The analysis of capital, within the bourgeois horizon, is essentially the work of the Physiocrats. It is this service that makes them the true fathers of modern political economy. In the first place, the analysis of the various material components in which capital exists and into which it resolves itself in the course of the labour-process. It is not a reproach to the Physiocrats that, like all their successors, they thought of these material forms of existence such as tools, raw materials, etc. as capital, in isolation from the social conditions in which they appear in capitalist production; in a word, in the form in which they are elements of the labour-process in general, independently of its social form and thereby made of the capitalist form of production an eternal, natural form of production. For them the bourgeois forms of production necessarily appeared as natural forms. It was their great merit that they conceived these forms as physiological forms of society: as forms arising from the natural necessity of production itself, forms that are independent of anyone s will or of politics, etc. They are material laws, the error is only that the material law of a definite historical social stage is conceived as an abstract law governing equally all forms of society. In addition to this analysis of the material elements of which capital consists within the labour-process, the Physiocrats established the forms which capital assumes in circulation (fixed capital, circulating capital, even though as yet they give them other names), and in general the connection between the process of circulation and the reproduction process of capital. We shall come back to this in the chapter on circulation. In these two principal points Adam Smith inherited the legacy of the Physiocrats. His service in this connection is limited to fixing the abstract categories, to the greater consistency of the baptismal names which he gave to the distinctions made by the Physiocrats in their analysis. ||223| As we have seen, the basis for the development of capitalist production is, in general, that labour-power, as the commodity belonging to the workers, confronts the conditions of labour as commodities maintained in the form of capital and existing independently of the workers. The determination of the value of labour-power, as a commodity, is of vital importance. This value is equal to the labour-time required to produce the means of subsistence necessary for the reproduction of labour-power, or to the price of the means of subsistence necessary for the existence of the worker as a worker. It is only on this basis that the difference arises between the value of labour-power and the value which that labour-power creates a difference which exists with no other commodity, since there is no other commodity whose use-value, and therefore also the use of it, can increase its exchange-value or the exchange-values resulting from it. Therefore the foundation of modern political economy, whose business is the analysis of capitalist production, is the conception of the value of labour-power as something fixed, as a given magnitude as indeed it is in practice in each particular case. The minimum of wages therefore correctly forms the pivotal point of Physiocratic theory. They were able to establish this although they had not yet recognised the nature of value itself, because this value of labour-power is manifested in the price of the necessary means of subsistence, hence in a sum of definite use-values. Consequently, without being in any way clear as to the nature of value, they could conceive the value of labour-power, so far as it was necessary to their inquiry, as a definite magnitude. If moreover they made the mistake of conceiving this minimum as an unchangeable magnitude which in their view is determined entirely by nature and not by the stage of historical development, which is itself a magnitude subject to fluctuations this in no way affects the abstract correctness of their conclusions, since the difference between the value of labour-power and the value it creates does not at all depend on whether the value is assumed to be great or small. The Physiocrats transferred the inquiry into the origin of surplus-value from the sphere of circulation into the sphere of direct production, and thereby laid the foundation for the analysis of capitalist production. Quite correctly they lay down the fundamental principle that only that labour is productive which creates a surplus-value, in whose product therefore a higher value is contained than the sum of the values consumed during the production of this product. Since the value of raw and other materials is given, while the value of the labour-power is equal to the minimum of wages, this surplus-value can clearly only consist in the excess of labour which the labourer returns to the capitalist over and above the quantity of labour that he receives in his wage. But it does not appear in this form with the Physiocrats, because they have not yet reduced value in general to its simple substance the quantity of labour or labour-time. ||224| Their method of exposition is, of course, necessarily governed by their general view of the nature of value, which to them is not a definite social mode of existence of human activity (labour), but consists of material things land, nature, and the various modifications of these material things. The difference between the value of labour-power and the value created by it that is, the surplus-value which the purchase of labour-power secures for the user of labour-power appears most palpably, most incontrovertibly, of all branches of production, in agriculture, the primary branch of production. The sum total of the means of subsistence which the labourer consumes from one year to another, or the mass of material substance which he consumes, is smaller than the sum total of the means of subsistence which he produces. In manufacture the workman is not generally seen directly producing either his means of subsistence or the surplus in excess of his means of subsistence. The process is mediated through purchase and sale, through the various acts of circulation, and the analysis of value in general is necessary for it to be understood. In agriculture it shows itself directly in the surplus of use-values produced over use-values consumed by the labourer, and can therefore be grasped without an analysis of value in general, without a clear understanding of the nature of value. Therefore also when value is reduced to use-value, and the latter to material substance in general. Hence for the Physiocrats agricultural labour is the only productive labour, because it is the only labour that produces a surplus-value, and rent is the only form of surplus-value which they know. The workman in industry does not increase the material substance; he only alters its form. The material the mass of material substance is given to him by agriculture. It is true that he adds value to the substance, not through his labour, but through the costs of production of his labour: through the total means of subsistence which he consumes during his labour, equivalent to the minimum of wages, which he receives from agriculture. Because agricultural labour is conceived as the only productive labour, the form of surplus-value which distinguishes agricultural labour from industrial labour, rent, is conceived as the only form of surplus-value. Profit on capital in the true sense, of which rent itself is only an offshoot, therefore does not exist for the Physiocrats. Profit is seen by them as only a kind of higher wages paid by the landowners, which the capitalists consume as revenue (and which therefore enters into their costs of production in the same way as the minimum wages of the ordinary workmen); this increases the value of the raw material, because it enters into the consumption costs which the capitalist, [the] industrialist, consumes while he is producing the product, transforming the raw material into a new product. Surplus-value in the form of interest on money another branch of profit is consequently declared by one section of the Physiocrats, such as Mirabeau the elder, to be usury and contrary to nature. Turgot on the other hand derives his justification of it from the fact that the money capitalist could buy land, that is, rent, and that therefore his money capital must bring him in as much surplus-value as he would receive if he converted it into landed property. This means therefore that interest too is not newly created value, not surplus-value; it only explains why a part of the surplus-value gained by the landowners finds its way to the money capitalists in the form of interest, just as it is explained on other grounds ||225| why a part of this surplus-value finds its way to the industrial capitalist in the form of profit. Because agricultural labour is the only productive labour, the only labour that creates surplus-value, the form of surplus-value which distinguishes agricultural labour from all other branches of labour, rent, is the general form of surplus-value. Industrial profit and interest are merely different categories into which rent is divided and, in certain portions, passes from the hands of the landowners into the hands of other classes. This is the direct opposite to the view held by later economists beginning with Adam Smith, because they rightly consider industrial profit to be the form in which surplus-value is originally appropriated by capital, hence as the original general form of surplus-value they present interest and rent as mere offshoots of industrial profit, which is distributed by the industrial capitalists to various classes, who are co-owners of surplus-value. In addition to the reason already stated that agricultural labour is the labour in which the creation of surplus-value appears in material and tangible form, and apart from the process of circulation there were a number of other considerations which explain the standpoint of the Physiocrats. First, because in agriculture rent appears as a third element, as a form of surplus-value which is not found in industry or merely has a transient existence. It was surplus-value over and above surplus-value (profit), and so the most palpable and most conspicuous form of surplus-value, surplus-value raised to the second power. Secondly: leaving foreign trade out of account as the Physiocrats rightly did and had to do in an abstract study of bourgeois society it is clear that the number of workmen engaged in manufacture, etc., and completely detached