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Technological Change in Capitalism: Some Marxian Themes

Tony SmithIowa State University

While general statements regarding “the nature of

technology” can be found in Marx’s writings, he was much more

interested in the way technological change and its social

consequences are shaped by generalized commodity exchange,

investment capital, wage labour, and other dominant social forms

of our epoch. We may begin with what may be termed the “standard

view” of these matters before turning to Marx’s own account.

The Standard View

Adam Smith asserted that “consumption is the sole end and

purpose of all production,” regarding this thesis as “so

perfectly self-evident that it would be absurd to attempt to

prove it” (Smith, 1976, p. 155). For mainstream social theorists

this thesis unquestionably applies to capitalist market

societies, despite the fact that actors in these societies often

seem to make the acquisition of money their “end and purpose.”

In their view a closer look reveals that money is not their

ultimate goal, but a generalized means:

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(I)n an uncertain world individuals must mostly aim not at

some ultimate ends but at procuring means which they think

will help them to satisfy those ultimate ends … The

immediate purpose of a man’s efforts will most often be to

procure means to be used for unknown future needs—in an

advanced society most frequently that generalized means,

money, which will serve for the procurement of most of his

particular ends (Hayek 1976, pp. 8-9).

Just as money is defined as a generalized means to procure

human ends, “technology” is conceptualized as a set of particular

means to the same ends. In the standard view “technology refers

to the equipments, techniques, and expertise that can be applied

to produce a good or service (including new knowledge and

technology)” (Galama and Hosek, 2008, p. 6). Capitalism has

proven to be a uniquely effective framework for developing such

means. Market competition provides a powerful incentive for

units of production to introduce product innovations meeting

wants and needs in new and better ways. The incentive to

introduce process innovations enabling goods and services to be

produced more efficiently is no less intense. Technological

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change does not always proceeds smoothly in capitalism, and there

are on-going debates among mainstream social theorists regarding

the proper role of the state in response to market failures

regarding technological development. All participants in these

debates, however, accept the standard view of the nature of

technology in capitalism: technology is inherently a means for the fulfilment

of human ends.

Marx’s Critique of Political Economy

Surprisingly, perhaps, Marx acknowledged the tremendous

benefits humanity has enjoyed as a result of capitalism’s

unprecedented technological dynamism:

The all-round exploration of the earth to discover both new

useful objects and new uses for old objects, such as their

use as raw materials, etc.; hence the development of the

natural sciences to their highest point; the discovery,

creation, and satisfaction of new needs arising from society

itself; cultivating all the qualities of social man and

producing him in a form as rich as possible in needs because

rich in qualities and relations—producing man as the most

total and universal social product possible (for in order to

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enjoy many different kinds of things he must be capable of

enjoyment, that is he must be cultivated to a high degree)—

all these are also conditions of production based on capital

(Marx, 1986, p. 336).

This is, however, far from the entire story. From Marx’s

standpoint the social ontology of capitalism is more complex, and

more perverse, than mainstream social theorists suspect. And as

we shall see, this ontological perversity infects the ontology of

technology.

In capitalism production is for the most part undertaken

privately. Units of production must then attempt to validate the

social necessity of their endeavours through sale of their

products. With successful exchange these products acquire a

special abstract and homogeneous social property, value, distinct

from their various concrete and heterogeneous physical properties

(the property “having been produced by privately undertaken

labour that has proven to be socially necessary”). Marx goes on

to argue that value requires an abstract and homogeneous external

thing, money, to serve as its socially objective measure.

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The fact that units of production face a ceaseless

competitive pressure to socially validate their privately

undertaken labour makes money far more than a mere means for the

circulation of commodities. Units that do not relentlessly and

successfully direct their endeavours to valorisation, that is, to

appropriating monetary returns (M’) exceeding the initial money

invested (M), will over time necessarily tend to be pushed to the

margins of social life or eradicated altogether.1 And so,

Use-values must ... never be treated as [their] immediate

aim … nor must the profit on any single transaction. [The]

aim is rather the unceasing movement of profit-making …

(t)he ceaseless augmentation of value (Marx, 1976, p. 254).

