marx on division of labor and technical progress

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Marx on division of labour, mechanization and

technical progress*

Carlos J. Ricoy

1. Introduction

The aim of this paper is to reconstruct Marxs analysis of the developmentof the forces of production in terms of division of labour and technicalprogress. Such a reconstruction is not found in the literature, where onlypartial accounts are available. Among them, Shaikh (1978) and Rosenberg(1974, 1976b) are of particular significance from the perspective of thispaper. In his discussion of the choice of technique in relation to the law ofthe falling rate of profit, Shaikh states, without providing evidence, that, inMarxs view, the fundamental tendency in the development of the social

productivity of labour is the progressive mechanization of production; thistendency, he argues, is inherent to the inner nature of capitalistproduction. By providing some evidence from Marxs writings, Rosenbergdiscusses such a tendency as a requirement for the application of science inthe productive sphere.

The reconstruction here proposed intends to bring out the differentaspects of Marxs view of the development of the forces of production onthe basis of evidence from his writings. Thus, the analysis has a wider scopethan those of Shaikh and Rosenberg as regards both the evidence and the

problems considered. The reconstruction moves along the following lines.First, I provide a full account of the main tendency towards mechanizationas envisaged by Marx. Second, I establish his view of the development of theforces of production through the interaction among division of labour inparticular processes of production, social division of labour and technicalprogress. Third, I bring out his conception of technical progress as anevolutionary process of accretion of knowledge with respect to, and of

Address for correspondence

Departamento de Fundamentos del Analisis Economico, Facultad de CienciasEconomicas y Empresariales, Universidad de Santiago de Compostela, Spain; e-mail:[email protected]

Euro. J. History of Economic Thought 10:1 4779 Spring 2003

The European Journal of the History of Economic Thought

ISSN 0967-2567 print/ISSN 1469-5936 online # 2003 Taylor & Francis Ltd

http://www.tandf.co.uk/journals

DOI: 10.1080/0967256032000043797


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cumulative improvement of, the various elements material, human,organizational making up productive activities; this process evolves

through the interaction between the development of science and thelearning process which results from experience in production. Fourth, Iestablish the essential interdependence envisaged by Marx among thedevelopment of the forces of production, the process of capital accumula-tion and the expansion of markets; in this regard, I bring out the role ofcompetition as a fundamental driving force in the interrelated processes ofaccumulation and of development of the social productivity of labour.

The main conclusion of the paper is that, in Marxs conception, thedevelopment of the forces of production constitutes a cumulative andevolutionary process of a macroeconomic-structural nature. This process isendogenous to capital accumulation and economic growth. The analysisfurther implies that Marxs conception can be seen as an antecedent ofsome modern views on the dynamics of productivity. In particular, hisanalysis can be seen as the most consistent and developed antecedent of

Youngs view of increasing returns and economic progress and, moregenerally, of the view implied in the principle of cumulative causation asdeveloped by Nicholas Kaldor.1As it is well known, both Young and Kaldoracknowledge that their analyses are based on Adam Smiths vision ofeconomic growth centred on the development of division of labour as

determinant of productivity, and, in particular, on his proposition thatthe division of labour is limited by the extent of the market. Yet, it is onlyKaldor who makes a mere passing mention to Marx. In establishing theprinciple of cumulative causation as a view of the economic process and ofthe workings of the market mechanism alternative to that implied by themainstream equilibrium framework, he refers to the co-existence ofincreasing returns and competition emphasized by Young and also byMarx (Kaldor, 1972, as reprinted in Kaldor 1978: 195). Moreover, asregards technical progress, Marxs conception can be seen as an

antecedent of those advanced among others by Rosenberg (1976, 1982),Sahal (1981), Nelson and Winter (1977, 1982), and Dosi (1984, 1984b,1988).2

The paper is organized as follows. Section 2 provides a detaileddiscussion of Marxs view of the development of the forces of productionunder capitalist relations in terms of the evolution from simplecooperation to manufacture (section 2.1) and from manufacture tomodern industry (section 2.2). The discussion brings out the maintendency towards progressive mechanization of social production and the

fundamental interrelation among division of labour, mechanization andtechnical progress. Section 3 deals with Marxs view of technical progress.Section 4 centres on the dynamics of social division of labour as interrelated

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with that of division of labour in particular processes of production andwith technical progress; in this regard, the analysis brings out the central

role of the extent of the market and the resulting view of the dynamics ofproductivity as a macroeconomic-structural phenomenon. Section 5 deals with the interdependence among the development of the forces ofproduction, capital accumulation and the expansion of markets; moreover,it deals with the key role of competition in the process of capitalaccumulation and in the dynamics of productivity. Section 6 containssome concluding remarks.

2. Development of the conditions of production: cooperation,manufacture and machinery system. Division of labour, mechanization

and technical progress

Marxs conception of the development of the forces of production is basedon a detailed analysis of the evolution of the conditions of production fromthe handicraft system, previous to the emergence of capitalist relations, tomanufacture and to modern industry based on production by means ofmachinery.

In Marxs view, the dominant tendency underlying the developmentof the forces of production is the progressive automatization ormechanization of social production. This tendency is intrinsic to thedetermining motive of capitalist production, namely, the self-expansionof capital on a progressively extended scale. The essential notion here isthe progressive rationalization of social production as a process ofproduction of capital, that is, its progressive adaptation to the specificrequirements to the inner logic of capitalist production. It entailsfreeing the labour process from the restrictions imposed by the limits

and imperfections of the human labour force, be they natural oracquired. It further entails designing and performing the labour processaccording to rules based on scientific and technological criteria. That is,it implies the substitution of the human labour force as the regulatingelement of the production process and the progressive development ofproduction on the basis of machinery, which, in itself, allows andrequires the systematic application of science in productive activities.

According to Marx, production on the basis of machinery not onlyimplies an increasing productivity in the labour process but also endows

the system with an increasing elasticity in its productive capacity, whichpromotes the inherent tendency of capital to prolong and intensify the working day.3 Thus, machinery endows the system with an increasing

Marx: division of labour, mechanization and technical progress

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elasticity and potential for expansion, and, hence, it promotes the self-realization of capital, i.e. its progressive self-expansion on an extended

scale. Once modern industry achieves a degree of development suchthat machinery is itself produced by means of machinery, socialproduction becomes susceptible to a continuous and progressive processof technical change and, at the same time, it acquires a capacity forexpansion that is only limited by the growth of markets and by thesupply of raw materials. In order to provide a detailed account of whathas been just stated let me consider Marxs analysis of the evolution ofthe conditions of production, first, from the handicraft system tomanufacture and then from manufacture to modern industry.

2.1 From handicraft production to manufacture

In Marxs conception, the development of the forces of productionappears as an evolutionary process in which the new emerges anddevelops gradually out of what already exists. When capitalist relationsinitially emerge, neither the general character of the labour processnor the particular methods employed are altered in any significant way(see Marx 1867: 184). The only difference in the conditions of labourprocess rests on the concentration and cooperation of a large number of

workers under the control of individual capitalists and on the increase inthe scale of production that such concentration implies. As Marx puts it,the workshop of the medieval master handicraftsman is simplyenlarged. At first, the difference is only quantitative (ibid.: 322).Indeed, it entails a greater outlay of capital, both variable and constantand, hence, a greater accumulation by any individual capitalist (seeMarx 1867: 330).

Thus, in Marxs view, capitalist production does not lead initially to anytechnological change. The technical conditions of the labour process are

the same as those characterizing handicraft production. The onlyfundamental change in the labour process refers to the social relationsprevailing in it development of the basic wage labour-capital relationship(see Marx 1867: 330 3). Yet, the concentration and cooperation of workersbring about an increase in the intensity and productivity of production (seeMarx 1867: 329); in this sense, the labour process is characterized by thepresence of increasing returns.