from agriculture the free hands , as Steuart calls them is determined by the mass of agricultural products which the farm labourers produce in excess of their own consumption. As agricultural labour thus forms the natural basis (on this, see an earlier notebook) not only for surplus-labour in its own sphere, but also for the independent existence of all other branches of labour, and therefore also for the surplus-value created in them, it is clear that it was bound to be considered the creator of surplus-value, so long as the substance of value was regarded as definite, concrete labour, and not abstract labour with its measure, labour-time. ||226| Thirdly. All surplus-value, not only relative but absolute, depends on a given productivity of labour. If the productivity of labour had reached only such a stage of development that a man s labour-time no more than sufficed to keep him alive, to produce and reproduce his own means of subsistence, then there would be no surplus-labour and no surplus-value, and there would be no difference at all between the value of labour-power and the value which it creates. The possibility of surplus-labour and of surplus-value therefore arises from a given productivity of labour, a productivity which enables labour-power to create more than its own value, to produce more than the needs dictated by its life process. And indeed this productivity, this level of productivity which is presupposed as the starting-point, must first as we saw in the second point above make its appearance in agricultural labour. It appears therefore as a gift of nature, a productive power of nature. Here, in agriculture, from the very beginning there is a large measure of co-operation of the forces of nature the increase of human labour-power through the use and exploitation of the forces of nature working automatically. This utilisation of the forces of nature on a large scale appears in manufacture only with the development of large-scale industry. A definite stage in the development of agriculture, whether in the country concerned or in other countries, forms the basis for the development of capital. Up to this point absolute surplus-value coincides with relative. (Buchanan a great adversary of the Physiocrats makes this point even against Adam Smith, when he tries to show that agricultural development preceded the emergence of modern town industry). Fourthly. Since it is the great and specific contribution of the Physiocrats that they derive value and surplus-value not from circulation but from production, they necessarily begin, in contrast to the Monetary and Mercantile system, with that branch of production which can be thought of in complete separation from and independently of circulation, of exchange; and which presupposes exchange not between man and man but only between man and nature. Hence the contradictions in the Physiocratic system. It is in fact the first system which analyses capitalist production, and presents the conditions within which capital is produced, and within which capital produces, as eternal natural laws of production. On the other hand, it has rather the character of a bourgeois reproduction of the feudal system, of the dominion of landed property; and the industrial spheres within which capital first develops independently are presented as unproductive branches of labour, mere appendages of agriculture. The first condition for the development of capital is the separation of landed property from labour the emergence of land, the primary condition of labour, as an independent force, a force in the hands of a separate class, confronting the free labourer. The Physiocrats therefore present the landowner as the true capitalist, that is, the appropriator of surplus-labour. Feudalism is thus portrayed and explained from the viewpoint of bourgeois production; agriculture is treated as the branch of production in which capitalist production that is, the production of surplus-value exclusively appears. While feudalism is thus made bourgeois, bourgeois society is given a feudal semblance. This semblance deceived Dr. Quesnay s adherents among the nobility, such as the crotchety and patriarchal Mirabeau the elder. Among the later representatives ||227| of the Physiocrats, especially Turgot, this illusion disappears completely, and the Physiocratic system is presented as the new capitalist society prevailing within the framework of feudal society. This therefore corresponds to bourgeois society in the epoch when the latter breaks its way out of the feudal order. Consequently, the starting-point is in France, in a predominantly agricultural country, and not in England, a predominantly industrial, commercial and seafaring country. In the latter country attention was naturally concentrated on circulation, on the fact that the product acquires value, becomes a commodity only when it becomes the expression of general social labour, money. In so far, therefore, as the question concerned not the form of value, but the amount of value and the increase of value, profit upon expropriation that is, relative profit as Steuart describes it is what catches the eye. But if the creation of surplus-value in the sphere of production itself is what has to be established, it is necessary first of all to go back to that