We might vary the scheme by changing the ratio between the variable and constant capital. For instance as follows: Now let us analyse scheme a) more closely. Let us suppose that both I and II accumulate one half of their surplus-value, that is to say, convert it into an element of additional capital, instead of spending it as revenue. As one half of 1,000 Is, or 500, are to be accumulated in one form or another, invested as additional money-capital, i.e., converted into additional productive capital, only (l,000v + 500s) I are spent as revenue. Hence only 1,500 figures here as the normal size of IIc. We need not further examine the exchange between 1,500 I(v + s) and 1,500 IIc, because this has already been done under the head of process of simple reproduction. Nor does 4,000 Ic require any attention, since its re-arrangement for the newly commencing reproduction (which this time will occur on an extended scale) was likewise discussed as a process of simple reproduction. The only thing that remains to be examined by us is 500 Is and (376v + 376s) II, inasmuch as it is a matter on the one hand of the internal relations of both I and II and on the other of the movement between them. Since we have assumed that in II likewise one half of the surplus-value is to be accumulated, 188 are to be converted here into capital, of which one-fifth, or 47, or, to round it off, 48, are to be variable capital, so that 140 remain to be converted into constant capital. Here we come across a new problem, whose very existence must appear strange to the current view that commodities of one kind are exchanged for commodities of another kind, or commodities for money and the same money again for commodities of another kind. The 140 IIs can be converted into productive capital only by replacing them with commodities of Is of the same value. It is a matter of course that that portion of Is which must be exchanged for IIs must consist of means of production, which may enter either into the production of both I and II, or exclusively into that of II. This replacement can be made feasible only by means of a one-sided purchase on the part of II, as the entire surplus-product of 500 Is, which we still have to examine, is to serve the purposes of accumulation within I, hence cannot be exchanged for commodities II; in other words, it cannot be simultaneously accumulated and consumed by I. Therefore II must buy 140 Is for cash without recovering this money by a subsequent sale of its commodities to I. And this is a process which is continually repeating itself in every new annual production, so far as it is reproduction on an extended scale. Where in II is the source of the money for this? It would rather seem that II is a very unprofitable field for the formation of new money-capital which accompanies actual accumulation and necessitates it under capitalist production, and which at first actually presents itself as simple hoarding. We have first 376 IIv. The money-capital of 376, advanced in labour-power, continually returns through the purchase of commodities II as variable capital in money-form to capitalist II. This constant repetition of departure from and return to the starting-point, the pocket of the capitalist, does not add in any way to the money roving over this circuit. This, then, is not a source of the accumulation of money. Nor can this money be withdrawn from circulation in order to form hoarded, virtually new, money-capital. But stop! Isn't there a chance here to make a little profit? We must not forget that class II has this advantage over class I, that its labourers have to buy back from it the commodities produced by themselves. Class II is a buyer of labour-power and at the same time a seller of the commodities to the owners of the labour-power employed by it. Class II can therefore: We see that in an objective analysis of the mechanism of capitalism certain stains still sticking to it with extraordinary tenacity cannot be used as a subterfuge to get over some theoretical difficulties. But strange to say, the great majority of my bourgeois critics upbraid me as though I have wronged the capitalists by assuming, for instance in Book I of Capital, that the capitalist pays labour-power at its real value, a thing which he mostly does not do! (Here, exercising some of the magnanimity attributed to me, it would be appropriate to quote Sch ffle.) So with the 376 IIv we cannot get any nearer the goal we have mentioned. But the 376 IIv seem to be in a still more precarious position. Here only capitalists of the same class, mutually buying and selling the articles of consumption they produced, confront one another. The money required for these transactions functions only as a medium of circulation and in the normal course of things must flow back to the interested parties in the same portion in which they advanced it to the circulation, in order to cover the same route over and over again. There seem to be only two ways by which this money can be withdrawn from circulation to form virtually additional money-capital. Either one part of capitalists II cheats the other and thus robs them of their money. We know that no preliminary expansion of the circulating medium is necessary for the formation of new money-capital. All that is necessary is that the money should be withdrawn from circulation by certain parties and hoarded. It would not alter the case if this money were stolen, so that the formation of additional money-capital by one part of capitalists II would entail a positive loss of money by another part. The cheated capitalists II would have to live a little less gaily, that would be all. Or a part of II represented by necessities of life is directly converted into new variable capital within department II. How that is done we shall examine at the close of this chapter (under No. IV). Let us now assume that 400 