The first fundamental changes in the technical conditions and in theorganization of the labour process resulting from capitalist production

take place with the development of manufacture. As regards theconditions of production, manufacture is characterized by theintroduction and further development of division of labour (see Marx

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1867: 338). As a form of (social) production,4 manufacture evolvesfrom the decomposition of handicraft production.5 It entails the

simplification, specialization and subdivision of handicraft productioninto its various detail processes and the allocation of different workers toeach of them. As such, it is characterized by the formation anddevelopment of the specialized detail labourer and by its articulation ina single working mechanism, the collective labourer which is themachinery specially characteristic of the manufacturing period (ibid:348 9). Moreover, given the sequential nature of production, carryingout the labour process involves the need to coordinate its constituentdetail processes in such a way that each of them results in specific levelsof production in given times. In this sense, manufacture is character-ized by a greater (and increasing) continuity, regularity and intensity ofproduction.

The labour-time necessary in each partial process, for attaining the desired effect, islearnt by experience; and the mechanism of manufacture as a whole is based on the as-sumption that a given result will be obtained in a given time. It is only on this assump-tion that the various supplementary labour-processes can proceed uninterruptedly,simultaneously, and side by side. It is clear that this direct dependence of the opera-tions, and therefore of the labourers, on each other, compels each one of them tospend on his work no more than the necessary time, and thus a continuity, uniformity,

regularity, order, and even intensity of labour, of quite a different kind, is begotten thanis to be found in an independent handicraft or even in simple co-operation.

(Marx 1867: 345; emphasis added)

As such, this form of production requires the establishment ofdetermined and fixed quantitative proportions among the different partialprocesses. Thus, to the qualitative division of labour in the process ofproduction there corresponds a specific quantitative division among itsdifferent parts; in this sense, manufacture is characterized by the

introduction and development of technical laws of necessity whichregulate the execution of the labour process.

The division of labour, as carried out in Manufacture, not only simplifiesand multipliesthe qualitatively different parts of the social collective labour, but also creates a fixedmathematical relation or ratio which regulates the quantitative extent of those parts i.e.,the relative number of labourers, or the relative size of each group of labourers, foreach detail operation. It develops, along with the qualitative subdivision of the sociallabour-process, a quantitative rule and proportionality for that process.


In addition, the development of division of labour leads to changes in theinstruments of production. These changes result from the need to


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overcome the difficulties experienced in the process of production with theuse of those instruments in their original form. In particular, their

simplification, specialization, differentiation and improvement are due totheir necessary adaptation to the simplified and specialized detail processesresulting from division of labour.

So soon as the different operations of a labour-process are disconnected the one fromthe other, and each fractional operation acquires in the hands of the detail labourer asuitable and peculiar form, alterations become necessary in the implements that previouslyserved more than one purpose. The direction taken by this change is determined bythe difficulties experienced in consequence of the unchanged form of the implement. Manufactureis characterised by the differentiation of the instruments of labour a differentiationwhereby implements of a given sort acquire fixed shapes, adapted to each particular

application, and by the specialisationof those instruments, giving to each special imple-ment its full play only in the hands of a specific detail labourer. . . . The manufacturingperiod simplifies, improves, and multiplies the implements of labour, by adapting them to the ex-clusively special function of each detail labourer. It thus createsat the same time one of thematerial conditions for the existence of machinery.

(Marx 1867: 341 2; emphasis added)

Thus, in Marxs view, division of labour allows conditions and inducesmechanization and technical progress. But division of labour, in turn,depends on technical progress. According to Marx, the most adequate

form of the division of production into its constituent specialized detailprocesses is determined at first by experience in productive activity. Inother words, the adaptation of division of labour to the requirements ofthe single productive mechanism as a whole the technical lawregulating the labour process is established at first experimentally.Once the organization of production so established consolidates itself,any additional variation results directly from modifications in theinstruments of labour.

The division of labour peculiar to manufacture . . . acquires the best adapted form at first byexperience . . . and then strives to hold fast that form when once found, and here andthere succeeds in keeping it for centuries. Any alteration in this form, except in trivialmatters, is solelyowing to a revolution in the instruments of labour.


The interrelation among division of labour, mechanization andtechnical progress envisaged by Marx is a first fundamental element inhis view of the development of the forces of production. Such

interrelation, on the other hand, constitutes one of the core elementsof both Youngs notion of increasing returns and of Kaldors view of thedynamics of productivity.

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In addition, from the previous analysis, two more elements of Marxs viewcan be singled out. First, technical progress is seen as a learning process,

that is, as a process of analysis and resolution of problems in the sphere ofproduction.6 Again, this is the view implied in Kaldors account of theprinciple of cumulative causation. Second, the dependence of division oflabour on technical progress established by Marx implies that theorganization of production depends on the nature of capital, i.e. of themeans of production used. This latter view reappears in Marxs analysis ofthe economy in the employment of constant capital, where, moreover, themethod of production is seen to depend on the level of activity and onaccumulation of capital.7 Besides, in that analysis, capital and labour aselements (factors) of production are seen as essentially complementary.8

Thus, in Marxs view, the changes in the method or technique ofproduction that may occur are mostly the result of technical progress; assuch, those changes belong to the dynamics of the system. This is preciselythe conception advanced by Kaldor in his critique of the neoclassicalproduction function, which is summarized in his dictum that one cannotdistinguish movements along a production function from shifts in thatfunction.9

Manufacture constitutes only a first step in the process of rationalizationand improvement of social production as a process of production of capital.

As Marx argues:

By decomposition of handicrafts, by specialisation of the instruments of labour, by theformation of detail labourers, and by grouping and combining the latter into a singlemechanism, division of labour in manufacture creates a qualitative gradation, and aquantitative proportion in the social process of production; it consequently creates a definiteorganisation of the labour of society, and therebydevelops at the same time new productive

forces in the society. In its specific capitalist form and under the given conditions, itcould take no other form than a capitalistic one manufacture is but a particular methodof begetting relative surplus-value, or ofaugmentingat the expense of the labourer the self-expansion of capital usually called social wealth, Wealth of Nations, & c.


2.2 From manufacture to modern industry

From the perspective of the development of capitalist production,manufacture still entails a fundamental restriction. An essential character-istic remains, namely that the human labour force continues to be theregulating element of social production. As Marx argues, whatever may

have been the particular starting-point, its final form is invariably thesame a productive mechanism whose parts are human beings (Marx 1867:338). Thus, social production continues to be dependent on the


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capacities and skills, be they natural or acquired, of the human being. Infact, manufacture still has its fundamental basis in the handicraft system

(see Marx 1867: 338 9). Due to its narrow technical basis, manufactureis very limited in its potential of expansion. As a consequence of thelimits imposed by the imperfections of the human labour force asregulating element of production, manufacture never grows into acomplete technical system of its own foundations (ibid.: 347 8) and,hence, into a system susceptible of a continuous improvement in itsconstituent aspects.

The full adaptation of (social) production to inner logic of capitaldepends on the progressive substitution of the human labour force bymachinery and on the continuous development of production towardsmore and more mechanized levels. In this view, the crucial step in theprocess of rationalization of social production is taken with the introduc-tion and progressive development of a system based on the use ofmachinery with the emergence and progressive development of thefactory system or modern industry.

Yet, at the same time, manufacture is the fundamental basison which thesystem centred on the use of machinery is erected. As Marx establishes atthe end of his analysis of manufacture,

One of [manufactures] most finished creations was the workshop for the productionof the instruments of labour themselves, including especially the complicated mechan-ical apparatus then already employed. A machine factory, says Ure, displayed the divi-sion of labour in manifold gradations the file, the drill, the lathe, having each itsdifferent workman in the order of skill. This workshop, the product of the division of labourin manufacture, produced in its turn-machines. It is they that sweep away the handicraftsmanswork as the regulating principle of social production. Thus, on the one hand, the technicalreason for the life-long annexation of the workman to a detail function is removed. Onthe other hand, the fetters that this same principle laid on the domination of capital,fall away.