branch of production in which surplus-value is found independently of circulation that is, agriculture. The initiative was therefore taken in a predominantly agricultural country. Ideas related to those of the Physiocrats are to be found in fragmentary form in older writers who preceded them, partly in France herself, for example, Boisguillebert. But it is only with the Physiocrats that those ideas develop into an epoch-making system. The agricultural labourer, depending on the minimum of wages, the strict n cessaire, reproduces more than this strict n cessaire, and this more is rent, surplus-value, which is appropriated by the owners of the fundamental condition of labour nature. So what they say is not: the labourer works more than the labour-time required for the reproduction of his labour-power; the value which he creates is therefore greater than the value of his labour-power; or the labour which he gives in return is greater than the quantity of labour which he receives in the form of wages. But what they say is: the amount of use-values which he consumes during the period of production is smaller than the amount of use-values which he creates, and so a surplus of use-values is left over. Were he to work only for the time required to reproduce his own labour-power, there would be nothing over. But the Physiocrats only stuck to the point that the productivity of the earth enables the labourer, in his day s labour, which is assumed to be a fixed quantity, to produce more than he needs to consume in order to continue to exist. The surplus-value appears therefore as a gift of nature, through whose co-operation a definite quantity of organic matter plant seeds, a number of animals enables labour to transform more inorganic matter into organic. On the other hand, it is taken for granted that the landowner confronts the labourer as a capitalist. He pays for the labour-power, which the labourer offers to him as a commodity, and he receives in return not only an equivalent, but appropriates for himself the enlarged value arising from the use of this labour-power. The alienation of the material condition of labour from labour-power itself is presupposed in this exchange. The starting-point is the feudal landowner, but he comes on to the stage as a capitalist, as a mere owner of commodities, who makes profitable use of the goods exchanged by him for labour, and gets back not only their equivalent, but a surplus over this equivalent, because he pays for the labour-power only as a commodity. He confronts the free labourer as an owner of commodities. In other words, this landowner is in essence a capitalist. In this respect too the Physiocratic system hits the mark, inasmuch as the separation of the labourer from the soil and from the ownership of land is a fundamental condition ||228| for capitalist production and the production of capital. Hence the contradictions in this system: it was the first to explain surplus-value by the appropriation of the labour of others, and in fact to explain this appropriation on the basis of the exchange of commodities; but it did not see that value in general is a form of social labour and that surplus-value is surplus-labour. On the contrary, it conceived value merely as use-value, merely as material substance, and surplus-value as a mere gift of nature, which returns to labour, in place of a given quantity of organic material, a greater quantity. On the one hand, it stripped rent that is, the true economic form of landed property of its feudal wrapping, and reduced it to mere surplus-value in excess of the labourer s wage. On the other hand, this surplus-value is explained again in a feudal way, as derived from nature and not from society; from man s relation to the soil, not from his social relations. Value itself is resolved into mere use-value, and therefore into material substance. But again what interests [the Physiocrats] in this material substance is its quantity the excess of the use-values produced over those consumed; that is, the purely quantitative relation of the use-values to each other, their mere exchange-value, which in the last resort comes down to labour-time. All these are contradictions of capitalist production as it works its way out of feudal society, and interprets feudal society itself only in a bourgeois way, but has not yet discovered its own peculiar form somewhat as philosophy first builds itself up within the religious form of consciousness, and in so doing on the one hand destroys religion as such, while on the other hand, in its positive content, it still moves only within this religious sphere, idealised and reduced to terms of thought. Hence also, in the conclusions which the Physiocrats themselves draw, the ostensible veneration of landed property becomes transformed into the economic negation of it and the affirmation of capitalist production. On the one hand, all taxes are put on rent, or in other words, landed property is in part confiscated, which is what the legislation of the French Revolution sought to carry through and which is the final conclusion of the fully developed Ricardian modern political economy. By placing the burden of tax entirely on rent, because it alone is surplus-value and consequently any taxation of other forms of income ultimately