State Spending and the System
An important distinction
If the enormous growth of the economic importance of the state was one feature which distinguished 20th century capitalism from the capitalism of Marx's time, another was the growth of all sorts of expenditures that were not directly productive.
Marx had taken over from Adam Smith a distinction between "productive" and "unproductive" labour. Smith had been writing at a time when the capitalist mode of production was still in its infancy and he sought to work out what was needed for it to overcome obstacles to its further advance. He therefore distinguished between the uses of hired labour that enabled the capitalist to make profits so as to further advance production and those which simply absorbed existing resources. Employing someone to make things to sell was productive; employing someone to tend to one's individual desires was not. Or, as it was sometimes put, employing someone in a factory created wealth; employing someone as a personal servant simply used wealth up. But it was not only servants who Smith regarded as unproductive and wasteful in this sense: he had the same attitude to the hoards of placemen and women who lived off the revenues of a state which had not been reformed fully to suit the needs of capitalist production.1
Marx took up this distinction as he prepared various drafts for Capital and developed his own understanding of it. He, like Smith, was interested in what made capitalism function-even if out of opposition to, not support for, the system. And so his concern was with what was "productive" in capitalist terms.2 It was, he argued, that which was productive of surplus value. Labour which produced surplus value enabled capitalists to accumulate;
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