Previously, in the context of the same analysis, Marx refers explicitly tothe fundamental role that in the development of the machinery system wasplayed by the exceptional use of some simple machines in themanufacturing period as well as in earlier periods (see Marx 1867: 348).

As already pointed out, the manufacturing period, as a consequence ofdivision of labour, results in the simplification, specialisation, differentia-tion and improvement of the instruments of labour; and, as Marx argues, it

thus creates the material conditions for the existence of machinery (ibid.:341 2). In this regard, Marx refers to machines and to their developmentas follows

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The machine is a unification of the instruments of labour. . . . When, by the division oflabour, each particular operation has been simplified to the use of a single instrument,the linking-up of all these instruments, set in motion by a single engine, constitutes a

machine. (Babbage, Traite sur lEconomie des Machines, etc., Paris 1833). Simple tools,accumulation of tools; composite tools; setting in motion of a composite tool by a sin-gle hand engine, by men; setting in motion of these instruments by natural forces; ma-chines; system of machines having one motor; system of machines having oneautomatic motor this is the progress of machinery.10

Again, division of labour in manufacture allows conditions and leadsto the introduction and further development of production on the basisof machinery progressive mechanization of social production. The two-sided nature of manufacture as a restriction in the development ofcapitalist production and as a fundamental basis of such a developmentis evident in Marxs analysis in the chapter on machinery and modernindustry. In the first section of the chapter, Marx discusses at length thedevelopment of machinery along the lines sketched in the previousquote. As regards the process of production of a given commodity, Marxsees the development of the factory system as an evolutionary processfrom simple cooperation of machines of the same type to a complexsystem of machinery. While in the former the product is entirely madeby a single machine performing all the operations previously done by

one handicraftsman with his tool, in the latter, the process ofproduction is conformed by a series of specialized and successive detailprocesses being performed by a given machine. As Marx argues in thisregard:

A real machinery system . . . does not take the place of these independent machines,until the subject of labour goes through a connected series of detail processes, thatare carried out by a chain of machines of various kinds, the one supplementing theother. Here we have again the co-operation by division of labour that characterises Manufacture;only now, it is a combination of detail machines. The special tools of the various detail

workman . . . are nowtransformed into the tools of specialised machines each constitut-ing a special organ, with a special function, in the system.


Manufacture appears here again as the starting point of the factorysystem based on the use of machinery. As in manufacture, carryingout the process of production by means of machines implies the needto coordinate the specialized detail processes conforming it. Moreover,due to the sequential character of those processes, it requires the

establishment of determined and fixed quantitative proportions amongthem and, hence, among the various machines performing each ofthem.


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In those branches of industry in which the machinery system is first introduced, Man-ufacture itself furnishes, in a general way, the natural basis for the division, and consequentorganisation, of the process of production. [ . . . ] Each detail machine supplies raw material

to the machine next in order; and since they are all working at the same time, the pro-duct is always going through the various stages of its fabrication, and is also constantlyin a state of transition, from one phase to another. Just as in Manufacture, the directco-operation of the detail labourers establishes a numerical proportion between the specialgroups, so in an organised system of machinery, where one detail machine is constantlykept employed by another, a fixed relation is established between their numbers, their size,and their speed.

(Marx 1867: 379, 380; emphasis added)

Yet, while in manufacture, the continuity of the process of production ismerely the result of division of labour, in modern industry, it is a technicalimperative intrinsic to the nature of the machine. Thus, in so far as thecontinuity of production determines its effectiveness and its perfection, itfollows that its efficiency depends on the level of automatization and,hence, on the degree to which it is freed from the intervention of thelabour force.

The collective machine, now an organised system of various kinds of single machines,or groups of single machines, becomes more and more perfect, the more the process as whole

becomes a continuous one, i.e., the less the raw material is interrupted in its passagefrom the first phase to its last; in other words, the more its passage from one phaseto another is effected, not by the hand of man, but by the machinery itself. In Manufactureisolation of each detail process is a condition imposed by the nature of division of la-bour, but in the fully developed factory the continuity of those processes is . . . impera-tive.


Thus, the fundamental difference between manufacture andmodern industry rests on the subjective or objective nature of their

respective basis. In manufacture, the nature of production is subjectiveas its organization is based on and, hence, its performance is limited by,the necessary allocation of the different specialized detail labourers. Thesubjective nature of manufacture is intrinsically defined by itsdependence on the intervention of man as the regulating element ofthe labour process. By contrast, in modern industry, the organizationof production is strictly objective. Once machinery substitutes thehuman labour force as the regulating element of the process ofproduction, the logic of the latter the necessary technical laws which

define both the different detail processes and their articulation in asingle productive mechanism becomes independent of the subjectivefoundations of manufacture. In this way, production gets freed from its

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dependence on the characteristics of the human being as its regulatingelement. In sum, in modern industry, carrying out the process of

production on the basis of machinery allows and requires its analysis anddesign according to objective rules based on scientific and technologicalcriteria.

An essential difference at once manifests itself. In Manufacture it is the workmen who,with their manual implements, must, either singly or in groups, carry on each particu-lar detail process. If . . . the workman becomes adapted to the process ... the process was previouslymade suitable to the workman. This subjective principle of the division of labour no longer exists in

production by machinery. Here, the process as a whole is examined objectively, in itself, thatis to say, without regard to the question of its execution by human hands, it is analysedinto its constituent phases; and the problem, how to execute each detail process, and bind

them all into a whole, is solved by the aid of machines, chemistry&c. But, of course, in this casealso, theory must be perfected by accumulated experience on a large scale.

(Marx 1867: 379 80; emphasis added).

As Marx argues later on:

The implements of labour in the form of machinery necessitate the substitution of nat-ural forces for human force, and the conscious application of science, instead of the rule ofthumb. In Manufacture the organisation of the social labour-process is purely subjec-tive, it is a combination of detail labourers; in its machinery system, Modern Industryhas a productive organism that is purely objective, in which the labourer becomes a mereappendage to an already existing material condition of production. In simple co-op-eration, and even in that founded on division of labour, the suppression of the iso-lated, by the collective, workman still appears to be more or less accidental.Machinery . . . operates only by means of associated labour, or labour in common. Hence theco-operative characterof the labour-process is, in the latter case, a technical necessity dictatedby the instrument of labour itself.


On this view, production on the basis of machinery involves a

tendency towards the equality and uniformity of the different labours, which, in turn, implies a greater degree of substitution among them.Hence, production by means of machinery endows the system with ahigher (and increasing) degree of continuity and flexibility (see Marx1867: 420, 421).

In sum, in Marxs view, production by means of machinery entails anincreasing productivity in the labour process. In addition, it endows thesystem with a higher and increasing elasticity of productive capacity and,hence, with a higher and increasing flexibility in its utilization, thus

promoting the inherent tendency of capital to prolong and intensifythe working day (see Marx 1867: 371, 403, 404 5, 409, 410, 412). Inthis way, machinery endows the system with an increasing elasticity and


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potential for expansion and, therefore, it promotes the self-realizationof capital its progressive self-expansion on an extended scale.

Yet, from the perspective of the economy as a whole of socialproduction as a process of production of capital the system is stillrestricted in so far as its characteristic instrument, the machine, continuesto be produced by manufacture. In this view, the full development andimprovement of modern industry requires that machinery be itself producedby means of machinery.