falls on landed property, but in a roundabout way, and therefore in an economically harmful way, that hinders production taxation and along with it all forms of State intervention, are removed from industry itself, and the latter is thus freed from all intervention by the State. This is ostensibly done for the benefit of landed property, not in the interests of industry but in the interests of landed property. Connected with this is laissez faire, laissez aller; unhampered free competition, the removal from industry of all interference by the State, monopolies, etc. Since industry [as the Physiocrats see it] creates nothing, but only transforms values given it by agriculture into another form; since it adds no new value to them, but returns the values supplied to it, though in altered form, as an equivalent; it is naturally desirable that this process of transformation should proceed without interruptions and in the cheapest way; and this is only realised through free competition, by leaving capitalist production to its own devices. The emancipation of bourgeois society from the absolute monarchy set up on the ruins of feudal society thus takes place only in the interests of the feudal landowner transformed into a capitalist ||229| and bent solely on enrichment. The capitalists are only capitalists in the interests of the landowner, just as political economy in its later development would have them be capitalists only in the interests of the working class. It can be seen therefore how little the modern economists, [such as] Herr Eug ne Daire (who published the works of the Physiocrats together with his prize essay on them), have understood the Physiocrats when they treat their specific theories of the exclusive productivity of agricultural labour, of rent as the only surplus-value, and of the landowners pre-eminent status in the system of production as if they had no connection and were only fortuitously associated with their proclamation of free competition, the principle of large-scale industry, of capitalist production. At the same time it is understandable how the feudal semblance of this system, in the same way as the aristocratic tone of the Enlightenment, was bound to win a number of feudal lords as enthusiastic supporters and propagandists of a system which, in its essence, proclaimed the rise of the bourgeois system of production on the ruins of the feudal. With Quesnay himself, in the Analyse du Tableau conomique the nation consists of three classes of citizens: Only the agricultural labourers, not the landowners, appear as a productive class, as a class which creates surplus-value. The importance of this class of landowners, which is not sterile , because it is the representative of surplus-value , does not rest on its being the creator of surplus-value, but exclusively on the fact that it appropriates surplus-value. [With] Turgot [the Physiocratic system is] most fully developed. In some passages in his writings the pure gift of nature is presented as surplus-labour, and on the other hand the necessity for the labourer to yield up what there is in excess of his necessary wage [is explained] by the separation of the labourer from the conditions of labour, and their confronting him as the property of a class which uses them to trade with. The first reason why agricultural labour alone is productive is that it is the natural basis and pre-condition for the independent pursuit of all other forms of labour. How then does surplus-value arise? It does not arise from circulation, but it is realised in circulation. The product is sold at its value, not above its value. There is no excess of price over value. But because it is sold at its value, the seller realises a surplus-value. This is only possible because he has not himself paid in full for the value which he sells, that is, because the product contains a portion of value which has not been paid for by the seller, which he has not offset by an equivalent. And this is the case with agricultural labour. The seller sells what he has not bought. Turgot at first presents this unbought element as a pure gift of nature. We shall see, however, that in his writings this pure gift of nature becomes imperceptibly transformed into the surplus-labour of the labourer which the landowner has not bought, but which he sells in the products of agriculture. In this first conception we have, to begin with, the essence of surplus-value that it is value realised in sale, without the seller having given an equivalent for it, without his having bought it. Unpaid value. But in the second place this is conceived as a pure gift of nature, this excess over the wage of labour; because after all it is a gift of nature, it depends on the productivity of nature that the labourer is able to produce in his day s labour more than is necessary for the reproduction of his labour-power, more than the amount of his wages. In this first conception the total product is still appropriated by the labourer himself And this total product is divided into two parts. The first forms his wages; he is presented as his own wage-labourer, who pays himself the part of the product that is necessary for the reproduction of his labour-power, for his subsistence. The second part, which is the excess over the first, is a