of the 500 Is are to be converted into constant capital, and 100 into variable capital. The exchange within I of the 400s, which are thus to be capitalised, has already been discussed. They can therefore be annexed to Ic, without more ado and in that case we get for I: 4,400c + 1,000v + 100s (the latter to be converted into 100v). II in turn buys from I for the purpose of accumulation the 100 Is (existing in means of production) which now form additional constant capital II, while the 100 in money which it pays for them are converted into the money-form of the additional variable capital of I. We then have for I a capital of 4,400c + 1,100v (the latter in money), equaling 5,500. II has now 1,600c for its constant capital. In order to put them to work, it must advance a further 50v in money for the purchase of new labour-power, so that its variable capital grows from 750 to 800. This expansion of the constant and variable capital of II by a total of 150 is supplied out of its surplus-value. Hence only 600s of the 750 IIs remain as a consumption-fund for capitalists II, whose annual product is now distributed as follows: II. 1,600c + 800v + 600s (consumption-fund), equal to 3,000. The 150s produced in articles of consumption, which have been converted here into (100c + 50v) II, go entirely in their bodily form for the consumption of the labourers, 100 being consumed by the labourers of I (100 Iv), and 50 by the labourers of II (50 IIv), as explained above. As a matter of fact in II, where its total product is prepared in a form suitable for accumulation, a part greater by 100 of the surplus-value in the form of necessary articles of consumption must be reproduced. If reproduction really starts on an extended scale, then the 100 of variable money-capital I flow back through the hands of its working-class to II, while II transfers 100s in commodity-supply to I and at the same time 50 in commodity-supply to its own working-class. The arrangement changed for the purpose of accumulation is now as follows: But if the old ratio of v:s is maintained in II, then additional 25v must be laid out for 50c, and these are to be taken from the 750s. Then we have In I, 550s must be capitalised. If the former ratio is maintained, 440 of this amount form constant capital and 110 variable capital. These 110 might be taken out of the 725 IIs, i.e., articles of consumption to the value of 110 are consumed by labourers I instead of capitalists II, so that the latter are compelled to capitalise these 110s which they cannot consume. This leaves 615 IIs of the 725 IIs. But if II thus converts these 110 into additional constant capital, it requires an additional variable capital of 55. This again must be supplied by its surplus-value. Subtracting this amount from 615 IIs leaves 560 for the consumption of capitalists II, and we now obtain the following capital-value after accomplishing all actual and potential transfers: If things are to proceed normally, accumulation in II must take place more rapidly than in I, because otherwise the portion I(v + s) which must be converted into commodities II will grow more rapidly than IIc, for which alone it can be exchanged. If reproduction is continued on this basis and conditions otherwise remain unchanged we obtain at the end of the succeeding year: I has now to capitalise 605s. Of these 484 are constant and 121 variable. The last named are to be deducted from IIs, which is still equal to 797 , leaving 676 IIs. II, then, converts another 121 into constant capital and requires another variable capital of 60 for it, which likewise comes out of 676 , leaving 616 for consumption. Then we have the following capitals: in the consumption-fund of the capitalists and labourers. As 70 IIs are directly annexed here to IIc, a variable capital of 70/5, or 14, is required to set this additional constant capital in motion. These 14 must also come out of the 215 IIs, so that 201 IIs remain, and we have: The exchange of 1,500 I(v + s) for 1,500 IIc is a process of simple reproduction, and nothing further need be said about it. However a few peculiarities remain to be noted here, which arise from the fact that in accumulating reproduction I(v + s) is not replaced solely by IIc, but by IIc plus a portion of IIs. It goes without saying that as soon as we assume accumulation, I(v + s) is greater than IIc, not equal to IIc, as in simple reproduction. For in the first place, I incorporates a portion of its surplus-product in its own productive capital and converts five-sixths of it into constant capital, therefore cannot replace these five-sixths simultaneously by articles of consumption II. In the second place I has to supply out of its surplus-product the material for the constant capital required for accumulation within II, just as II has to supply I with the material for the variable capital, which is to set in motion the portion of I s surplus-product employed by I itself as additional constant capital. We know that the actual, and therefore also the additional, variable capital consists of labour-power. It is not capitalist I who buys from II a supply of necessities of life or accumulates them for the additional labour-power to be employed by him, as the slaveholder had to do. It is the labourers themselves who trade with II. But this does not prevent the articles of consumption of his additional labour-power from being viewed by the capitalist as only so many means of production and maintenance of his eventual additional labour-power, hence as the bodily form of his variable capital. His own immediate operation, in the present case that of I, consists in merely storing up the new money-capital required for the purchase of additional labour-power. As soon as he has incorporated this in his capital, the money becomes a means of purchase of commodities II for this labour-power, which must find these