to their distinctions. Admittedly Marx’s original is not
keit und Entwertung] is the presupposition of capital
as clear as it could be. Still, where Marx writes that “devalua-
tion, unlike depreciation, can be general, absolute, not merely and the precondition of free labour in general.”14 This
relative”. Nicolaus translates this as the exact opposite: “devalu- devaluation occurs through a series of revolutions
ation, like the depreciation, can be general, absolute and not
merely relative…” (Grundrisse, p. 446). (As regards devaluation 14 Capital Vol. 1, Chs. 12, 15, especially p. p. 395, 406,
and revaluation, the recent New Left Review/Penguin transla- where Marx talks about the devaluation [Entwertung] of labour
tions of Capital Vols I and II by Fowkes and Fernbach, 1976, power. Again this is translated as depreciation. Also, see Grun-
1978, are somewhat more accurate and consistent.) drisse der Kritik… p.p. 199-200.

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CONCEPTS OF DEVALUATION, VALORIZATION AND DEPRECIATION

in value, some large, some small. Such revolutions possible to embark upon this task. The following is
in value clearly have a direct tendency to devalue a tentative and brief summary of this translation from
already existing instruments of production, as well as the positing of value to the necessity of crisis.
the labour employed in production: “The continual
improvements…. lower the use value, and therefore From the outset it should be clear that since depre-
the value, of existing machinery, factory building, etc. ciation and appreciation are price sphere phenomena,
This process has a particularly dire effect during the they are generally peripheral for the understanding of
first period of newly introduced machinery, before it the origin of crisis. The above clarification of concepts
attains a certain stage of maturity, when it continually began on the surface with depreciation and appre-
becomes antiquated before it has time to reproduce its ciation, and burrowed progressively deeper through
own value.”15 This first type of devaluation I shall call devalorization and devaluation to crisis. But this is a
progressive. case where the method of logical presentation does not
at all express the actual historical process. In fact, the
Unlike this first form of devaluation which is logical sequence from depreciation to devalorization
ongoing in character, the second form of devaluation of capital is the appearance that crisis often takes if one
is periodic, occurring only at particular moments of the examines only isolated capitals, and from the point
accumulation process. This is the particularly violent of view of exchange. Nonetheless, this is the very
and sudden devaluation of capital that has taken place sequence accepted in under consumptionist theory
in connection with crises, and although clearly related as the true explanation for crisis: underconsumption/
to the first form of devaluation, is equally clearly overproduction leads to a lowering of prices, which
distinct from it. Devaluation in crises affects all forms leads in turn to an interruption of the production
of capital – M, C, and P – but given that for Marx process, and eventually to crisis. While this sequence
the origin of crises is the tendency toward a falling does in part take place, it does so only after the onset
rate of profit, hastened by a rapidly increasing organic of crisis, which is the expression of far deeper forces.
composition of capital (c/v), the devaluation of pro-
ductive capital is particularly crucial. This periodic The starting place for a discussion of the origins
devaluation occurs either through a direct cheapening of crisis is devalorization. Marx’s first mention of
of productive capital, through the non-use of capital crisis in Capital coincided with his first discussion
(over-accumulation being an integral part of the falling of devalorization. There, while discussing the M-C
rate of profit), or through its physical deterioration transformation, Marx chose to emphasize that the
because of non-use. inability to effect the entire circulation of value
implied the direct “possibility, and no more than
III. the possibility, of crisis.”16 Devalorization expresses
the possibility of crises; there is no guarantee that the
It is in the discussion of crisis that the relation- devalorization phase of the circulation of value (M-C)
ship between the different sets of concepts becomes will be succeeded by the second part of the valoriza-
clear. They are historically clarified in the course of tion process (C-M). The valorization process itself, in
crisis. First, it is important to stress as Marx did that so far as it is simultaneously a devalorization process,
crisis is simply an expression of the internal contra- contains the seeds of crisis.
dictions of the concept of capital; the definition of
crisis is contained in the concept of capital. But in his But if the valorization and devalorization of
different treatments of crisis, Marx did not make clear capital express the possibility of crisis, the reality of
the systematic historical translation of crisis, Marx did crisis emerges from elsewhere. It in fact emerges from
not make clear the systematic historical translation the progressive devaluation of capital. Crisis for the
from the positing of value to the outbreak of crisis. capitalist class is a low rate of profit, and Marx demon-
With the above clarification of concepts, it is now strated the necessity of this tendency toward a low rate
15 Capital Vol. III, p. 113. 16 Capital Vol. I, p. 114.