At first, machinery, which is progressively used in the production ofcommodities, is produced by means of the specialized and skilled labourcharacteristic of the manufacturing period (see Marx 1867: 382).Manufacture constitutes the immediate technical foundation of ModernIndustry. As Marx argues, in the natural course of things, the factorysystem was raised on inadequate foundations (ibid.: 382). Despite theincreasing use of machinery in production, the dynamics of the factorysystem is still restricted in so far as the production of machinery is carriedout on the subjective basis characteristic of manufacture, i.e., in so far asthe production of machinery continues to be dependent on the capacitiesand skills of the labour force and, in particular, of those of a handicrafttype. Moreover, given the ever increasing need to solve the problemsexperienced with the use of machinery and the ensuing need to adapt it

to the specific requirements of production through the continuousimprovement of its constituent parts, the factory system appears limited inits possibilities of development and expansion due to the restrictedtechnological basis on which manufacture rests (see Marx 1867: 382 4).

In Marxs view, it is only once modern industry achieves a degree ofdevelopment such that machinery is itself produced by means ofmachinery, and, hence, it is erected on its own technical basis, that socialproduction becomes susceptible to continuous improvement in itstechnical conditions, i.e. it becomes susceptible of a continuous and

progressive process of technical change (see Marx 1867: 381, 461), thusacquiring a capacity for expansion which is only limited by the growth of markets and by the supply of raw materials.

So soon . . . as the factory system has gained a certain breadth of footing and a definitedegree of maturity and specially so soon as its technical basis, machinery, is itself pro-duced by machinery . . . so soon, in short, as the general conditions requisite for pro-duction by the modern industrial system have been established, this mode ofproduction acquires an elasticity, a capacity for sudden extension by leaps and bounds thatfinds no hindrance except in the supply of raw material and in the disposal of the produce.

(Marx 1867: 450 51, emphasis added)

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3. Technical progress

In Marxs conception, technical progress is specific to and a characteristic ofmodern industry as a form of social production based on the use ofmachinery. As we have just seen, it is only with the introduction anddevelopment of machinery as regulating elements of production, and, inparticular, once machinery itself is produced by means of machinery, thatsocial production becomes susceptible to continuous improvement in itstechnical conditions and in its constituent parts. In this regard, sciencebecomesan active and determining element in production. As Marx argues, modernindustry . . . makes science a productive force distinct from labour and pressesit into the service of capital (Marx 1867: 361). Similarly, in his analysis of theconversion of surplus-value into capital, Marx establishes that science is afundamental driving force in the dynamics of productivity and, hence, in theself-expansion of capital. In this context, he refers explicitly to the continuousdevelopment and improvement of the different elements of constant capital as

well as to the new applications that such a development entails.

If the productiveness of labour has, during the using up of these instruments of labour,increased (and it develops continually with uninterrupted advance of science and technology),more efficient and (considering their increased efficiency), cheaper machines . . . re-place the old. The old capital is reproduced in a more productive form, apart fromthe constant detail improvementsin the instruments of labour already in use. . . . Every ad-vance in Chemistry . . . multiplies the number of useful materials and the useful appli-cations of those already known, those extending with the growth of capital its sphere ofinvestment. . . . science and technology give capital a power of expansion independent of the givenmagnitude of the capital actually functioning.


As already seen, the introduction and development of machinery as theregulating element of production allows and, at the same time, requires, its

analysis, organization and execution on the basis of scientific andtechnological criteria. In short, the factory system allows and requiresthe conscious application of science in productive activities.

Along with the development of the factory system . . . production in all . . . branches ofindustry not only extends, but alters its character. The principle, carried out in the fac-tory system, ofanalysing the process of production into its constituent phases, and ofsolving the

problems thus proposedby the applications of mechanics, of chemistry, and of the whole range ofthe natural sciences, becomes the determining principle everywhere. Hence, machinerysqueezes itself into the manufacturing industries first for one detail process, thenfor another. Thus the solid crystal of their organisation, based on the old division oflabour, becomes dissolved, and makes way for constant changes.



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Again, in contrast with the subjective principle regulating division of labourin manufacture, in modern industry, the organization of production is

strictly objective; as Marx argues:

Here, the process as a whole is examined objectively, in itself, that is to say, without re-gard to the question of its execution by human hands, it is analysed into its constituentphases; and the problem how to execute each detail process, and bind them all into awhole, is solved by the aid of machines, chemistry & c. But, of course, in this case also,theory must be perfected by accumulated experience on a large scale.

(Marx 1867: 380)

According to Marx, freeing social production from the subjectivity inherentto division of labour in manufacture and the ensuing need of analysingthe different processes of production into its constituent phases give rise tothe development of technology as a specific field of enquiry:

even down into the eighteenth century, the different trades were called mysteries(mysteres); into their secrets none but those duly initiated could penetrate. ModernIndustry rent the veil that concealed from men their own social process of production,and that turned the various, spontaneously divided branches of production into somany riddles, not only to outsiders, but even to the initiated. The principle which itpursued, ofresolving each process into its constituent movements, without any regard to theirpossible execution by the hand of man, created the modern science of technology. The var-

ied, apparently unconnected, and petrified forms of the industrial processes now re-solved themselves into so many conscious and systematic applications of natural science tothe attainment of given useful effects. Technology also discovered the few main fundamen-tal forms of motion, which, despite of the diversity of the instruments used, are neces-sarily taken by every productive action of the human body; just as the science ofmechanics sees in the most complicated machinery nothing but the continual repeti-tion of the simple mechanical powers.


These arguments contain what can be considered the core of Marxs

conception of technical progress. In this regard, two main elements can besingled out. First, the interaction between the development of science andthe dynamics of production. Second, the view of technical progress as aprocess of analysis and resolution of problems in productive activities andthe implied notion of learning through experience. Thus, in this view,technical progress appears as a continuous process of analysis andresolution of problems in the sphere of production that takes placethrough the interaction between science and the accumulated knowledgeresulting from experience in production and from the analysis and the

resolution of problems themselves; it is in this latter sense that it can beargued that technical progress constitutes a path-dependent process. As aresult of such a process, technical progress is, at the same time, an

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evolutionary process of modification and improvement of both the processof production taken as whole and of its individual constituent aspects or

conditions. As stated in the introduction of this paper, this view can be seenas an antecedent to that implied in the principle of circular and cumulativecausation as developed by Kaldor and those advanced among others byRosenberg, Sahal, Nelson and Winter, and Dosi.11

As already pointed out, in Marxs view, manufacture, as it allows andinduces the emergence of modern industry, plays an essential role in thedevelopment of capitalist production. This role is again made evident in hisanalysis of the development of machinery, where Marx refers explicitly tothe evolution of particular machines or techniques from their first models

which, in their basic design and characteristics, are derived from theinstruments and techniques of the manufacturing period. In this regard, heargues that this process requires both the development of science and theaccumulation of practical experience.

The power-loom was at first made chiefly of wood; in its improved form it is made ofiron. To what an extent the old forms of the instruments of production influenced their new formsat first startingis shown by amongst other things, the most superficial comparison of thepresent power-loom with the old one, of the modern blowing apparatus of a blast-fur-nace with the first inefficient mechanical reproduction of the ordinary bellows, andperhaps more strikingly than in any other way, by the attempts before the invention

of the present locomotive, to construct a locomotive that actually had two feet, whichafter the fashion of a horse, it raised alternately from the ground. It is only after con-siderable development of the science of mechanics, and accumulated practical experience, thatthe form of a machine becomes settled entirely in accordance with mechanical prin-ciples, and emancipated from the traditional form of the tool that gave rise to it.12

(Marx 1867: 383, footnote; emphasis added)

Marx puts forward the same argument with reference to the motivepower of the process of production or to its generating mechanism. Again,the evolutionary nature of the development of machinery and, hence, of

the process of technical change is made evident. Moreover, here, Marxestablishes explicitly his fundamental view of manufacture as the basis ofthe scientific and technological development characteristic of modernindustry; in his own words:

Of all great motors handed down from the manufacturing period, horse-power is theworst, partly because a horse has a head of his own, partly because he is costly, and theextent to which he is applicable in factories is very restricted. Nevertheless, the horsewas extensively used in the infancy of the Modern Industry. . . . Wind was to inconstantand uncontrollable, and besides, in England, the birthplace of Modern Industry, the

use of water-power preponderated even during the manufacturing period. In the17th century attempts had already been made to turn two pairs of millstones with a sin-gle water-wheel. But the increased size of the gearing was too much for water-power,


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which had now become insufficient, and this was one of the circumstances that led to a moreaccurate investigation of the laws of friction. In the same way the irregularity caused by themotive power in mills that were put in motion by pushing and pulling a lever, led to the

theory, and the application, of the fly-wheel, which afterwards plays so important a role inModern Industry. In this way, during the manufacturing period, were developed the first scien-tific and technical elements of Modern Mechanical Industry.