articles of consumption at hand. By the by. The capitalist, as well as his press, is often dissatisfied with the way in which the labour-power spends its money and with the commodities II in which it realises this money. On such occasions he philosophises, babbles of culture, and dabbles in philanthropical talk, for instance after the manner of Mr. Drummond, the Secretary of the British Embassy in Washington. According to him, The Nation (a journal) carried last October 1879, an interesting article, which contained among other things the following passages: Long hours of labour seem to be the secret of the rational and healthful processes, which are to raise the condition of the labourer by an improvement of his mental and moral powers and to make a rational consumer of him. In order to become a rational consumer of the commodities of the capitalist, he should above all begin to let his own capitalist consume his labour-power irrationally and unhealthfully but the demagogue prevents him! What the capitalist means by a rational consumption is evident wherever he is condescending enough to engage directly in the trade with his own labourers, in the truck system, which includes also the supplying of homes to the labourers, so that the capitalist is at the same time a landlord for them a branch of business among many others. The same Drummond, whose beautiful soul is enamoured of the capitalist attempts to uplift the working-class, tells in the same report among other things of the cotton goods manufacture of the Lowell and Lawrence Mills. The boarding and lodging houses for the factory girls belong to the corporation or company owning the mills. The stewardesses of these houses are in the employ of the same company which prescribes them rules of conduct. No girl is permitted to stay out after 10 p.m. Then comes a gem: a special police patrol the grounds for the purpose of guarding against an infringement of those rules. After 10 p. m. no girl can leave or enter. No girl may live anywhere but on the premises of the company, and every house on it brings the company about 10 dollars per week in rent. And now we see the rational consumer in his full glory: But the main secret of making a rational consumer out of the labourer is yet to be told. Mr. Drummond visits the cutlery works of Turner s Falls (Connecticut River), and Mr. Oakman, the treasurer of the concern, after telling him that especially American table cutlery beat the English in quality, continues: A reduction of wages and long hours of labour that is the essence of the rational and healthful processes which are to uplift the labourer to the dignity of a rational consumer, so that they make a market for things showered upon them by culture and growth of invention. Consequently, just as I has to supply the additional constant capital of II out of its surplus-product, so II likewise supplies the additional variable capital for I. II accumulates for I and for itself, so far as the variable capital is concerned, by reproducing a greater portion of its total product, and hence especially of its surplus-product, in the shape of necessary articles of consumption. In production on the basis of increasing capital, I(v + s) must be equal to II plus that portion of the surplus-product which is re-incorporated as capital, plus the additional portion of constant capital required for the expansion of the production in II; and the minimum of this expansion is that without which real accumulation, i.e., a real expansion of production in I itself, is unfeasible. Reverting now to the case which we examined last, we find in it the peculiarity that II is smaller than I(v + s), than that portion of product I which is spent as revenue for articles of consumption, so that on exchanging the 1,500 I(v + s) a portion of surplus-product II, equal to 70, is at once realised. As for IIc, equal to 1,430, it must, all other conditions remaining the same, be replaced by an equal magnitude of value out of I(v + s), in order that simple reproduction may take place in II, and to that extent we need not pay any more attention to it here. It is different with the additional 70 IIs. What for I is merely a replacement of revenue by articles of consumption, merely commodity-exchange meant for consumption, is for II not a mere reconversion of its constant capital from the form of commodity-capital into its bodily form, as it is in simple reproduction, but a direct process of accumulation, a transformation of a part of its surplus-product from the form of articles of consumption into that of constant capital. If with 70 in money (money-reserve for the conversion of surplus-value) I buys the 70 IIs, and if II does not buy in exchange 70 Is, but accumulates the 70 as money-capital, then the latter is indeed always an expression of additional product (precisely of the surplus-product of II, of which it is an aliquot part), although this is not a product which re-enters production; but in that case this accumulation of money on the part of II would at the same time express that 70 Is in means of production are unsaleable. There would be a relative overproduction in I, corresponding to the simultaneous non-expansion of reproduction on the part of II. But apart from this: Until the 70 in money, which came from I, return to it, wholly or in part, through the purchase of 70 Is by II, this 70 in money figures wholly or in part as additional virtual money-capital in the hands of II. This is true of every exchange between I and II, until the mutual replacement of their respective commodities has effected the return of the money to its starting-point. But in the normal course of things the money figures here only transiently in this role. In the credit system, however, where all temporarily released additional money is supposed to function at once actively as an additional money-capital, such