12 Human Geography
 NEIL SMITH

of profit by showing that capital could expand only if capital loses its value on the market, it is left idle or un-
at the same time the organic composition of capital deremployed, and it decays physically despite or even
(c/v) was also increased at such a rate that the very because of its non-use. These processes of devaluation
basis upon which profit is produced (the employment obviously occur unevenly according to many things:
of labour power with v) was systematically diminished. the form of capital, its physical properties, conditions
The increase in the organic composition of capital of production in the sector or region in which it is
is simultaneously an expression of the progressive employed. Although the focus here has been purely
devaluation of capital. This is so because both result on productive capital, it would also be possible to
from the continuous increase in the productive forces follow capital out of the productive sphere and into
made necessary by the relations of production under the speculative financial and money markets as well as
capitalism. Given these relations of production, you the commodity markets and to trace the depreciation
cannot have a systematic increase in the organic com- and appreciation of commodities and money during
position of capital and a resulting tendency toward a crises, and further to discuss the reverse effect of these
falling rate of profit without a progressive devaluation processes on the underlying sphere of production, and
of capital. Each expresses the other. ultimately on the constitution of value. But this is a
more detailed discussion of crisis that does not belong
A movement of capital takes place away from here. The important conclusion from this analysis is
those sectors and regions where a falling rate of profit that through a consistent use of the concepts of de-
first manifests itself. But this capital which switches preciation, devalorization, and devaluation, the origin
from its original source can only valorize itself at the and development of crisis, as well as its roots in the
expense of capitals in other sectors where, in all likeli- constitution of value, become clearer.
hood, the rate of profit is also diminishing. Even if it
is not, the influx of new capitals and the heightening IV.
of competition would hasten such a fall. This general-
ization of the falling rate of profit, and the consequent There are three further sets of concepts in Marx
intensification of competition, crowds out some that are closely related to the ones already considered.
capitals, forcing them to lie completely or partially Clarification of these will not only complete the
idle. Thus, the progressive devaluation of capital has conceptual analysis, for sake of neatness, but will also
led to the more serious periodic devaluation of capital allow us to clarify the value transformations involved
and to the devalorization of capital (interruption of in the circulation of fixed capital.
the valorization process). This is simultaneously
the process of over-production, or more accurately, Marx talked about the realization [realisieren] of
over-accumulation: “the fallen rate of profit and value, and particularly in Nicolaus’s translation of
over-production of capital originate from the same the Grundrisse, this has been confused for the entire
conditions.”17 The over-production of capital leads to valorization process.18 In fact, realization is very
the depreciation of commodities on the market, both narrowly defined by Marx as just one transaction
directly, and as an expression of the devalorization in the entire valorization process. Realization is the
process. process by which a commodity is exchanged on the
market for money – the C-M transformation. It
Thus it is not depreciation leading to devaloriza- carries none of the implications about self-expansion
tion and eventually devaluation which is responsible of value contained in valorization. Alongisde realiza-
for crises, but exactly the opposite. The progressive tion, is a second duality of concepts which Marx uses
devaluation of capital leads equally to the periodic to describe not the fruition of value but the fruition
devaluation of capital and to the devalorization and of the physical process, the physical realization of
depreciation of capital, and these in turn, certainly,
18 Grundrisse pp. 310-18, passim. See also Ernest Mandel’s
exacerbate the initial devaluation of capital. Existing
comment to the same effect in his introduction to the Fowkes
17 Capital Vol. III, p. p. 251-2. translation of Capital, Vol. I, 1976, p. 36n.