gift of nature and forms surplus-value. The nature of this surplus-value, of this pure gift of nature, will however take clearer shape, when the premise of the proprietor who cultivates his land is abandoned and the two parts of the product, wages and surplus-value, accrue to different classes, the one to the wage-worker, the other to the landowner. The formation of a class of wage-labourers, whether in manufacture or in agriculture itself at first all manufacturiers appear only as stipendi s, wage-labourers of the cultivating proprietor requires the separation of the conditions of labour from labour-power, and the basis for this separation is that the land itself becomes the private property of one part of society, so that the other part is cut off from this objective condition for making use of its labour. In this, way, therefore, the relation between capital and wage-labour arises in agriculture itself. It first arises when a number of people find themselves cut off from ownership of the conditions of labour above all from the land and have nothing to sell but their labour itself. For the wage-labourer, however, who can no longer produce commodities, but must sell his labour itself, the minimum of wages, the equivalent of the necessary means of subsistence, necessarily becomes the law which governs his exchange with the owner of the conditions of labour. Then as soon as wage-labour has arisen, the produce of land is divided into two parts: the one includes the subsistence and the profits of the husbandman, which are the reward of his labour and the condition upon which be undertakes to cultivate the field of the proprietor. What remains is that independent and disposable part which the land gives as pure gifts to him who cultivates it, over and above his advances and the wages of his trouble; and this is the portion of the proprietor, or the revenue with which the latter can live without labour and which he uses as he will (l.c., p. 14). This pure gift of the land, however, is now already defined as a gift which it gives to him who cultivates it , and thus as a gift which it makes to labour; as the productive power of labour applied to the land, a productive power which labour possesses through using the productive power of nature and which it thus derives from the land but it derives it from the land only as labour. In the hands of the landowner, therefore, the surplus appears no longer as a gift of nature , but as the appropriation without an equivalent of another s labour, which through the productivity of nature is enabled to produce means of subsistence in excess of its own needs, but which, because it is wage-labour, is restricted to appropriating for itself, out of the product of the labour, only what is necessary to procure him [i. e., the worker] his subsistence . Thus in this passage surplus-value is explicitly stated to be the part of the cultivator s labour which the proprietor appropriates to himself without giving any equivalent, and he sells the product of his labour, therefore, without having bought it. Only what Turgot has in mind is not exchange-value as such, the labour-time itself, but the surplus of products which the cultivator s labour supplies to the proprietor over and above his own wages; which surplus of products, however, is only the embodiment of the amount of time which he works gratis for the proprietor in addition to the time which he works for the reproduction of his wages. We see thus how, within the limits of agricultural labour, the Physiocrats have a correct grasp of surplus-value; they see it as a product of the wage-labourer s labour, although they in turn conceive this labour in the concrete forms in which it appears in use-values. The capitalist exploitation of agriculture leasing or letting of land is, it may be noted in passing, described by Turgot as the most advantageous method of all, but it presupposes a land that is already rich (l.c., p. 21). <In considering surplus-value it is necessary to turn from the sphere of circulation to the sphere of production. That is to say, to deduce surplus-value not simply from the exchange of commodity for commodity, but from exchange as it occurs within production, between the owners of the conditions of labour and the labourers themselves. These too confront each other as owners of commodities, and consequently there is no assumption here of production independent of exchange.> <In the Physiocratic system the proprietors [landowners] are the salariants, labourers and manufacturers in all other branches of industry being wage-labourers or stipendiaries. Consequently also the governing and the governed.