It is true that the consumption of commodities is the goal of

countless transactions in generalized commodity exchange. But

the consumption opportunities of individuals are generally

determined by their role in “the unceasing movement of profit-

making.” Transactions aiming at surplus value (the difference between M’ and M)

dominate the circulation of commodities and money.

In capitalism those who do not own or control capital must

sell their labour power as a commodity to those who do in order

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to gain access to the money required to purchase means of

subsistence. For Marx, this is a form of coercion, even in the

absence of overt violence or its threat. Once hired, the living

labour of wage labourers is then subordinated to “the ceaseless

augmentation of value”; valorisation depends upon the performance

of surplus labour (labour beyond that required to produce an

amount of value equivalent to their wages). At the conclusion of

the process wage labourers, having spent their income on means of

subsistence, must once again sell their labour power to holders

of capital, and they must once again subordinate their living

labour to the “augmentation of value.” The valorisation process

is, in brief, simultaneously the reproduction of the capital/wage

labour relationship, a relationship characterized by structural

coercion and exploitation.

In generalized commodity production the totalizing drive to

valorisation is the dominant principle of organization on the

level of society as a whole, invading every nook and cranny of

social life. This drive is not an “entity” in the sense of a

table or a tree. Nonetheless, it is real. All agents,

capitalists no less than wage labourers, are subject to its

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external compulsion. For Marx, “capital” does not refer merely

to various forms of commodities and money. It is the principle

of unity underlying the valorisation process, a bizarre sort of

“subject” that takes on and discards the forms of money and

commodity in its process of “self-valorisation” (Marx, 1976, pp.

255-6).

Marx is well aware of the dangers of reification here.

Capital’s alleged “power” of self-valorisation is not a creative

act in itself; “capital … valorizes itself through the

appropriation of alien labour” (Marx, 1986, p. 233). Capital is nothing

in itself; it is a pseudo-subject, a “ghost” or “vampire,” in

Marx’s evocative terminology. But due to the historically

specific way in which social life is organized in generalized

commodity production—the separation of units of production from

each other, the separation of working men and women from means of

production and subsistence, and the subordination of living

labour under the valorisation imperative—the social powers of

living labour necessarily take the alien form of “capital” and

its “self-valorisation.” As long as the social relations of

generalized commodity production are in place there is a sense in

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which “capital” is ontologically prior to—and shapes—the

intentions and activities of individual agents (including

capitalists), however much human agency is responsible for its

emergence and continuance.

Mainstream social theorists do not deny that in systems of

generalized commodity production there are agents who invest

money to obtain monetary returns. They assert, however, that

money is merely a proximate goal, subordinate to the ultimate end

of obtaining goods and services to meet human wants and needs.

For Marx, in contrast, capital is defined by a profound

ontological inversion of means and ends. Human ends are

subordinate to the accumulation of money capital as an end in

itself, and human flourishing is subordinate to the flourishing

of capital. The above reference to the “ontological perversity”

of capitalism was introduced with this inversion in mind.

From Marx’s standpoint, this inversion fundamentally shapes

the nature of technology in capitalism. It is no longer

sufficient to define technology solely in use-value terms as “the

equipment, techniques, and expertise that can be applied to

produce a good or service.” That definition is not false. But it

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fails to capture the historically specific nature of technology

in capitalism, a social order in which equipment, techniques, and

expertise are generally developed and employed only if it is

anticipated that surplus value will be appropriated as a result

of doing so. In this social order technology is not primarily a

means to the fulfilment of human ends, as in the standard view.

Technology is first and foremost a means to capital’s end, valorisation.

The remainder of this paper will explore illustrations of

this thesis.

From the Critique of Political Economy to the Critique of

Technology

Technological Change and Class Relations in Production

For Marx, the introduction of machinery in capitalism cannot

be adequately comprehended apart from the imperative to

appropriate surplus value. Productivity gains reduce unit costs.