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CONCEPTS OF DEVALUATION, VALORIZATION AND DEPRECIATION

concrete labour in the produced use-value. Here he considers the case where and instrument of produc-
talks about “Verwirklichung” (the physical realization) tion has reproduced its own value, over a period de-
and Entwirklichung, which Nicolaus translates as de- termined by a social averaging process, but where the
realization. Put simply, de-realization is the process instrument remains physically capable of production
by which the labourer, in realizing the commodity, and therefore continues in the production process,
also objectifies his or her own activity and abilities in in so far as these old instruments of production can
the form of the commodity, thereby bringing abou still produce competitively. The reason for Marx’s
the worker’s alienation. Thus the physical “realization apparent confusion of these two processes seems to be
process [Verwerklichungs progress] is at the same time twofold. First, volume 2 of Capital where the concept
the de-realization [Entwirklichungs prozess] process of wear and tear is introduced is unfinished, and it
of labour.”19 is entirely possible that Marx would have refined this
analysis. But more important, it seems that Marx did
The second set of concepts concerns the working not sufficiently distinguish the process of the routine
of fixed capital. When referring to the steady loss of transfer of value (from fixed capital to the commodity)
value by an instrument of production, Marx talks from what he himself referred to as “moral wear and
about wear and tear (“Verschliess”). By “wear and tear” (Moralische Verschliess – generally but errone-
tear” Marx means two things. “Wear and tear is first ously translated as “moral depreciation”). In labelling
of all a result of use,” and it “is furthermore caused by this process, Marx was typically tongue in cheek.
the action of natural forces.” This is the first meaning: “Moral wear and tear” is in fact, for Marx, the process
wear and tear is a physical process affecting the use of devaluation of fixed capital (both progressive and
value of fixed capital, and it results either from the deg- periodic devaluation) though Marx emphasizes pro-
radation of an instrument of production through use gressive devaluation. And as we noted above, Marx
or else its degradation through non-use at the hands of himself refers to this same process in volume 3 using
natural processes. But second, by wear and tear, Marx the term “Entwertung”. Illustrating “moral wear and
also means an economic process: “by wear and tear tear” (really progressive devaluation of fixed capital)
… is meant that part of value which the fixed capital, in volume 2 of Capital, he explains that railway cars
on being used, gradually transmits to the product, in and locomotives which can be purchased for £40,000
proportion to its average loss of use-value….(b)y the one year can generally be purchased for £30,000 ten
wear and tear of the instruments of labour, a part of years later. The development of the productive forces
their value passes on to the product, while the other extends the life of fixed capital, on the one hand, by
remains fixed in the instruments of labour and thus making it more durable, but shortens it on the other
in the process of production. The value fixed in this by these technological improvements which render
way decreases steadily, until the instrument of labour previous fixed capital obsolete. “This involves a
is worn out, its value having been distributed during change in the means of production and the necessity
a shorter or longer period over a mass of products.”20 of their constant replacement, on account of moral
depreciation [Moralischen Verschliesses], long before
It is strange that Marx did not make a real distinc- they expire physically.”21
tion here between the physical and economic aspects
of wear and tear. The one implies the other, certainly, This process of the devaluation of fixed capital,
but this is equally true for the realization (realisieren) which is translated as “moral depreciation,” is clearly
of value and the physical realization (Verwirklichung) very different from the routine surrendering of value
of a commodity, which Marx was careful to distin- by fixed capital. Thus, on the one side, we have the
guish. The importance of the distinction between devaluation of fixed capital, and on the other we have
physical and economic wear and tear is clear if one the physical wear and tear of fixed capital; between
19 Grundrisse der Kritik… p. 358; p. 454 in the English trans- 21 Das Kapital Vol. II, p. 185; p. 185 in the English transla-
lation. tion. The Fernbach translation also translates this as moral
20 Capital Vol. II, p. 171, 158. depreciation.