In the same line, and in relation to the development of science, Marxargues:

The sporadic use of machinery in the 17th century was of the greatest importance, be-cause it supplied the great mathematicians of that time with a practical basis and stimu-

lant to the creation of the science of mechanics.(Marx 1867: 348)

These arguments constitute clear evidence not only of the evolu-tionary nature of technical progress but also of its dependence on theproblems experienced in production. Notice, moreover, that Marxconceives the development of science itself as partly dependent on thoseproblems. On this basis, and taking into account the objective nature ofmodern industry and the need of decomposing and analysing the

labour process into its constituent detail processes according totechnical and scientific criteria, technical progress appears clearly as aprocess of learning resulting from the analysis and resolution ofproblems in the sphere of production. Again, this view is made evidentin the following argument, which refers to the problems experienced inthe production of machines by means of machines, where Marx alsopoints to the relations of technological interdependence and complementarityamong different sectors.13

The most essential condition for the production of machines by machines was a primemover capable of exerting any amount of force, and yet under perfect control. Such acondition was already supplied by the steam-engine. But at the same time it was neces-sary to produce the geometrically accurate straight lines, planes, circles, cylinders,cones and spheres, required in the detail parts of the machines. This problem HenryMaudsleysolvedin the first decade of this century by the invention of the slide rest, a toolthat was soon made automatic, and in a modified form was applied to other constructive ma-chines besides the lathe, for which it was originally intended. This mechanical appliance re-places. . . the hand itself. . . produces a given form by holding and guiding thecutting tool along the iron or other material operated upon. Thus it became possibleto produce the forms of the individual parts of machinery with a degree of ease and

accuracy, and speed, that no accumulated experience of the hand of the most skilledworkman could give(1)14 (1) Cf. The Industry of Nations, Lond., Part II., p. 239].(Marx 1867: 385; emphasis added)

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The continual improvements both of commodities and of methods ofproduction acquire full significance in the capital goods sector; for,

technical progress in that sector plays a key role in the dynamics of thesocial productivity of labour.15 The relevance of these improvements restson the cheapening of machinery, on the production of more efficientmachines of the same type and on the innovation process; as Marx argues,these phenomena entail an increase in the rate of moral depreciation obsolescence of machinery already in use.

In addition to the material wear and tear, a machine also undergoes, what we may callmoral depreciation. It loses exchange-value, either by machines of the same sort beingproduced cheaper than it, or by better machines entering in competition with it. In

both cases, be the machine ever so young and full of life, its value is no longer deter-mined by the labour actually materialised in it, by the labour-time requisite to repro-duce either it or the better machine.

(Marx 1867: 404)

And, Marx goes on:

When machinery is first introduced into an industry, new methods of reproducing itmore cheaply follow blow upon blow, and so do improvements, that not only affect in-dividual parts and details of the machine, but its entire build.

(Marx 1867: 404 5)

In this context, Mars quotes Babbage who, on the basis of rough estimates,establishes that . . . the first individual of a new invented machine will costabout five times as much as the construction of the second (Marx 1867:405, footnote 1).

Rosenberg suggests that there is, in Marxs analysis, a sort of lifecycle hypothesis as regards both the development of machinery and itsmethods of production.16 When introduced, new machines, as they have

not yet been subject to a rigorous analysis of their performance underactual conditions of production, are usually inefficient. As a result ofsuch an analysis, a sequence of improvements follows, which refer bothto the basic structure of machines and to their constituent parts and,hence, to their operating characteristics. Once they have acquired astabilized form, technical progress centres on their methods ofproduction, which results in a falling cost of reproduction. Thus, inthe first stages of its life cycle, machinery is subject to a high rate ofobsolescence (see Marx 1894: 113 14). Again, technical progress

appears as a process of analysis and resolution of problems; moreover,we find here a sort of combined hypothesis of learning by doing and byusing which points to the need for a close interaction between makers


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and users of machinery. This view also points to the existence of anessential uncertainty in the adoption of new techniques; in this regard,

Marx refers to:

1) the great difference in the cost of the first model of a new machine and that of itsreproduction ( . . . see Ure and Babbage)17 2)The far greater cost of operating an es-tablishment based on a new invention as compared to later establishments arising exsuis ossibus. This is so very true that the trail-blazers generally go bankrupt, and onlythose who later buy the buildings, machinery, etc., at cheaper prices make moneyout of it. It is . . . generally the most worthless and miserable sort of money capitalistswho draw the greatest profit out of all new developments of the universal labour ofthe human spirit and their social application through combined labour.

(Marx 1894: 104)

4. Social division of labour, extent of the market and macroeconomic-

structural nature of efficiency

Another central element in Marxs view of the development of the forces ofproduction rests in his view of the dynamics of social division of labour asinterrelated with that of division of labour in particular processes ofproduction and with technical progress. This interrelation constitutes also acore element of Allyn Youngs notion of increasing returns.

According to Marx, the production and circulation of commodities are aprerequisite of capitalist production as the latter presupposes a certaindegree of development of the process of exchange and of social division oflabour. In turn, capitalist production extends and intensifies social divisionof labour; as he establishes, this mode of production, once it is assumed tobe general, carries in its wake an ever increasing division of social labour(Marx 1893: 33). This process takes place already through the developmentof division of labour in manufacture.

Division of labour in manufacture demands that division of labour in society at largeshould previously have attained a certain degree of development. Inversely, the formerdivision reacts upon and develops and multiplies the latter.

(Marx 1867: 353)

And, as Marx goes on, the introduction and development of division oflabour in integrated industries which produce either different commod-ities horizontal integration or one single commodity and the corre-sponding inputs vertical integration lead to their subdivision and

specialization as independent industries (see Marx 1867: 353). Also, thedevelopment of division of labour in manufacture, as it leads to thedifferentiation of the instruments of labour, promotes a further develop-

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ment of social division of labour through the differentiation of the industrieswhich produce those instruments (ibid.: 353).

The interrelation Marx establishes between division of labour inmanufacture and in society is closely related to Smiths propositionthat the division of labour is limited by the extent of the market. For,as I have argued elsewhere (Ricoy 1994), this proposition is intrinsicallylinked to the characterization of social production as commodityproduction as a commercial society in Smiths terminology that is, asystem based on social division of labour and organized throughexchange. The basic idea in this regard rests on the continuousinteraction that takes place between the development of social divisionof labour and the development [the intensity] of the process ofexchange that results from the increasing interdependence amongindustries [their integration] through the market mechanism. This isbut the manifestation of the development of the economic system as asystem of production of commodities by means of commodities. It should benoted that Kaldor recognizes that for Smith the existence of a socialeconomy and the existence of increasing returns are closely relatedphenomena.18 It is in this sense that Marxs view that the conditions ofrealization of surplus-value conditions of sale are limited by theproportional relations of the various branches of production (Marx

1894: 244) is to be understood; as he argues as regards the creation ofabsolute surplus-value:

[it] is conditional upon an expansion . . . of the sphere of circulation. The surplus-valuecreated at one point requires the creation of surplus-value at anotherpoint, for which itmay be exchanged. . . . A precondition of production based on capital is ... the produc-tion of a constantly widening sphere of circulation, whether the sphere itself is directly ex-panded or whether more points within it are created as points of production.19

(Marx 1939: 407; italics in the original)

Moreover, in the context of the previous discussion on social division oflabour, Marx refers explicitly to density of population as a prerequisite ofdivision of labour and to its dependence on the development of the meansof communications. In the same line, Marx sees the opening of externalmarkets as a factor inducing division of labour (Marx 1867: 352 4).