If the decline is sufficiently large—if the individual value of

produced commodities is sufficiently below their social value—the

output can be sold at a price that both undercuts competitors and

allows above average profits to be appropriated (Marx, 1976, p.

434). In effect, more productive labour is then paid as if it

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were labour of average productivity, raising the rate of surplus

value for the given unit of production. Eventually the above

average profits (“technological rents”) are lost, as other

capitals duplicate the productivity-enhancing innovations. But

when productivity improves in sectors producing wage goods (or

inputs employed in the production of wage goods), the prices of

these goods tend to decline. Taking the level of real wages and

the length of the working day as given, the time devoted to

producing a value equivalent to wages is thereby reduced,

increasing the surplus labour time devoted to the production of

what Marx terms “relative surplus value.”

Increases in productivity would soon reach their limits if

instruments of production remained tools, directly controlled by

workers. Machines overcome the limits of human dexterity by

operating with a precision and regularity human agents cannot

match. And they overcome the limits of human strength and

endurance when they are powered by motors, such as the steam

engines of Marx’s day. It follows that revolutionizing the

instruments of production is not a contingent feature of capital.

It is an essential determination of the capital form:

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Once included into the production process of capital … the

means of labour passes through a series of metamorphoses

until it ends up as the machine, or rather as an automatic

system of machinery … In the machine, and to an even greater

degree in machine[ry] as an automatic system, the means of

labour is transformed, with respect to its use value, i.e.

to its material character, into a form adequate to fixed

capital and to capital in general (Marx, 1987, p. 82).

No machine or system of machinery will remain “adequate … to

capital in general” indefinitely; “every degree of the

development of the social productive forces, of intercourse, of

knowledge, etc., appears to [capital] as a barrier which it

strives to overcome” (Marx, 1986, p. 465). Striving to overcome

this barrier results in the increasing subsumption of scientific-

technological knowledge under capital:

(A)ll the sciences have been forced into the service of

capital … invention becomes a business, and the application

of science to immediate production itself becomes a factor

determining and soliciting science (Marx, 1987, pp. 89-90).

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Contemporary economists who proclaim that technological change is

endogenous to capitalism, and that capitalism evolves into a

“knowledge economy,” are echoing Marx.

In contrast, defenders of the standard view do not recognize

the force of Marx’s claim that there is an ineluctable connection

between endogenous technological change and the knowledge

economy, on the one hand, and the exploitation of the

capital/wage labour relationship, on the other:

John Stuart Mill says …”It is questionable if all the

mechanical inventions yet made have lightened the day’s toil

of any human being.” That is, however, by no means the aim

of the application of machinery under capitalism. Like

every other instrument for increasing the productivity of

labour, machinery is intended to cheapen commodities and, by

shortening the part of the working day in which the worker

works for himself, to lengthen the other part, the part he

gives to the capitalist for nothing. The machine is a means

for producing surplus-value (Marx, 1976, p. 492).

The ever-present danger that an investment in machinery will

become technologically outdated before satisfactory returns have

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been appropriated (“moral obsolescence”) reinforces this tendency

for technological changes in the workplace to not be associated

with a lightening of toil (Marx, 1976, pp. 528 ff.). Severe

physical harm and psychological stress has been inflicted on

workers in offices and factories as a result, in our day no less

than in Marx’s (Smith, 2000, Chapter 3; Head, 2003). No less

profoundly, the development of human capacities is restricted by

the the quenchless thirst for surplus value: “Since all free time is

time for free development, the capitalist usurps the free time

created by workers for society” (Marx, 1987, p. 22).