14 Human Geography
 NEIL SMITH

them we have a third process, the routine surrendering not mean that the steady loss of value by fixed capital
of value due to the productive consumption of fixed is not a process of devalorization.
capital. How are we to conceptualize this latter process?
It is clearly not a depreciation of fixed capital since In fact, it is quite appropriate to view this process
the transfer of value has to do with the price sphere as one of devalorization. Consistent with the earlier
only in so far as the price at which used fixed capital definition of valorization, this devalorization of fixed
could be exchanged would reflect both the deeper capital is an integral part of the valorization process.
value transformations and the physical deterioration The only difference at first sight is that the devaloriza-
of capital. This is a depreciation process only in so tion if fixed capital involves a systematic loss of value
far as it is simultaneously a more fundamental process by fixed capital, whereas this is not true of the M-C
occurring in the value sphere, and should therefore be transformation where loss and gain of value balance
distinguished carefully from depreciation proper. Nor each other in the social averaging process. But this is
is the routine transfer of value by fixed capital simply a not a real objection. In the first place, the loss and gain
devaluation process, since far from happening outside of value involved in the P-C transaction also balance.
the normal sphere of self-expansion, this regular But second, there is a systematic pattern of loss and
transfer of value is a central part of the process. Would gain of value involved in the M-C transformation; this
it, then, be reasonable to view this steady loss of value is precisely what Marx pointed to in the analysis of the
by fixed capital as the devalorization of fixed capital? prices of production. This process also occurs as part
After all, the loss of value by fixed capital throughout of the overall valorization process: since profit accrues
its productive life is due to a continuous change in to capital not on the basis of the actual quantity of
the form in which capital presents itself – a change surplus value extracted in that specific work process,
of form from P to C – and this is analogous to the but in proportion to the capital advanced, capitals
change of form from M to C we analysed above under with a high organic composition of capital attract
the heading of devalorization. On the other hand, we a higher quantity of surplus value on the market
are here talking also about a quantitative loss of value than they produce, while those with a lower organic
by one moment of capital. Does this make the steady composition attract less. Just as with fixed capital, the
loss of value by fixed capital into a separate process valorization/devalorization process here implies that
from that of devalorization? Actually, the fact that a quantitative losses and gains of capital do occur in
quantitative loss of value (by one moment of capital) a systematic way but that they balance out; value is
is involved does not in the least invalidate the use redistributed, not destroyed or created.
of “devalorization” to characterize the steady loss of
value by fixed capital. Rather, it points to a further The third set of concepts follows on from the
refinement of the category of devalorization. So far, second. The economic lifetime of a given piece of
it has been assumed that in the C-M transformation, fixed capital, the period during which it is actively
both C and M represent fixed quantities of value, and devalorized through employment in the production
this is certainly consistent with Marx’s treatment in process, is “determined by a calculation of averages.”
Grundrisse and much of Capital. But this assumption The actual lifetime of a given piece of fixed capital
must ultimately be relaxed too, and this is precisely will vary from the average according to a number of
the difference between Marx’s and Ricardo’s theories forces, including the development of superior means
of value. For Marx the quantity of value contained of production, the level of competition between capi-
in a commodity is not finally established until it is talists, and the performance of repairs on the currently
realized through exchange – made real. Thus it is not employed capital. In any case, the capitalist must
possible to maintain absolutely that the quantity of continually contribute to an “amortization fund” to
value expressed in some particular M is exactly equal allow for the replacement of fixed capital when the
to the value of C. The devalorization of capital may present machinery expires. When examining the
indeed involve a quantitative loss of value. Just because lifetime of fixed capital and attempting to illustrate
a quantitative loss of value is involved, therefore, does the principle upon which this duration is calculated,