> Turgot analyses the conditions of labour as follows: All these advances, these conditions on which alone labour can be performed, which are therefore preconditions of the labour-process, are originally provided gratis by the land: Now these conditions of labour, these advances to labour become capital as soon as they have to be advanced to the labourer by a third person, and this is the case from the moment when the labourer owns nothing but his labour-power itself. ||233| Turgot defines capitals as accumulated movable values (l.c., p. 38). Originally the proprietor or cultivator pays wages directly each day and supplies the material, for example, to the spinner of flax. As industry develops, larger advances and continuity of the process of production are necessary. This is then undertaken by the possessor of capital. In the price of his products he must recover all his advances and a profit equal to The stipendiary industrial class is itself subdivided into capitalists, entrepreneurs and simple workers , etc. (p. 39). Agricultural entrepreneurs are in the same position as these [industrial] entrepreneurs. They must similarly get all their advances replaced, along with the profit as shown above. Finally: It is quite right, that if rent is the only surplus-value, accumulation takes place only from rent. What the capitalists accumulate apart from rent, they pinch from their wages (their revenue, destined for their consumption since this is how profit is defined). As profit, like wages, is reckoned in with the costs of cultivation, and only the surplus forms the revenue of the proprietor, the latter in spite of the honourable status given him is in fact excluded from the costs of cultivation (and thereby from being an agent of production), just as with the Ricardians. The emergence of the Physiocrats was connected both with the opposition to Colbertism and, in particular, with the hullabaloo over the John Law system. ||234| The confusion of value with material substance, or rather the equating of value with it, and the connection between this view and the whole outlook of the Physiocrats, comes clearly to light in the following extracts from Ferdinando Paoletti: I veri mezzi di render felici le societ (in part directed against Verri, who in his Meditazioni sulla Economia politica (1771), had attacked the Physiocrats). (Paoletti of Toscana, op. cit., t. XX, [published by] Custodi, Parte moderna.) Agriculture is the first of all branches of industry to use the forces of nature on a considerable scale. Their use in manufacturing industry becomes apparent only at a higher stage of industrial development. The following quotation shows how, in this connection, Adam Smith still reflects the prehistory of large-scale industry and for this reason upholds the Physiocratic point of view, and how Ricardo answers him from the standpoint of modern industry. ||235| In Book II, Ch. V [of his An Inquiry into the Nature and Causes of the Wealth of Nations], Adam Smith says with reference to the rent of land: On which Ricardo comments [in his On the Principles of Political Economy, and Taxation], 2nd edition, 1819, note to pp. 61-62: [An anonymous author emphasises] that the Physiocrats regarded profit as only a deduction from rent: The view of Adam Smith and his followers that the accumulation of capital is due to personal stinting and saving and self-denial of the capitalists also originates from the view of the Physiocrats that profit (including interest) is merely revenue for the consumption of the capitalists. They could say this because they only regarded land rent as the true economic, so to speak legitimate, source of accumulation. He, says Turgot, i.e., the husbandman, is the only one whose labour produces over and above the wages of labour (Turgot, l.c., p. 11). Here the entire profit is thus reckoned in with the wages of labour. Adolphe Blanqui, Histoire de l conomie politique, Brussels, 1839, says [of the Physiocrats] on p. 139: <Thus the Physiocrats saw the production of surplus-value as the essence of capitalist production. It was this phenomenon that they had to explain. And it remained the problem, after they had eliminated the profit upon alienation of the Mercantile system. This holds good both for ||237| purchase and for sale, as also for the whole metamorphosis of the commodity, or for the result of the exchange of different commodities at their value, that is, the exchange of equivalents. Whence, therefore, comes surplus-value? That is, whence comes capital? That was the problem for the Physiocrats. Their error was that they confused the increase of material substance, which because of the natural processes of vegetation and generation distinguishes agriculture and stock-raising from manufacture, with the increase of exchange-value. Use-value was their starting-point. And the use-value of all commodities, reduced, as the scholastics say, to a universal, was the material substance of nature as such, whose increase in the same form occurs only in agriculture.> Germain Garnier, the translator of Adam Smith and himself a Physiocrat, correctly expounds their theory of savings, etc. First he says that manufacture, as the Mercantilists maintained of all production, can only produce surplus-value through the profit of expropriation, by selling commodities above their value, so that only a new distribution of values created takes place, but no new addition to the created values. Garnier is also quite correct in noting that Adam Smith s theory of accumulation through savings rests on this Physiocratic foundation. (Adam Smith was strongly infected by the Physiocrats, as he nowhere shows more strikingly than in his critique of the Physiocrats). Garnier says: ||239| Among the immediate historical circumstances which facilitated the spread of Physiocratic theory and even its emergence, Adolphe Blanqui, in the work already mentioned, adduces: Turgot as well as Quesnay and his