The progressive extension of division of labour in society acquires itsfull relevance with the emergence and development of the factory systembased on the use of machinery. In this context, the input-output relationshipsand the intersectoral demands that such a system entails acquire special

significance. In effect, the generalization of the use of machinery allthrough the different industries, given the increase in productivity and,hence, in production involved, leads to an increasing demand for means of


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production, which, in turn, allows and induces the progressive subdivision,specialization and differentiationof the producing sectors.

As the use of machinery extends in a given industry, the immediate effect is to increaseproduction in the other industries that furnish the first with means of production.[ . . . ] When machinery is applied to any of the preliminary or intermediate stagesthrough which the subject of labour has to pass on its way to completion, there is anincreased yield of material in those stages . . . In proportion as machinery . . . increasesthe mass of raw materials, intermediate products, instruments of labour, &c, the work-ing-up of these raw materials and intermediate products becomes split up into num-berless branches; social production increases in diversity. The factory system carriesthe social division of labour immeasurably further than does manufactures, for it in-creases the productiveness of the industries it seizes upon, in a far higher degree.

(Marx 1867: 443, 444)

Similarly, the process of innovation in the machinery producingindustries and the increasing demand for machines lead to the subdivisionand specialization of those industries and to the progressive development ofdivision of labour in each of them.

As inventions increased in number, and the demand for newly discovered machinesgrew larger, the machine-making industry split up, more and more, into numerous in-

dependent branches, and division of labour in these manufactures was more and moredeveloped.(Marx 1867: 382)

On the other hand, modern industry, as it implies a higher level ofproductivity and, hence, a larger surplus-value, leads to an increasingcapitalist consumption, both in volume and in variety, which, in turn, leadsto an increasing diversity of social production. At the same time, it requiresand promotes the construction and continuous improvement of all sorts of

public works as well as the introduction and progressive development ofnew goods and new sectors of production20 (Marx 1867: 445). Also, thedevelopment of the factory system, given its intrinsic tendency toexpansion, requires the substitution of the means of communication andtransport handed down from the manufacturing period (Marx 1867: 384).

In this view, the dynamics of productivity, as determined by theinterrelated processes of division of labour, both in manufacture and insociety, and technical progress, appears as a macroeconomic-structuralphenomenon. This nature of productivity is inherent to a system of

production of commodities by means of commodities. In this system, technicalprogress in the sectors producing means of production plays a key role inthe dynamics of social productivity. This is made evident in Marxs analysis

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of the economy in the employment of constant capital, where, along withthe savings in its application, he considers the savings yielded by the

continuous improvement of machinery (Marx 1894: Ch. V). A distinctivefeature of these improvements is that, although they result from technicalprogress in the producing sectors, their effect manifests itself in the sectorsmaking use of machinery. Thus, technical progress in the capital goodssector results in an increased productivity and/or in cost reductions in theusing sectors.

The development of the productive power of labour in anyoneline of production, e.g.,the production of iron, coal, machinery, . . . etc., which may again be partly connectedwith progress in the field of intellectual production, notably natural science and its

practical application, appears to be the premise for a reduction of the value, and con-sequently of the cost, of means of production in other lines of industry, e.g., textile in-dustry, agriculture, etc.

(Marx 1894: 81; italics in original)

In this way, a higher level of productivity in the capital goods sector, in sofar as it results in a lower price of those goods, leads to a reduction in the

value of capital invested and, hence, to a higher rate of profit in the usingsectors.

The increased profit received by a capitalist through the cheapening of, say, cottonand spinning machinery, is the result of higher labour productivity; not in the spin-nery, to be sure, but on cotton cultivation and construction of machinery. [ . . . ] It isthe development of the productive power of labour in its exterior department, in thatdepartment that supplies it with means of production, whereby the value of the con-stant capital employed by the capitalist is relatively lowered and consequently the rateof profit is raised.

(Marx 1894: 80, 82)

These arguments make clear the fundamental relevance of the interindustry

relations from the perspective of the dynamics of the economic system as awhole. That relevance is, in fact, implied in Marxs own view of the socialprocess of production as a circular process in which the output of one sectoris, in turn, the input of another. Again, this is a feature inherent to a systemof production of commodities by means of commodities. As he argues, thedependence of the value of the means of production used in one sector onthe increases in productivity in the producing sectors is self-evident:

Since a commodity which is the product of a certain branch of industry enters anotheras a means of production. Its lesser or greater price depends on the productivity of la-

bour in the line of production from which it issues as a product, and is at the same timea factor that not only cheapens the commodities into whose production it goes as a


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means of production, but also reduces the value of the constant capital whose elementsit here becomes, and thereby one that increases the rate of profit.

(Marx 1894: 81)

In the last analysis, the increases in productivity just considered are theresult of the progressive development of the industrial sector as a whole.Thus, the sectors making use of the means of production benefit from theadvantages derived from the process of subdivision and specialization ofindustries, i.e., from the development of social division of labour, includingscience as part of it. In this sense, the analysis of Marx makes clear thefundamental nature of the dynamics of productivity as a macroeconomic-structural phenomenon.

The characteristic feature of this kind of savings of constant capital arising from theprogressive development of industryis that the rise in the rate of profit in oneline of industrydepends on the development of the productive powers of labour in another. Whateverfalls to the capitalists advantage in this case is once more a gain produced by sociallabour . . . Such a development of productive power is again traceable in the final ana-lysis to the social nature of the labour engaged in production; to the division of labourin society; and to the development of intellectual labour, especially in the naturalsciences. What the capitalist thus utilises are the advantages of the entire system of the socialdivision of labour.

(Marx 1894: 81 2; italics in the original, emphasis added)

The macroeconomic-structural nature of productivity acquires full relevance once the relations of technological interdependence and complementarityamong sectors are considered. According to Marx, an innovation in a givensector may give rise to a similar innovation in other sectors; similarly, theintroduction and the development of an innovation in a given sector mayrequire and, hence, promote or induce a complementary development inother sectors. In this sense, technical progress in one part of the system

depends and, at the same time, induces technical progress in other parts.

A radical change in the mode of production in one sphere of industry involves a similarchange in other spheres. This happens first in such branches of industry as are con-nected together by being separate phases of a process, and yet are isolated by the socialdivision of labour, in such a way, that each of them produces an independent commod-ity. Thus spinning by machinery made weaving by machinery a necessity, and both to-gether made the mechanical and technical revolution that took place in bleaching,printing and dyeing imperative. So too, on the other hand, the revolution in cotton-spinning called forth the invention of the gin for separating the seeds from the cottonfibre; it was only by means of this invention that the production of cotton became pos-

sible on the enormous scale at present required.21(Marx 1867; 383 4)

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5. Development of forces of production, accumulation, expansion of

markets and competition

As already stated, in Marxs view, the development of the forces ofproduction through cooperation, division of labour and the introduc-tion and progressive development of machinery is intrinsic to thedetermining motive of capitalist production, namely, the production ofsurplus-value to a progressively extended scale. In short, such adevelopment is inherent to the development of capitalist productionitself.

When considering the production process we saw that the whole aim of capitalist

production is appropriation of the greatest possible amount of surplus-labour, inother words, the realisation of the greatest possible amount of immediate labour-time with the given capital, be it through the prolongation of the labour-day orthe reduction of the necessary labour-time, through the development of the pro-ductive power of labour by means of co-operation, division of labour, machinery,etc. . . . . 22

(Marx 1959, Part II: 521 2)

As we have seen, according to Marx, the dominant tendency underlyingthe development of the forces of production is the progressive automatiza-

tion or mechanization of social production in so far as it entails itsprogressive rationalization and improvement as a process of production ofcapital. In other words, the development of the forces of productionthrough division of labour and technical progress allows, conditions andpromotes the self-realization of capital.