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CONCEPTS OF DEVALUATION, VALORIZATION AND DEPRECIATION

Marx resorts to an argument couched in accounting 3. The devaluation of fixed capital (“moral deprecia-
terms – how the capitalist calculates the total price of tion” for Marx) which results from forces outside the
his machinery (including repairs) and the size of his direct production process. The development of more
amortization fund. Marx admits that the “manner of advanced items of fixed capital, for example, devalues
the book-keeping does not of course change in any way certain already operating items, both shortening their
the state of affairs booked,” but continues nonetheless lifetime and reducing the quantity of value passed
to base his analysis of the lifetime of fixed capital, and on to each commodity. 4. The amortization of fixed
his analysis of the capital employed upon repairs and capital, in which the capitalist regularly sets aside a
maintenance, on exactly this premise.22 This is the given quantity of money capital, over a given period,
source of later problems for Marx, since without first in order to finance the reproduction of fixed capital.
examining the actual process of the devalorization of This occurs purely in the price sphere. The amortiza-
capital, upon which the various price sphere calcula- tion rate – an accounting convention – may or may
tions are based, he is unable to fit fixed capital into the not accurately reflect the rate of depreciation of fixed
reproduction schema. This is not the place to lay out capital where the latter is the price sphere expression
a more detailed analysis of the devalorization of fixed of the first three processes (physical wear and tear,
capital and the different forces that affect this process. devalorization, and devaluation).
The point here is simply to show that the devalorization
of fixed capital lies behind much of Marx’s discussion Finally, the larger implications of this clarification
in volume 2 of Capital, and to point out the problems of fixed capital will not be elaborated here. Suffice it
of his taking the price sphere analysis as accurately to say that fixed capital has been something of a poor
describing the circulation of fixed capital. Indeed, relation in Marxist theory, receiving little attention,
today, Marx’s analysis is potentially obscurantist in and that it is perhaps most in need of theoretical
that the rhythm of depreciation and amortization analysis. By clarifying the different processes involved
of fixed capital (price sphere) is often systematically in the circulation of fixed capital, this analysis should
different from the rhythm of devalorization of fixed enable us to begin deriving the actual cycle through
capital (value sphere). Particularly in recent years, which fixed capital moves. This in turn will shed light
with the state attempting to stimulate private capital on the role of fixed capital in the equalization of the
investment as a means to solve the world economic profit rate, and upon the necessity of disequilibrium
crisis, depreciation and amortization rates have been between different sectors and regions of the economy.
manipulated to release capital to the private sector, Further, it should allow us to fit fixed capital into
and are therefore increasingly divorced from any real Marx’s reproduction schema, to like the value analysis
relationship with the rate of devalorization. This is of the circulation of fixed capital with the analysis of
only part of the larger systematic departure of price the circulation of fixed capital as a material commodity,
from value, evident in a crisis, and it is clear that in and to evaluate better the role of fixed capital in the
the crisis the reality of their relationship will reassert origin and solution of crisis.
itself forcefully, thus exposing the folly of shortening
the period of depreciation in accounting terms, as a V.
means to solve a real crisis.
Finally, very direct conclusions concerning the
In summary, then, we can identity four distinct characterization of capital employed by the state
processes concerning the operation of fixed capital. emerge from this analysis of depreciation/appreciation,
1. Physical wear and tear on machinery, buildings, devalorization/valorization, and devaluation/revalua-
etc. either through use or in non-use due to natural tion. Of increasing popularity in the last fifteen years
processes. 2. The devalorization of fixed capital has been the notion that the contemporary capitalist
resulting from its steady transfer of value to com- state, by definition, employs “devalorized capital”.
modities. This is economic wear and tear, for Marx. Capital invested by the state is invested at a negative,
22 Capital Vol. II, Ch. 8. zero, or at least reduced rate so as to provide capital