other adherents also want capitalist production in agriculture. Thus Turgot: And Quesnay in his Maximes g n rales du gouvernement conomique d un royaume agricole: In the same passage Quesnay admits that the increased productivity of agricultural labour accrues to the net revenue , and therefore in the first place to the landowner, i. e., the owner of surplus-value, and that the relative increase of the latter arises not from the land but from the social and other arrangements for raising the productivity of labour. ||240| For he says in the same place: At the same time Mercier de la Rivi re (l.c., t. II, p. 407) has an inkling that surplus-value at least in manufacture has something to do with the manufacturing workers themselves. (Turgot extended this to all production, as already mentioned.) In the passage cited he exclaims: [There were] contradictions in the system of the Economists, taken as a whole. Among others, Quesnay was for the absolute monarchy. Mercier de la Rivi re [says]: And to crown all the Friend of the People , the Marquis de Mirabeau Mirabeau the Elder! It was precisely this school, with its laissez faire, laissez aller, that overthrew Colbertism and all forms of government interference in the activities of bourgeois society. It allowed the State to live on only in the pores of this society, as Epicurus placed his gods in the pores of the world! The glorification of landed property in practice turns into the demand that taxes should be put exclusively on ground-rent, [and this implies] the virtual confiscation of landed property by the State, just as with the radical section of the Ricardians. The French Revolution, in spite of the protests of Roederer and others, accepted this taxation theory. Turgot himself [was] the radical bourgeois minister who prepared the way for the French Revolution. For all their sham feudal pretences the Physiocrats were working hand in hand with the Encyclopaedists! 160; |240|| ||241| Turgot sought to anticipate the measures of the French Revolution. By the edict of February 1776 he abolished the guilds. (This edict was revoked three months after it was promulgated.) Similarly he annulled the road-making corv e des paysans He tried to introduce the single tax on rent of land. ||241| We shall come back again later to the great service rendered by the Physiocrats respecting the analysis of capital. Meanwhile just this point: surplus-value (according to them) is due to the productivity of a special kind of labour, agricultural labour. And on the whole this special productivity is due to nature itself. In the Mercantile system, surplus-value is only relative what one wins, the other loses: profit upon alienation or oscillation of wealth between different parties. So that within a country, if we consider the total capital, no creation of surplus-value in fact takes place. It can only arise in the relations between one nation and other nations. And the surplus realised by one nation as against the other takes the form of money (the balance of trade), because it is precisely money that is the direct and independent form of exchange-value. In opposition to this for the Mercantile system in fact denies the creation of absolute surplus-value the Physiocrats seek to explain absolute surplus-value: the net product. And since the net product is fixed in their minds as use-value, agriculture [is for them] the sole creator of it. One of the most na ve representatives of Physiocratic theory how far removed he is from Turgot! is the old smeller-out of demagogues and royal Prussian Privy Councillor Schmalz. For instance: The minimum of wages is so formulated by the Physiocrats that the consumption (or expenditure) of the labourers is equal to the wage that they receive. Or as Herr Schmalz puts it in a general way: This kind of labour (agriculture proper) being the only labour that contributes to the production of new b o d i e s, it is therefore the only labour that can, up to a certain point, be considered productive. As for labours in working up material or in industry they simply give a new form to bodies which nature has produced (l.c., pp. 15-16). Against the superstition of the Physiocrats. Verri (Pietro): Meditazioni sulla Economia politica. (First printed 1771), t. XV. [Published by] Custodi, Parte moderna. ||243| On the other hand, Verri calls attention to the constant poverty of the agricultural population in contrast to the progressive enrichment of the artisans, and then goes on to say: This proves that the artisan, in the price which he receives, gets not only the replacement of his outlay on consumption, but a certain sum over and above that; and this sum is a new quantity of value created in the annual production (l.c., p. 26). The newly-created value is therefore that part of the price of the agricultural or industrial products which they yield over and above the original value of the materials and the necessary outlays on consumption while they are being worked up. In agriculture the seed and the consumption of the husbandman must be deducted, as in manufacture the raw material and the consumption of the industrial workman; and every year new value is created, to the amount of the balance that remains (l.c., pp. 26-27).
Economic Manuscripts: Theories of Surplus-Value, Chapter 2