There may, however, be compensation. While Marx

provisionally assumed that the level of the real wage is fixed,

he explicitly recognized that the value of labour power varies in

different historical circumstances (Marx, 1976, p. 275). In

specific, living standards for workers may rise as productivity

improves. Unfortunately, technological developments can also

limit the extent to which workers share in the material gains of

productivity advances. Consider, for example, the manner in

which many individual workers experience technology and

scientific-technological knowledge in the workplace:

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In no respect does the machine appear as the means of labour

of the individual worker … (T)he machine, which possesses

skill and power in contrast to the worker, is itself the

virtuoso. It possesses a soul of its own in the laws of

mechanics which determine its operation … The activity of

the worker, restricted to a mere abstraction of activity, is

determined and governed in every respect by the movement of

the machinery, not vice versa. Science, which compels the

inanimate members of the machinery, by means of their

design, to operate purposefully as an automaton, does not

exist in the worker’s consciousness, but acts upon him

through the machine as an alien force, as the force of the

machine itself (Marx, 1987, pp. 82-3).

In these circumstances individual workers experience a sense of

powerlessness. The more this sense is a defining feature of

their lived experience, the less they are to see themselves as

agents, capable of struggling for higher real wages.

Collective organization can overcome this sense of

individual powerlessness, and collective action has proven the

most effective way of ensuring that workers benefit from

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productivity advances. By definition, however, collective

organization is undermined by divisions within the workforce, and

technological change may foster such divisions in a variety of

ways. Technologically-induced unemployment can set those

desperate for work against those desperate to retain their jobs

(Marx, 1976, Chapter 25). Technologies may also make the threat

of shifting investment from one group of workers to another more

effective. In Capital Marx paid particular attention to the use of

the technologies of the industrial revolution in “divide and

conquer” strategies along gender lines (Marx, 1976, p. 601). In

more recent decades information technologies have enabled cross-

border production chains to be established, making it much easier

for workers in one region of the globe to be played off against

those of another.

Technologies that that “deskill” those enjoying relatively

high levels of remuneration and control over the labour process

also shift the balance in power between capital and labour in

favour of the former (Marx, 1976, p. 549).2 Technologies that

undercut the effectiveness of strikes should be mentioned in this

context as well:

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(M)achinery does not just act as a superior competitor to

the worker, always on the point of making him superfluous.

It is a power inimical to him … It is the most powerful

weapon for suppressing strikes, those periodic revolts of

the working class against the autocracy of capital … It

would be possible to write a whole history of the inventions

made since 1830 for the sole purpose of providing capital

with weapons against working-class revolt (Marx, 1976, pp.

562-3).

This history has not yet concluded.

It is important to stress that the social consequences of

technological innovation are not always foreseeable. The very

technologies introduced to divide the work force, deskill certain

categories of workers, or break strikes, may in certain contexts

contribute to worker unity, enhance the skills of other workers,

and help labour struggles succeed. Nonetheless, ownership and

control of capital grants its holders the power to initiate and

direct the innovation process in the workplace. As long as this

power is in place, technological change will tend to reinforce

the structural coercion and exploitation at the heart of the

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capital/wage labour relation, subordinating human flourishing to

the flourishing of capital.

The Limits of “the Networked Economy”

Two of the most noteworthy dimensions of the information

technology revolution are the rise of “commons-based peer

production” and the new economy of producing and distributing

knowledge products. Both are potentially of world historical

importance. Neither will develop fully under the reign of

capital.

“Commons-based peer production” refers to cooperative

knowledge work undertaken within information networks outside the

capital/wage labor relation. For example:

Ideas like free Web-based e-mail, hosting services for

personal Web pages, instant messenger software, social

networking sites, and well-designed search engines emerged

more from individuals or small groups of people wanting to

solve their own problems or try something neat than from

firms realizing there were profits to be gleaned (Zittrain,

2008, p. 85).

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Encryption software, peer-to-peer file-sharing software, sound

and image editors, and many other examples can be added to this

list; “Indeed, it is difficult to find software not initiated by

amateurs” (Zittrain, 2008, p. 89). Capitalist firms are happy to

appropriate these creative achievements of social labour outside

the capital/wage labour relation as “free gifts.” But a system

fundamentally based upon profits from the sale of proprietary

products will inevitably restrict the resources devoted to the

non-proprietary output of commons-based peer production. The

time and energy people have to participate in commons-based

production will be severely limited as well, given the

unrelenting financial pressure most face to sell their labour

power and perform extensive surplus labour for capitalist firms.