16 Human Geography
 NEIL SMITH

with products and services more cheaply than could a contradiction in reality. The state employs capital
be done by private capital. “Devalorized capital” is (as opposed to the revenue it also employs) precisely
the key theoretical foundation to the theory of state in order to guarantee a valorization process (both of
monopoly capitalism. According to this theory, which its own capital and of private capital) which could
originated around the French Communist Party, state not be brought about by private capital alone. This
monopoly capitalism is a new phase of monopoly capi- it is able to do because, unlike private capital, it is
talism which can be dated to the period from the 1930s under the complete influence of private market forces
to the Second World War. The history of capitalism, but can be invested according to political as well as
according to the theory, can be divided between three economic criteria, with less regard even no regard at
fundamental stages – primitive capitalism, the stage all for the likely economic return on the capital. The
of classic capitalism, and the imperialist or monopoly fact of state centered social control over this capital in
stage. The latter stage is divided between two phases no way makes it devalorized. Indeed it is precisely the
– those of simple monopoly and state monopoly direct political control over this capital that allows it
capitalism. At the centre of this second phase of third to be valorized in the first place; in a similar situation,
stage of capitalism is the ability of the state to employ private capital could not valorize its capital.
“devalorized capital” in order to overcome the effects
of the overaccumulation of capital and the falling rate Further, the state may well assist in the process of
of profit. Invested at negative, zero or below average counteracting the falling rate of profit but it does not
rates of profit, capital is directed to those monopoly do so because its capital is somehow different from
sectors of the economy where the profit rate has sunk other capital. In fact the role of the state here is very
particularly low, and because, strictly speaking, it is complex and nothing if not contradictory. In the first
not capital, its employment does not contribute to a place, capital employed by the state contributes to the
further fall in the profit rate.23 falling rate of profit in the same way as other capital.
It enters the averaging process and to the extent that it
Used in this way, the concept of “devalorized is above average it raises the rate of profit, and to the
capital” is an eclectic hybrid of a term. It has no basis extent that it is below average it lowers it. But there is
in Marx since it is defined as a state in which capital a major difference with the state. Because much of its
exists and not as a moment of the valorization process capital is inherited from private enterprise, precisely
itself. In fact, what the term attempts to designate is because under private ownership and exposed to the
capital which does not seek its own valorization, or at full force of market competitiveness a necessary level
least does so at a reduced rate. This may or may not of profit cannot be achieved, much of the capital
be a valid conception but it does not coincide with the employed by the state reaps a below average profit.
process of devalorization (or, for that matter, devalua- This occurs out of necessity not choice; when it invests
tion). “Devalorization” is not a state in which capital capital, the state attempts to create as much surplus
exists but rather a moment of the valorization process; value as possible. But then the function of the state
when it passes from being a moment in that process vis-à-vis these inherited capitals is not simply to provide
to being an actual state in which capital exists, this subsidized services and goods. It is also to restructure
capital is then devalued. capital in such a way that it can begin to produce the
requisite profit again. This it does through devaluing
In fact, the concept of “devalorized capital” used the capital it inherits, in precisely the same way that in
in this way is not just a contradiction in terms but the private sphere, the devaluation of capital in crisis
23 The definitive reference here is Paul Boceara, Etudes sur le paves the way for a new period of expansion. Thus,
Capitalism Monopoliste D’Etat, sa Crise et son Issue, Editiones as regards the rate of profit, much capital employed
Sociales, Paris, 1974. See also John Fairley, “French Develop- by the state reaps a low profit rate and in so far as it
ments in the Theory of State Monopoly Capitalism”, Science enters the averaging process, it would help lower the
and Society 44, 1980, 1980, p.p. 305-25; Margaret Wirth, “To-
profit rate, not raise it as suggested by the theory of
wards a Critique of the Theory of State Monopoly Capitalism”,
Economy and Society 3, 1977. state monopoly capitalism. In so far as the state is suc-