Capital and its self-expansion appear as the starting and the closing point, the motiveand the purpose of production; . . . production is only production for capital . . . themethods of production employed by capital for its purposes . . . drive towards unlim-ited extension of production, towards production as an end in itself, towards uncondi-

tional development of social productivity of labour . . . unconditional development ofthe productive forces of society.

(Marx 1894: 250, italics in the original)

In this view, the development of the forces of production constitutes a keyelement in the global dynamics of the economic system. The other keyelement in such dynamics is accumulation of capital conversion of surplus-

value into capital.23 In effect, in Marxs view, the dynamics of capitalistproduction rests on accumulation of capital and on the development of the

forces of production of the social productivity of labour. In this regard,Marx sees the process in terms of the reciprocal interactionamong these twoelements.


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The mere quantitative increase in capital at the same time implies that its productivepower grows. If its quantitative increase is the result of the development of productivepower, then the latter in turn develops on the assumption of a broader, extended ca-

pitalist basis. Reciprocal interaction takes placein this case. Reproduction on an extendedbasis, accumulation, even if originally it appears only as a quantitative expansion ofproduction the use of more capital under the same conditions of production at acertain point, therefore, always represents a qualitative expansion in the form of agreater productivity of the conditions under which reproduction is carried out. Con-sequently, the volume of products increases not only in simple proportion to thegrowth of capital in expanded reproduction.

(Marx 1959, Part II: 522; emphasis added)

As it is implied in this argument, the dynamics of the system based on theinteraction between accumulation of capital and the development of theforces of production implies and requires the continuous expansion ofproduction. As such, the whole process requires the market to expandaccordingly.

Constantly expanding production5it expands . . . for two reasons; firstly because the ca-pital invested in production is continually growing; secondly because the capital is con-stantly used more productively; in the course of reproduction and accumulation, smallimprovements are continuously building up. There is a piling up of improvements, acumulative development of productive powers4 requires a constantly expanding market.

(Marx 1959, Part II, p. 522; emphasis added)

In short, the dynamics of the system centred on the self-expansion ofcapital and, as such, determined by the interaction between accumulationof capital and the development of the forces of production depends on theexpansion of markets on the expansion of demand. As Marx argues, . . . the process of circulation sets in motion new forces independent of thecapitals magnitude of value and determining its degree of efficiency, itsexpansion and contraction (Marx 1893: 38 9).

Or as he argues in Volume III of Capital:

The conditions of direct exploitation, and those of realising it, are not identical. Theydiverge not only in time and place but also logically. The first are only limited by theproductive power of society, the latter by the proportional relation of the variousbranches of production and the consumer power of society.

(Marx 1894: 244)

In this regard, and with reference to the production of relative surplus-

value, i.e. that based on the increase and development of the productiveforces, Marx establishes the overriding need of expanding the consumingcircle, of creating new consumption, through:

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Firstly, [the] quantitative expansion of existing consumption; secondly: [the] creationof new needs by propagating existing ones in a wide circle; thirdly: [the] production ofnewneeds and [the] discovery and creation of new use values.

(Marx 1939: 408; emphasis in the original)

According to Marx, this leads to:

the exploration of all nature in order to discover new, useful qualities in things;universal exchange of the products of all alien climates and lands; new (artificial)preparation of natural objects, by which they are given new use values. The ex-ploration of earth in all directions, to discover new things of use as well as new usefulqualities of the old... the development . . . of the natural sciences to their highestpoint; likewise the discovery, creation and satisfaction of new needs arising from societyitself; the cultivation of all the qualities of the social human being, production ofthe same in a form as rich as possible in needs, because rich in qualities and rela-tions... the creation . . . of labour with a new use value; the development of a con-stantly expanding and more comprehensive system of different kinds of labour,of different kinds of production, to which a constantly expanding and constantly en-riched system of needs corresponds.


When Marxs analysis of the dynamics of the system on the basis of thereciprocal interaction between accumulation of capital and the develop-

ment of the forces of production is seen from the perspective of thedifferent individual capitals, competition appears as a fundamental drivingforce in such dynamics. Paraphrasing Kaldor, competition constitutes asocial mechanism, which transmits impulses to economic change and,thereby, creates more resources through enlarging the scope forspecialisation, division of labour [and technical progress] (Kaldor 1978,p. xxv).

In Marxs view, the objective basis of capital, namely, the expansion ofsurplus value on a progressively extended scale the never-ending

augmentation of value constitutes the subjective aim and the determiningmotive of each individual capitalist,24 as Marx argues in his analysis of theconversion of surplus-value into capital:

So far as he is personified capital, it is not values in use but and the enjoyment ofthem, but exchange-value and its augmentation what spurs him into action. Fanati-cally bent on making value expand itself, he ruthlessly forces the human race toproduce for productions sake; he thus forces the development of the productivepowers of society.

(Marx 1867: 592)

And, competition makes the subjective aim of individual capitalists arequisite of their own survival as such; in this sense, competition appears as


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a external coercive mechanism forcing capitalists into a continuous processof accumulation.

As such, [the capitalist] shares with the miser the passion for wealth as wealth. But thatwhich in the miser is a mere idiosyncrasy, is, in the capitalist, the effect of the social mechan-ism, of which he is but one of the wheels. Moreover, the development of capitalist produc-tion makes it constantly necessary to keep increasing the amount of the capital laid outin a given industrial undertaking, and competition makes the immanent laws of capitalist pro-ductionto be felt by each individual capitalist, as external coercive laws. It compels him tokeep constantly extending his capital, in order to preserve it, but extend it he cannot,butby means of progressive accumulation.


Thus, each individual capitalist, in his urge to expand his own capital andforced to do so by the mechanism of competition, tends continuously toexpand the production of commodities and to develop a competitive edgeover his rivals so as to enlarge his market share.

It is in the nature of capitalist production that: 1. each particular capital on a scalewhich is . . . determined by the endeavour to realise as much labour and therefore asmuch surplus-labour as possible and to produce the largest possible quantity of com-modities with a given capital; 2. each individual capital strives to capture the largestpossible share of the market and to supplant its competitors and exclude them from

the market competition of capitals.(Marx 1959, Part II: 484; italics in the original)

In this view, the behaviour of each individual capitalist is characterized bya continuous tendency to develop and improve the conditions ofproduction so as to cheapen the commodities produced in such a way asto lower its individual value below the corresponding social valueresulting from the average conditions of production of the sector implied.

Distinctive feature of the capitalist mode of production is the production of sur-plus value as the direct aim and determining motive of production. Capital pro-duces essentially capital, and does so only to the extent that it produces surplus- value. . . . Production for value and surplus-value implies . . . the constantly operat-ing tendency to reduce the labour-time necessary for the production of a com-modity, its value, below the actually prevailing social average. The pressure toreduce cost-price to its minimum becomes the stronger lever for raising the socialproductiveness of labour

(Marx 1894: 880 1)

In effect, a capitalist who introduces a new method of production andwho, as a consequence, increases the productivity of labour, thus loweringthe individual value of his commodities below their social value,

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appropriates himself of an extra surplus-value and, at the same time,develops a competitive advantage over other capitalists.

One capitalist can drive another from the field and capture his capital only by sellingmore cheaply. . . . He must produce more cheaply, that is, raise the productive powerof labour as much as possible. But, the productive power of labour is raised, above all,by a greater division of labour, by a more universal introduction and continual improve-ment of machinery. The greater the labour army among whom labour is divided, themore gigantic scale on which machinery is introduced, the more does the cost of pro-duction proportional decrease, the more fruitful is labour. Hence, a general rivalryarises among the capitalists to increase the division of labour and machinery to exploitthem on the greatest possible scale.