only temporarily released money-capital may be enthralled, for instance, serve in new enterprises of I, while it should have to realise surplus-products held there in other enterprises. It must also be noted that the annexation of 70 Is to constant capital II requires at the same time an expansion of variable capital II by 14. This implies about the way it did in I, in the direct incorporation of surplus-product Is in capital Ic that the reproduction in II is already in process with a tendency toward further capitalisation; in other words, it implies expansion of that portion of the surplus-product which consists of necessary means of subsistence. The product of 9,000 in the second illustration must, as we have seen, be distributed in the following manner for the purpose of reproduction, if 500 Is is to be capitalised. In doing so we merely consider the commodities and neglect the money-circulation. Capitalisation takes place in the following manner: In I the 500s which are being capitalised divide into five-sixths, or 417c plus one-sixth, or 83v. The 83v draw an equal amount out of IIs, which buys elements of constant capital and adds them to IIc. An increase of IIc by 83 implies an increase of IIv by one-fifth of 83, or 17. We have, then, after this exchange The reproduction on this basis in the second year brings the capital at the end of that year to In accumulation it is above all the rate of accumulation that must be considered. In the preceding cases we assumed that the rate of accumulation in I was equal to s I, and also that it remained constant from year to year. We changed only the proportion in which this accumulated capital was divided into variable and constant capital. We then had three cases: The premise of simple reproduction, that I(v + s) is equal to IIc, is not only incompatible with capitalist production, although this does not exclude the possibility that in an industrial cycle of 10-11 years some year may show a smaller total production than the preceding year, so that not even simple reproduction takes place compared to the preceding year. Besides that, considering the natural annual increase in population simple reproduction could take place only to the extent that a correspondingly larger number of unproductive servants would partake of the 1,500 representing the aggregate surplus-value. But accumulation of capital, real capitalist production, would be impossible under such circumstances. The fact of capitalist accumulation therefore excludes the possibility of IIc being equal to I(v + s). Nevertheless it might occur even with capitalist accumulation that in consequence of the course taken by the processes of accumulation during a preceding series of periods of production IIc might become not only equal but even bigger than I(v + s). This would mean an over-production in II and could not be adjusted in any other way than by a great crash, in consequence of which some capital of II would get transferred to I. Nor does it alter the relation of I(v + s) to IIc if a portion of constant capital II reproduces itself, as happens for instance in the use of home-grown seeds in agriculture. This portion of IIc is no more to be taken into consideration in the exchange between I and II than is Ic. Nor does it change matters if a part of the products of II is capable of entering into I as means of production. It is covered by a part of the means of production supplied by I, and this portion must be deducted on both sides at the outset, if we wish to examine in pure and unobscured form the exchange between the two large classes of social production, the producers of means of production and the producers of articles of consumption. Hence under capitalist production I(v + s) cannot be equal to IIc, in other words, the two cannot balance in mutual exchange. On the other hand, if I(s/x) is taken as that portion of Is which is spent by capitalists I as revenue, I(v + s/x) may be equal to, larger, or smaller than, IIc. But I(v + s/x) must always be smaller than II(c + s) by as much as that portion of IIs which must be consumed under all circumstances by capitalist class II. It must be noted that in this exposition of accumulation the value of the constant capital is not presented accurately so far as that capital is a part of the value of the commodity-capital it helped to produce. The fixed portion of the newly accumulated constant capital enters into the commodity-capital only gradually and periodically, according to the different natures of these fixed elements. Therefore whenever raw materials, semi-finished goods, etc., enter in huge quantities into the production of commodities, the commodity-capital consists for the most part of replacements of the circulating constant components and of the variable capital. (On account of the specific turnover of the circulating component parts this way of presenting the matter may nevertheless be adopted. It is then assumed that the circulating portion together with the portion of value of the fixed capital transferred to it is turned over so often during the year that the aggregate sum of the commodities supplied is equal in value to all the capital entering into the annual production.) But wherever only auxiliary materials are used for mechanical industry, and no raw material, there the labour element, equal to v, must reappear in the commodity-capital as its larger constituent. While in the calculation of the rate of profit the surplus-value is figured on the total capital, regardless of whether the fixed components periodically transfer much or little value to the product, the fixed portion of constant capital is to be included in the calculation of the value of any periodically created commodity-capital only to the extent that on an average it yields value to the product on account of wear and tear.
Economic Manuscripts: Capital: Volume Two