Similarly severe restrictions afflict the production and

distribution of knowledge goods. Many categories of knowledge

products (software; information; literary, scientific, and

cultural texts; music; videos, etc.) can today be reproduced and

distributed within information networks at close to zero marginal

cost. In principle, they could be treated as public goods and

made freely available. But “the ceaseless augmentation of value”

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requires the sale of commodities. And so massive amounts of

monetary and human resources are devoted to technologies whose

sole purpose is to restrict flows of knowledge products to

privately appropriable commodities (Perelman, 1998).

Commons-based peer production, and knowledge goods that can

be produced and distributed at a marginal cost close to zero,

have the potential to bring the development of human capacities

and the satisfaction of human wants to new peaks (Benkler, 2006).

Much of this potential is doomed to remain undeveloped within a

system based on the production and sale of privately owned

commodities, due to the fact that technological change in such a

system is primarily a means to further the ends of capital.

Technological Change and Crises

Marx held that the very investments in technological change

introduced to further capital accumulation (by increasing the

rate of relative surplus value) tend to undercut the accumulation

process (by lowering the rate of profit). The details of his

argument for the tendency for the rate of profit to fall are

notoriously obscure and controversial. In the reconstruction and

development of the argument proposed by Geert Reuten the

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essential point is that less efficient competitors in a sector do

not necessarily withdraw at a rate ensuring an equilibrium of

supply and demand when more efficient plants, lured by the

promise of above average profits, enter (Reuten, 1991). Their

fixed capital costs are already sunk, and so they may be happy to

receive the average rate of profit on their circulating capital.

They also may have established relations with suppliers and

customers impossible (or prohibitively expensive) to duplicate

elsewhere in any relevant time frame. Further, their management

and labour force may have industry-specific skills. And

governments may provide subsidies for training, infrastructure,

or R&D that would not be available if they were to shift sectors.

When a sufficient number of plants do not withdraw from a sector

when more efficient competitors enter, the result is an

overaccumulation of fixed capital, manifested in excess capacity

and declining rates of profit. If this dynamic unfolds

simultaneously in leading industries, an economy-wide fall in

profit rates may result for an extended historical period.

When overaccumulation crises occur, units of capital

desperately attempt to maintain profits through lay-offs, lower

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wages, and intensified and extended working days, deepening the

connection between technological change and the structural

coercion and exploitation of wage labour. An increasing

proportion of investment capital will also begin to circulate

within the financial sector, since high profits can be won from

speculating on capital assets even as overcapacity problems

plague non-financial sectors (Marx, 1981, pp. 621-3). When the

resulting speculative bubbles burst, as they inevitably do, the

social costs are with equal inevitability inflicted

disproportionately on working men and women.

In my view, the increasing frequency and scale of financial

bubbles in recent decades cannot be explained by a lack of a

political will to regulate finance, the standard explanation of

defenders of the standard view. The deeper explanation is that

technological change in non-financial sectors has led to

persisting overaccumulation difficulties, leaving speculation on

financial assets as the most promising option for pursing

profits. This explains as well why the highest private sector

investment in information technologies, the greatest

concentration of computing expertise, and the highest rate of

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product innovation (perhaps the highest in human history), have

been in the financial sector. This path of technological change

was not selected because it best furthered the end of human

flourishing. It was selected because it furthered the end of

capital accumulation better than available alternatives.

The causal connection in capitalism between technological

change and recurrent overaccumulation and financial crises is

usually ignored or downplayed by defenders of the standard view.

Theorists influenced by Schumpeter, however, agree with Marx that

this connection is a defining feature of capitalism, seeing it as

the price that must be paid in order to later enjoy “golden

ages” of dynamic growth and improvements in living standards. It

is worth noting that neo-Schumpeterian theorists themselves

provide reasons to think that for us “later” might be a very long

time indeed.