According to Marx, the competitive edge so developed becomeseffective in the market and, hence, becomes a real threat for competitors,if the innovating capitalist sells his commodities at a price lower than theirsocial value. Moreover, due to the innovation itself, his need to sell hasincreased as his capacity to produce and the value of his investment haveboth increased; thus, in order to enlarge his market share, the innovatingcapitalist is required to sell at a price that, although higher than theindividual value of his commodities, which means that he still makes an

extra profit, is lower than the corresponding social value.

If . . . by a greater division of labour, by the utilisation of new machines and their im-provement, by more profitable and extensive exploitation of natural forces, one capi-talists has found the means to produce with the same amount of labour or ofaccumulated labour, a greater amount of products, of commodities, than his compe-titors . . . how will this capitalist operate? He could continue to sell . . . at the old marketprice; this would, however, be no means of driving his opponents from the field and ofenlarging his own sales. But, in the same measure in which his production has ex-panded, his need to sell has also increased. The more powerful and costly means ofproduction that he has called into life enablehim, indeed, to sell his commodities morecheaply, theycompelhim, however, at the same time, to sell more commodities, to conquera much largermarket for his commodities; consequently, our capitalist will sell . . . morecheaply than his competitors. . . . Moreover, he attains the object he wishes to attain, ifhe puts the price of his goods only a small percentage lower than that of his competi-tors. He drives them from the field, he wrests from them at least a part of their sales, byunderselling them.

(Marx 1891: 38 9; italics in the original)

Yet, other capitalists, to the risk of being eliminated from markets, are

forced by the coercive law of competition to follow suit, to introduce, oreven to improve, the new method of production the new machinery or thenew division of labour. Hence, once the new method is generalized, the


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social value of the commodity will equal the new cost of production, oreven will be reduced below it.

However, the privileged positionof our capitalist is not of long duration; other compet-ing capitalists introduce the same machines, the same division of labour, introducethem on the same or on larger scale, and this introduction will become so general thatthe price .. is reducednot only below its old, butbelow its new cost of production.


Once the new conditions of production become dominant and theeffective price of commodities equals the new cost of production, both thesubjective urge to expand and competition make again individual capitalistsintend to extend the scope of division of labour and introduce newmachinery on an extended scale in order to achieve an additionalreduction in their cost of production. As Marx argues, once the price ofcommodities falls to the level of the cost of production corresponding tothe new method:

the capitalists find themselves, therefore, in the same position relative to one anotheras beforethe introduction of the new means of production, and if they are able to supplyby these means double the production at the same price, they are nowforced to supplythe double product below the old price. On the basis of this new cost of production,the same game begins again. More division of labour, more machinery, enlarged scaleof exploitation of machinery and division of labour. And again competition brings thesame counteraction against this result. We see how in this way the mode of productionand the means of production are continually transformed, revolutionised, how the divi-sion of labour is necessarily followed by greater division of labour, the application of machinery bystill greater application of machinery, work on a large scale by work on still a larger scale.

(Marx 1891: 39 40; italics in the original)

Thus, given the generalization of the new method of production, given

its higher productivity and the greater absolute value of investment,capitalists are forced again to expand production. This and the constantthreat of competition make them try to develop a new competitiveadvantage a new reduction of their cost of production through theimprovement of machinery and through a new extension of division oflabour. The competitive race for profits and market shares has no finishingline, and, in fact, renews itself indefinitely.

However powerful the means of production which a capitalist brings into the field,competition will make these means of production universal and from the moment

when it has made them universal, the only result of the greater fruitfulness of his ca-pital is that he must now supplyfor the same priceten, twenty, a hundred times as much

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as before. But, as he must sell perhaps a thousand times as much as before in order tooutweigh the lower selling price by the greater amount of the product sold, because amore extensive sale is now necessary, not only in order to make more profit but in or-

der to replace the cost of production the instrument of production itself, as we haveseen, becomes more and more expensive and because this mass sale becomes a mat-ter of life and death not only for him but also for his rivals, the old struggle beginsagain all the more violently the more fruitful the already discovered means of production are.The division of labour and the application of machinery, therefore, will go on anew on an incom-

parably greater scale.(Marx 1891: 40; italics in the original)

6. Concluding remarks

In this paper I have provided a reconstruction of Marxs analysis of thedevelopment of the forces of production of the social productivity oflabour. Such a development is seen as an evolutionary process ofmodification and improvement of the social conditions of production,

which takes place through the interaction among division of labour inparticular processes of production, technical progress and social division oflabour. As such, it is intrinsically linked to capital accumulation and itrequires and induces the expansion of markets.

In Marxs view, the fundamental tendency of the development of the

forces of production is the progressive automatization or mechanization ofsocial production which entails freeing it from the restrictions imposed bythe human labour force and its designing and performing according toscientific and technological criteria. The fundamental notion in this regardis the progressive rationalization and improvement of social production asproduction of capital. This process takes place through the evolution fromcooperation to manufacture to modern industry.

Along that tendency, I have distinguished in Marxs analysis three mainelements. First, the evolution just mentioned appears to be centred on the

interaction between division of labour, mechanization and technicalprogress. Division of labour entails the subdivision of production intospecialized detail processes, the establishment of specific proportionsamong them, and the simplification, specialization, differentiation andimprovement of the instruments of labour; as such, division of labourallows, conditions and leads to mechanization and technical progress. Inturn, technical progress conditions and leads to division of labour. On thisbasis, the changes in the form or method of production that may occur aremostly the result of technical progress and, as such, belong to the dynamics

of the system. Second, technical progress is seen as a continuous process ofanalysis and resolution of problems in the sphere of production which takesplace on the basis of the interaction between science and the accumulated


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knowledge resulting from experience in production and from the analysisand resolution of problems itself. As a result, technical progress is, at the

same time, an evolutionary, path-dependent process of modification andimprovement of the various elements conforming productive activities.Third, the dynamics of social division of labour is intrinsically interrelated

with that of division of labour in particular processes of production andtechnical progress. It is in this context that Smiths (and Youngs)proposition that division of labour is limited by the extent of the marketmust be placed; for the basic idea here rests on the continuous interactionthat takes place between the development of social division of labour andthe development of the process of exchange that results from theincreasing dependence among industries through the market mechanism.This is but the manifestation of the development of the economic system asa system of production of commodities by means of commodities. Indeed,the input-output relationships and the intersectoral demands acquirespecial significance in this context. In this view, productivity appears as amacroeconomic-structural phenomenon; this follows from the interdepen-dence and complementarity, both sectoral and technological, thatcharacterizes the industrial structure. In this regard, the development ofan efficient capital goods sector acquires full relevance in terms of thedynamics of productivity all across the economic system.

In the last section of the paper, and from a broader perspective, I haveconsidered Marxs view on the interdependence among the developmentof the forces of production, the process of accumulation and the expansionof markets. On this basis, the dynamics of the economic system are basedon the reciprocal interaction between capital accumulation and thedevelopment of the forces of production; as such, it depends on is limitedby the expansion of markets. Finally, I discuss Marxs view of competitionas fundamental driving force of such dynamics.

As an implication of the argument of the paper I have suggested that

Marxs analysis can be seen as the most consistent and developedantecedent of Allyn Youngs view on increasing returns and economicprogress and, more generally, of the view implied in the principle ofcircular and cumulative causation as developed by Kaldor.

Notes

* I am most grateful to Carlo Panico for his friendly help and advice. I wish also tothank Ferdinando Meacci for his comments as discussant of the paper at the

Conference on Old and New Growth Theories: An Assessment, Pisa (Italy),October 5 7, 2001. I thank also two anonymous referees. Responsibility for the

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content of the paper is,

marx on division of labor and technical progress

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