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CONCEPTS OF DEVALUATION, VALORIZATION AND DEPRECIATION

cessful in restructuring capital, however, it would in accumulation, as Marx elaborates them, make state
all likelihood have the effect of raising the profit rate. capital and inherent tendency of the capitalist mode of
production. Rosdolsky argues that because “the recip-
This all assumes, of course, that capital employed rocal repulsion between capitals is already contained”
by the state does enter into the calculation of profit rate in the concept of capital, state capitalism “would only
averages. It assumes further that capital employed by be possible with several capitals, organized by the
the state is equally capable of producing surplus value, state, confronting each other”. He argues, second,
that in fact, it acts as capital, not as revenue (although that “the capitalist is contained within the concept of
the state obviously expends large quantities of revenue capital, … and that ‘capitalism’ without the capitalist
also). Marx distinguishes between capital and revenue class would be a contradiction in terms.”25 In the first
not in terms of its origin but in terms of its employ- place, there is clearly a reciprocal repulsion between
ment. Where funds are invested for the production of capitals, but as Marx argued and as Rosdolsky himself
surplus value, they constitute capital, but where they repeated, this is counteracted by the attraction of
are employed for individual consumption they consti- capitals, their concentration, and “transformation
tute revenue.24 Thus wages are capital for the capital- of many small into a few large capitals.” This is the
ist but revenue for the worker. It matters not a whit, concentration and centralization of capital, which is
then, where the state gets its capital; if these funds are equally contained in the concept of capital.26 The
invested in wage labour for the production of surplus real issue here is the form of control over capital and
value, they do indeed constitute capital – state capital. the scale of this control. In fact, Rosdolsky assumes
The form of control over capital – the state rather than that the capitalist state exists only at the nation state
personal or corporate control – does not alter the fact level and that therefore a capital organized at that
that invested productive capital produces surplus value level through the state would by definition be non-
or that this capital enters into the averaging of profit competitive, but this is not true. The capitalist state
rates. The major difference with the state, however, is is organized at all spatial scales from the urban up to
this: the state is not constrained by the necessities of the international, and there is absolutely nothing in
economic survival to reap as profit its share of surplus the concept of capital that prevents a single capital, in
value. This is crucial. When the state invests capital competition with other capitals, from being organized
productively, that is by employing workers for the at the level of the nation-state. Indeed, the concept
production of surplus value, yet seems to get in return of state capital makes eminent sense as an internal
a negative, zero, or a lower than average profit, this is development of the concept of capital itself, given the
precisely because the surplus value produced as a result tendency for an increased centralization of capital.
of the valorization of state capital does not necessarily The main issue that worries Rodolsky here is not so
return to the state, but is redistributed in the profits much the scale at which capital is organized, however,
of other capitals. This is managed, for example, when but the coalescence of seemingly separate economic
the state sells its products and services below the and political spheres of control. This is the gist of
market price that would pertain had these products his second argument which, like the rigid distinction
and services been produced by private capital purchas- between the political and economic itself, is wholly
ing them; then this capital gets a certain quantity of specious.
social labour, embodied in its purchase, for less than
its social value equivalent. It is not the capitalist as individual but the capi-
talist class and internal competition within this class
In his brilliant exegesis on the making of Marx’s which is contained within the concept of capital. And
Capital, Rosdolsky attempts to show that the structure as Marx made clear, there is a tendency for control
of the valorization process renders impossible the over capital to pass from individuals in the class to
concepts of state capital and state capitalism. In fact, what Marx calls the “collective capitalist”. This is par-
the structure of valorization and the development of
25 Rosdolsky, p.p. 42, 210.
24 Capital Vol. I, p. 591; Capital Vol. II, p. 379, passim. 26 Capital Vol. I, p. 625.

18 Human Geography
 NEIL SMITH

ticularly prevalent with the progressive centralization ernments employ productive wage labour in mines,
of capital. The question becomes one of establishing railways, etc.,” he said, they “perform the function of
the institutional arrangements through which this industrial capitalists” and comprise the “state capital”
collectivity of capitalists are to control the valoriza- [Staatskapital].27 For in reality, the capitalist state
tion of their capital. Here again there is nothing in developed out of an economic foundation, and it has
the concept of capital which excludes the state as a continued to develop this foundation as part of its
possible institutional form, just as there is nothing political function. Neither devalorized capital, nor
which excludes the joint stock company or the state ‘capital’ as revenue, provide the basis from which
multinational. Indeed again, we would expect capital to analyze state capital and the emerging reality of
increasingly to organize and control its valorization state capitalism.28
process through the instrumentality of the state, as
centralization proceeds and as the international capi- VI.
talist system moves into crisis requiring more directly
political solutions and the seeming emancipation this Clarification of the different processes of depre-
affords from the necessity to profit. It is of course only ciation/appreciation, valorization/devaloriation, and
a seeming emancipation; displacement of the crisis valuation/devaluation can contribute not only to our
leads to its exacerbation and generalization. immediate understanding of the movement of value
but also to a number of broader issues of contempo-
As employed in the theory of state monopoly rary significance.
capitalism, the notion of “devalorized capital” contra-
dicts Marx’s analysis of value. In order to understand 27 Capital Vol. II, p. 97.
the realities of contemporary capitalist development, 28 On state capital, see N. Bukharin, Imperialism and World
one need not go to the elaborate stage and phase Economy, Merlin Press, London 1972. More recently Colin
Barker has laid an excellent foundation for analyzing “The State
structure of state monopoly capitalists. Well before as Capital”, International Socialism 2:1, 1978, pp. 16-42. See
the fruition of state capitalism, Marx was well aware also Colin Barker, “A Note on the Theory of the Capitalist
of the development of state capital. In “so far as gov- State”, Capital and Class 4, 1978, pp. 118-126.

Neil Smith’s article was transcribed from the original typescript by

Mara van den Bold, Clark University

Volume 10, Number 1 2017 19