According to neo-Schumpeterians, in previous ”golden ages”

units of capital in one region of the world system have enjoyed a

significant competitive advantage in a range of core technologies

for an extended period of time, enabling them to serve as the

engine of growth in the world market for a historical epoch

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(Perez, 2002). But today an unprecedented number of reasonably

effective national innovation systems are in place, even if

limited to the wealthiest regions (Nelson, 1993). While these

systems certainly contribute to technological dynamism in use-

value terms, in value terms maters are more complicated. When a

new cluster of innovations with significant commercial potential

emerges, research expenditures, tax breaks, credit allocations,

and a multitude of other direct and indirect subsidies, are

quickly mobilized by a host of national innovation systems in

support of both R&D in the relevant fields and firms hoping to

exploit that R&D. The more national innovation systems are

operating, the sooner overaccumulation problems will emerge in

the innovating sectors, and the more compressed the period will

be in which above average profits can be widely appropriated in a

given region.3 No extended “golden age” of growth and widespread

improvement of living standards appears likely to arise in such

circumstances. A new world war, or a deep and prolonged global

Depression, might change the equation by destroying a critical

mass of accumulated capital, and by dismantling a critical mass

of national innovation systems. Short of such catastrophes,

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persisting overaccumulation difficulties can be expected to

plague the capitalist world market in the twenty-first century.

Conclusion

Marx acknowledged the great benefits that capitalism’s

unprecedented technological dynamism has brought humanity. But

when technological development is subsumed under the valorisation

imperative, technological change in the workplace will tend to

reinforce coercive and exploitative social relations. Full

development of the immense potential of network technologies will

be systematically hampered. And technological change will

generate overaccumulation and financial crises. If space

allowed, other troubling dimensions of technological change in

capitalism could be added to this list, including its

contribution to environmental crises4 and severe global

inequality.5

None of these things is due to the “nature of technology”

per se. They are all due to the historically specific nature of

technological change when it is subordinated under the social

forms of capital. The ontological perversity of capital, its

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inversion of ends and means, does not leave the nature of

technology in capitalism unaffected.

Might there be a feasible and normatively attractive set of

alternative forms of social organization within which

technological change could contribute to human flourishing in a

far less partial and precarious manner than it does today? I

believe that the answer is yes (Smith, 2000, Chapter 7, and 2005,

Chapter 8). But that is a question for another day.

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D.C.: Rand Corporation.

Head, S. 2003. The New Ruthless Economy: Work and Power in the Digital Age,

New York:

Oxford University Press.

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Helpman, E. 2004. The Mystery of Economic Growth, Cambridge: Belknap

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1. This result does not follow with logical necessity, given the

indeterminacy that accompanies all human agency. But neither is

it a completely contingent occurrence, given the manner in which

social resources are allocated to agents within the structures of

capitalism. The notion of tendencies strikes the proper balance

between the causality of agents and the causal powers of social

structures (Callinicos, 2006, Chapter 6). For a discussion of

the complexities that arise in concrete historical conjunctures,

where a variety of tendencies operate simultaneously, see Smith,

2005, Chapter 6.

2. Scare quotes are required because “deskilling” is often used

to describe what is really a generalization of previously above

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average skills, and also because qualitatively new skills may be

developing as old ones are eroded.

3. Individual firms may, of course, still appropriate above

average profits from intellectual property rights to particular

parts of a cluster of innovations.

4. Capitalist firms, facing the unrelenting imperative to

accumulate, must attempt to produce and sell as many commodities

as possible, as rapidly as possible. And so, Marx thought, the

technologies of production and distribution will tend to be used

in a manner that depletes resources and generates wastes at a

faster rate than ecosystems can sustain (Marx, 1976, pp. 637-8;

Burkett, 1999).

5. Units of capital with access to advanced R&D enjoy tremendous

competitive advantages over those without such access (Marx,

1981, pp. 344-5; 1976, pp. 579-80). Today, 95% of all research

and development is undertaken in wealthy regions of the global

economy, where advantaged units of capital are clustered

(Helpman, 2004, p. 64). The dogmatic assumption that exchange

rate changes automatically neutralize this dimension of

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technological change in capitalism is neither theoretically nor

empirically justified (Shaikh, 2007). See Smith 2005 and 2007.